The Future of the Malaysian Rubber Industry

The Malayan gum elastic industry was one of the major beginning of income of the state in past decennaries. Subsequently on, the production of gum elastic has been worsening and some investors even labeled gum elastic industry as a sundown industry. Somehow it is still early to foretell the hereafter of Malaysia gum elastic industry. However, presently the gum elastic industry is in its positive tendency and there are some other positive marks of the hereafter. Therefore, we believe that the hereafter of Malayan gum elastic industry is bright.

Malaysia is now the largest consumer of latex dressed ore in the universe. Besides, our state is besides the universe ‘s largest provider of medical gum elastic baseball mitts and besides the universe ‘s largest provider of latex yarn and cord. Harmonizing to Malaysian Export Promotion Council, many states frequently choose Malaysia to import gum elastic to their states because the gum elastic produced in Malaysia has high quality and the gum elastic monetary value and the gum elastic merchandise is competitory in the international market. ( Beginning: Malayan Rubber Export Promotion Council )

Regardless of competition from Thailand and Indonesia, and late China, Malaysia is expected to stay as one of the major provider of baseball mitt due to the dynamic and farsighted baseball mitt makers. Malaysia has the advantage in term of lower cost beginning of energy such as natural gas and local productiveness. Malaysia besides exceeds China in natural stuff supply as the 3rd largest natural gum elastic provider after our neighbouring states Thailand and Indonesia. On the other manus, Malayan baseball mitt makers are advanced in footings of technological industry of scrutiny and medical class baseball mitts where their quality demands are going more rigorous and rigorous. ( Beginning: Bursa Malaysia News, August 26, 2009 )

Furthermore, Malaysia is presently the 3rd largest manufacturer of natural gum elastic in the universe. Even though the ingestion of natural gum elastic has been increasing, Malaysia has been able to bring forth more than one million metric tons of natural gum elastic to be exported since 2004 as shown in table 1. Therefore, the consumers of natural gum elastic can still anticipating Malaysia as a provider of natural gum elastic.

Table 1: Rubber Production, Export and Consumption of Malaysia ( Tonnes ) , 2000 – 2009

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Production of NR1

927,608

882,067

889,832

985,647

1,168,735

1,126,023

1,283,632

1,199,553

1,072,365

857,019

Export of NR1

977,975

858,993

927,919

1,646,708

1,369,428

1,322,165

1,184,396

1,018,052

916,599

703,051

Consumption of NR1

363,715

400,888

407,884

420,775

402,769

386,472

383,324

450,246

468,894

468,706

Consumption of SR2

95,000

96,000

90,000

90,000

86,500

96,400

112,400

122,800

124,500

129,500

Beginning: Department of Statistics, Malaysia ( DOS ) and International Rubber Study Group ( IRSG ) Adopted from Malayan Rubber Export Promotion Council

Furthermore, there are more than 160 states in the universe which import gum elastic merchandises from Malaysia. For case, USA and China are the two biggest export finish of Malayan gum elastic merchandises following by Germany, Japan and United Kingdom. Malayan gum elastic merchandises are celebrated for its high quality and the competitory monetary value. The no-good merchandise makers include local and foreign little and average sized endeavors which have the capablenesss of providing the downstream merchandises such as automotive constituents, medical baseball mitts, hosieries and belting. ( Beginning: Malayan Rubber Export Promotion Council )

Malaya is the top provider of scrutiny and surgical baseball mitts which carry throughing about half of the universe ‘s demand. For case, the scrutiny baseball mitts are largely utilized by the medical and wellness attention installations. Next, Malaysia is besides the universe ‘s top provider of Foley catheters and besides the 2nd largest provider of rubbers and latex togss. Basically, latex yarn is normally in the vesture industry as elastic sets and supports. Some other illustrations of of import latex merchandises which are produced in Malaysia include finger stables, balloons and others. Besides, Malaysia has a production comprises a broad scope of industrial gum elastic merchandises such as beltings, wires, hosieries and overseas telegrams for the international market. This is shown in table 2.

