MALAYSIA: ETP to restore Malaysia as major producer of rubber

The focus on rubber under the Economic Transformation Programme (ETP) holds great significance as it will restore Malaysia's position as a major producer and strengthen its competitive exporter status in the global market.

Often overshadowed by palm oil in terms of hectarage and pricing, the local rubber sector has been given the green light under the ETP to maintain its hectarage at one million hectares.

There would also be additional zoning of one million hectares via exploiting suitable land bank in Sabah and Sarawak, apart from increasing replanting activities to 40,000ha per year from 20,000ha currently.

In the past, given the lucrative oil palm operations, many rubber estates were cleared to make way for planting oil palm.

This resulted in a serious dwindling supply of natural rubber and rubber wood, making it hard even to cater to the multi-billion ringgit domestic integrated rubber industry such as rubber gloves and rubberwood furniture.

Realising the need to quickly address the supply situation, the Government in May launched a 10-year strategies for the Malaysian rubber industry and the Malaysian Rubber Board (MRB).

In fact, the ETP's three entry point projects (EPPs) for rubber; rubber area/yield improvement, acceleration in downstream products and new products targeted by 2020 were seen as an extension of the two other strategies.

So, with the road map for the entire rubber industry being defined so clearly under the ETP and the two rubber strategies, the next question is whether the targets would hit the mark by 2020?

Some quarters are confident of the EPPs, namely in the growth of downstream products via boosting the revenues of Standard Malaysian Rubber (SMR) grades, tyres, speciality rubber products and green rubber products.

However, others want the Government to put emphasis first on the EPP to increase rubber areas and yield improvement.

As Malaysia is no longer a low-cost producer of rubber, it is important to improve productivity and efficiency and also promote income diversification of smallholders - who contribute about 94% of the country's total rubber production.

In the upstream sector, MRB was tasked to enhance the national rubber productivity through development of high-yielding clones and developing a mechanised system for rubber plantations.

MRB also need to work closely with Risda, Felcra and Felda as well as the new areas of growth in east Malaysia under Sarawak Forestry Board and Sabah Rubber Industry Board to ensure a more efficient transfer of technologies to increase rubber yield to 1.8 tonnes per ha per year by 2020 from 1.4 tonnes currently.

In addition, the downstream sector was also too narrow-based with almost 80% of export consisting of latex dipped rubber goods.

Industry players should also diversify their products with the assistance of MRB to help formulate, design and re-engineer new rubber-based products.

Only then, perhaps the ETP's projected contributions from rubber EPPs to hit RM48.9 billion by 2020 can become a reality.

(Syed Rashid Ali, Karachi, Pakistan)