Rubber still performing amid lower prices

The success of the industry is a result of extensive R&D activities, says minister


Malaysia’s natural rubber (NR) production in 2017 reached 740,140 tonnes, an increase of 10% year-on- year, despite the downtrend in prices particularly from June 2017 onwards.

Primary Industries Minister Teresa Kok Suh Sim said the rubber industry in Malaysia has transformed and shifted its focus to downstream activities, particularly on manufacturing high-end innovative products.

“The rubber industry contributed RM32.3 billion in export earnings in 2017, an increase of RM7.5 billion from the previous year. It was attributed to a firm demand for rubber products globally,” she told reporters at the National Rubber Economic Conference (NREC) 2018 in Kuala Lumpur yesterday.

NR and other rubber accounted for RM10.5 billion of total exports, while rubber products contributed RM21.8 billion.

Kok added that the success of the industry is a result of extensive research and development (R&D) activities, which in turn has increased productivity, as well as resulted in new technologies that improve processes.

“It has provided vast opportunities, especially in the manufacturing of high-value added automotive and engineering components, as well as created additional employment to over 75,000 people in 2017,” she said.

Kok said the recent trip with Prime Minister (PM) Tun Dr Mahathir Mohamad proved to be very successful as a memorandum of understanding (MoU) was inked between the Malaysian Rubber Board (MRB) and Hainan State Farms Investment Holdings Group Co Ltd, to collaborate and adopt rubberised bitumen road technology.

“They were very impressed with our technology, our scientist was invited to do R&D on rubber tapping and autonomous.

“What we have can be commercialised. It is a good path into the Chinese market. They do not have much rubber trees as well,” she said.

However, Kok said she is disappointed with some government agencies that do not really value the rubber innovations or products from local R&D, and not interested in pushing the goods into other intra projects.

She urged the agencies to come up with a directive, especially in procurement processes.

“Please use Malaysian-made products. It does not make sense that we are able to export rubber products like gloves to so many other countries, but our own people do not use them.

“We must use our own resource-based products. We can’t push it out or sell it as a commodity anymore, we have to turn it into value-added products.

“When we start using our own-made products, this will not only increase domestic consumption, but also uplift the income of smallholders and the industry as a whole,” Kok said.

Almost 93% of the NR production is contributed by half a million rubber smallholders, who play a crucial role in continuing the supply of NR for the industry.

MRB DG Datuk Dr Zairossani Mohd Nor said the government will remain committed in encouraging smallholders to continue tapping during periods of low rubber prices through the Rubber Production Incentive (IPG) programme.

“To ensure supply and sustain minimum income levels, the government through MRB will continue the incentives through the IPG. If the rubber price falls, the government will top it up, so they will receive a minimum income,” he said.

He added that the subsidies will depend largely on the price of rubber and is not only for NR, but also for the production of latex.

“There are two types of raw material: The solid rubber material and latex. For rubber, it’s usually about 30 sen or 40 sen per kilo and that depends on the price of rubber, but for latex, it is fixed at 90 sen per kilo.

“That’s why we are currently encouraging more smallholders to produce more latex. Currently, it can only accommodate about 10% of the latex industry requirement for now,” Zairossani said.

Meanwhile, the NREC 2018 themed “Disruptive Trends: Innovate and Evolve”, is envisioned to be a platform for participants to discuss ideas and share knowledge on topics related to the emerging trends in the rubber industry.