Table 2: Malaya ‘s Export of Selected Rubber Products, 2005 – 2009

Rubber Product

2005

Value ( RM Million )

2006

Value ( RM Million )

2007

Value ( RM Million )

2008

Value ( RM Million )

2009

Value ( RM Million )

Baseball gloves, other than surgical baseball mitts

3,793.23

4,624.52

5,095.24

5,991.92

6,279.86

Surgical baseball mitts

706.87

758.39

780.41

916.34

866.21

Catheters

647.71

469.92

670.02

285.22

96.87

Vulcanized gum elastic yarn and cord

574.20

745.66

720.86

615.48

707.60

Wire, overseas telegram and other electrical music directors

60.96

86.74

103.04

22.84

20.16

Shrieking and tubing

216.72

223.08

307.60

338.31

218.39

Sheath preventives

115.78

143.75

151.71

212.50

233.65

Belt outing

55.22

57.92

62.15

59.31

45.05

Balloons

33.69

33.51

38.89

10.88

8.65

Precured pace of non-cellular gum elastic

32.26

32.18

19.17

26.95

54.19

Cellular gum elastic lined with fabric cloth on one side

24.94

17.23

13.40

6.56

13.99

Finger stables

9.51

9.85

8.67

4.46

3.34

Teats & A ; soothers

9.30

12.32

17.36

14.14

11.76

Pipe seal rings of untempered cured gum elastic

3.43

2.38

1.53

0.50

5.19

Beginning: A Department of Statistics, Malaysia

Adopted from Malayan Export Promotion Council

The other ground why hereafter of gum elastic industry is said to be bright is because of the recovery of the mechanization sector. This is because gum elastic is one of the major stuffs needed in car fabrication such as Surs, shrieking and tubing. With this, Malaysia ‘s natural gum elastic for 2010 is expected to increase by 16 per centum to one million metric tons beared by higher monetary values compare with 900,000 metric tons in 2009. The Director General of the Malaysian Rubber Board, Dr Salmiah Ahmad, said that the place of natural gum elastic for 2010 is believed to be positive because of the recovery and the turning demand in the planetary automotive sector. She besides claimed that the higher production of gum elastic estimated this twelvemonth would be due to the more attractive monetary value of natural gum elastic which would likely promote smallholders to tap for more latex. Besides, she added that during the first one-fourth of 2010, the normal monetary value of Standard Malaysian Rubber ( SMR20 ) , which is the major gum elastic class utilised in the fabrication Sur has increased more than twice to RM10,140 per metric ton from RM 4,990 per metric ton recorded in the first one-fourth of 2009. ( Beginning: The Star Online, April 13,2010 )

The addition in no-good monetary value presents which has benefited all rubber little holders is due to several grounds. First, with the increasing demand from China due to its rapid economic growing in that peculiar state increase the demand for natural gum elastic. Second, the addition in crude oil monetary value which later increase that monetary value of man-made gum elastic, which means the addition in monetary value of rivals of natural gum elastic. Third, the wintering seasons in the major state which produces gum elastic causes the stringency in gum elastic supply. Following, the cooperation and understanding between three major manufacturer states, Indonesia, Malaysia and Thailand named “ Tripartite Rubber Cooperation ” has balanced the universe ‘s demand and supply of gum elastic and go on to supply positive mentality toward the gum elastic market. The last factor which causes the addition in no-good monetary value is the instability in South Thailand which affects the production of gum elastic in that part to diminish. However, the addition in the gum elastic monetary value has made this industry attractive and this encourages little holders to tap more gum elastic. In add-on, harmonizing to economic experts which predict that the universe economic science will turn better particularly due to the recovery of car industry in China and India which would increase the demand of natural gum elastic production. It was given that in twelvemonth 1990, the monetary value of SMR20 is 214.00 sen/kg. The monetary value of SMR 20 has surged to 631.50 sen/kg. ( Beginning: Ministry of Plantation Industries and Commodities Malaysia, 2010 ) . In short, the addition in the gum elastic monetary value will do this industry more attractive to acquire involved in this sector. The tabular array below shows the recent monetary value of SMR20 in several provinces in Malaysia.

