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Malaysia: Natural rubber under pressure to chart new destiny

A FORCE TO BE RECKONED WITH: The recently unveiled One Nation Strategy proposes new plans to boost the industry

I RECENTLY attended the National Rubber Economy Conference 2013, themed “Natural Rubber at the Crossroads: Blazing New Trails”, that brought together many from the natural rubber industry.

It was also a chance for me to touch base with old friends from the former Rubber Research Institute of Malaysia who have yet to give up hope on rubber.

As for me, I left rubber for palm oil when I saw estates cutting down their rubber trees to plant oil palm. Natural rubber then was labelled a sunset industry. However, in the last few years, thanks to that growth frenzy in China, the price of natural rubber bounced back to reach levels never thought possible. The interest in natural rubber was rekindled. Some plantation companies seriously contemplated reinvesting in rubber. But this proved to be temporary as rubber prices again recently took a beating. The slowing down of growth in China is partly to blame.

Natural rubber needs a new strategy. The conference essentially deliberated on the plan to chart a new destiny for a crop which has served the nation well over many decades. Despite declining planted areas, natural rubber is still a force to be reckoned with. Last year, natural rubber contributed RM36.4 billion to the nation’s coffers.

Though natural rubber export has been down, the shortfall is made up by expansion in the export of rubber products and rubberwood furniture. Malaysia remains the world’s largest consumer of natural rubber latex and the number one manufacturer of medical gloves. At one time, there was a strategy to turn Malaysia into the regional hub for all kinds of rubber products using both natural and synthetic rubber. Unfortunately, that plan fell through and we did not make much headway, even in the manufacture of tyres or other rubber-based products for the car industry. Instead, the latest report suggests that Thailand is making commendable progress in this.

Although under the Economic Transformation Plan (ETP), natural rubber was not among the earlier list of 12 National Key Economic Areas (NKEAs), it is now included with palm oil.

The hope was that through the ETP, natural rubber would unleash a new vigour for expansion and contribution to the nation’s coffers.

Natural rubber has four Entry Point Projects (EPPs): increasing average national rubber productivity to 2,000 kg/ha/year by 2020; ensuring sustainability of the upstream rubber industry; increasing world market share of latex gloves to 65 per cent (RM30 billion or US$10 billion) by 2020; and commercialising the chemically modified natural rubber, now renamed Ekoprena and Pureprena.

As highlighted in the keynote presentation by the director-general of the MRB, implementing the EPPs present many challenges.

For one, 95 per cent of rubber are now produced by smallholders. More than 50 per cent of smallholders are old. Understandably, managing plantings has not been easy. Poor materials are used in the fields. Fertiliser application is not according to recommendations made by the extension agents. Stimulant use to boost yield is also low at only four per cent.

As a result, diseases are rampant in smallholders’ areas. Even the number of smallholders areas are decreasing and their income is low. It is worse when the price is not right. The average area operated by smallholders has also dwindled.

It is therefore no surprise that Malaysia’s productivity is low compared with other natural rubber producing countries. This is further exacerbated by the fact that 28 per cent of the trees are more than 20 years old. Another worrying trend is that both the SMR and latex concentrate processors are operating at low capacity utilisation. Profits in processing are also down.

So, what are the remedial measures? What are the new trails that will be blazed?

After much deliberation and engagement with key stakeholders of the industry, MRB unveiled a One Nation Strategy to chart the new destiny for natural rubber.

In a nutshell, the strategy proposes better coordination among the many institutions to achieve improved synergy and performance.

Through such coordination, it will be easier to address the productivity shortcomings of smallholders and therefore breathe new vigour in the industry. Executing that strategy is, of course, the next challenge.

Innovative technology can be the key to reinvigorating the natural rubber industry.

Source: nst.com.my

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