Deputy Primary Industries Minister Shamsul Iskandar Mohd Akin said the Government has not been able to consider the proposal due to several factors including the need for huge financial resources to back the initiative in the event of a sharp downturn in the global price of natural rubber.
“The fixing of a floor price also gives room for price speculation among the rubber sellers by pushing the price to a low level and hoping for the government to cover the difference between the market price and floor price,” he said.
He was replying to a question from Awang Hashim (PAS-Pendang) who had wanted to know the possible impact of the rubber floor purchase price of RM2.50 if it is implemented.
Shamsul Iskandar said fixing the floor price also gave room for the smuggling of rubber out of the country because the domestic price is much higher than the international price.
Nevertheless, he said, the Government is concerned about the challenge faced by rubber cultivators, especially when there is a fall in the rubber market price.
The Rubber Production Incentive (IPG) was implemented as a measure to stabilise the price and production of the commodity, he said.
“As the rubber price was too low at the end of 2018, the government improved the IPG on Nov 21, 2018, by raising the Activation Pricing Level (PHP) from RM2.20 to RM2.50 per kg of scrap rubber,” he said.
He said the PHP level came into effect on Jan 1 this year and the ministry, through the Malaysian Rubber Board, had implemented the IPG at the new rate beginning early February.