Table 3: Daily SMR20 Price from different provinces in Malaya

Date

States

Skrap monetary value ( sen/kg ) *

1 twenty-four hours

3 yearss

26/10/2010

Kelantan

541

563

26/10/2010

Terengganu

544

565

26/10/2010

Pahang

541

563

26/10/2010

Johor

536

557

26/10/2010

Negeri Sembilan

544

565

26/10/2010

Melaka

539

560

26/10/2010

Selangor

539

560

26/10/2010

Perak

539

560

26/10/2010

Kedah

536

557

26/10/2010

Perlis

536

557

26/10/2010

Pulau Pinang

536

557

Beginning: Rubber Industry Smallholders Development Authority

Next, the Economic Transformation Programme ( ETP ) is a programme to transform Malaysia into a high income economic system by twelvemonth 2020 by the Malayan authorities. ETP will convey back Malaysia ‘s place as the major manufacturer of natural gum elastic and reenforce its competitory exporter position in the international market. Under ETP, Malayan gum elastic sector can keep its hectarage at one million hectares. In add-on, there will be extra zone of one million hectares by working appropriate land bank in Sabah and Sarawak. There are besides replanting activities which increased to 40,000ha every twelvemonth twelvemonth from 20,000ha. Indeed, the ETP has three entry point undertakings ( EPPs ) for gum elastic, which including rubber country or output betterment, concentrating and rushing up in downstream merchandises and bring forth new merchandises aimed by 2020. ( Beginning: The Star Online, September 28,2010 ) .

In decision, gum elastic industry is an of import portion of agribusiness sector that should non be neglected. The related governments should concentrate on the research and development activities in the upstream sector of gum elastic in order to alleviate the job faced by the industry which is stringency in the gum elastic supply. Research and development activities should besides concentrate on issues faced by the manufacturer such as bettering the seting stuff, the demand to increase land and labour productiveness and besides bettering the acceptance of labour-saving engineerings to cut down the labour deficit job. The Malayan Rubber Research and Development Board ( MRRDB ) owned a UK based research and development centre named Tun Abdul Razak Research Center ( TARRC ) in the UK which has a research research lab to run in R & A ; D related to merchandise end-uses and possible markets. In the other manus, gum elastic industry should go on concentrate on the downstream merchandises and keep its current place as the top provider of scrutiny and surgical baseball mitt in the universe.

Policy Deduction

There are several establishment to assist in the development of gum elastic industry such as Malayan Rubber Research Development Board ( MRRDB ) . This is a authorities organisation which conducts overall control of the research, proficient development and promotional work in support of the Malayan natural gum elastic industry. The chief intent of MRRDB is to help in accomplishing the modernisation of the gum elastic industry with nonsubjective to collaborate and interact with all other national bureaus and responsible for research, extension, proviso of agricultural credits, processing and selling of gum elastic

Next, the Rubber Industry Smallholders ‘ Development Authority ( RISDA ) is a establishment which purpose at the modernisation of gum elastic smallholdings. RISDA is responsible for group processing development and established processing Centres in Malaysia. RISDA besides provides smallholders with installations to treat their natural stuffs. The maps of RISDA include pull offing the Rubber Industry ( Replanting ) Fund, control and run approved undertakings and strategies and implement all inventions from research that are appropriate to the smallholder sector ;

Malayan Rubber Development Corporation Berhad ( MARDEC ) is another establishment which engaged in the processing and selling of gum elastic of smallholders. MARDEC aims at bettering the quality of gum elastic and obtain premium monetary values for their production. The aims of MARDEC are to maximise the income of the gum elastic smallholders through the proviso of improved processing and selling installations and besides to upgrade the quality of gum elastic produced by smallholders into technically specified gum elastic.