Malaysia exports approximately 1.1 million tonnes of Standard Malaysian Rubber (SMR) products annually, bringing in between RM8 billion and RM9 billion in export revenue.
Malaysian Rubber Board (MRB) Managing Director Datuk Dr. Zairossani Mohd Nor said there was no issue in selling SMR products as they were highly sought after for its quality.
According to him, could potentially produce about 1.5 million tonnes of SMR, which is made from natural rubber.
Speaking at the Standard Malaysian Rubber Bulletin No 7, he said Malaysia currently only produce an estimated 700,000 tonnes of natural rubber (NR) while the balance was imported.
Despite the high demand (for SMR) and lack of local production of natural rubber, prices have remained sluggish due to external factors like higher stocks and excess production in other producing countries.
At the moment,stock is overhanging by 2 million tonnes in the market due to excess production, Dr. Zairossani said.
He also said in 2005 and 2006 when prices were higher, traditional producers like Thailand, Indonesia and Vietnam opened up land under rubber cultivation, totalling one million hectares.
“Non-traditional producers like the Ivory Coast, Cambodia and Laos, also joined the bandwagon to produce natural rubber and this resulted in excess supply.”
He adding that Malaysia exported about 70% of its SMR production to China but the ongoing trade war between the republic and the United States complicated the manufacturing sector, and in turn affected demand for SMR.
While saying that rubber prices traditionally tracked developments in crude oil prices, the recent trend was not truly reflective of the actual situation.
Dr. Zairossan also said that Malaysia would work together with the International Tripartite Rubber Council, which would meet in December to propose a supply management scheme by imposing production quotas for major producing countries in an effort to reduce the surplus and shore up prices.
Rubber smallholders accounted for about 90% of the natural rubber produced in Malaysia.
But, when prices are low, only 20-30% of rubber smallholders continue tapping their rubber trees while about 55% of them totally abstain from doing so as they feel it’s not worth their while, and turn to alternative sources for income.
Deputy Minister of Primary Industry Datuk Seri Shamsul Iskandar Mohd Akin said starting in 2019, the government would raise rubber production incentives for all rubber tappers from RM2.20 to RM2.50 per kg, to make up for the shortfall in prices.
Smallholders with an average rubber smallholding of two hectares will receive an income of about RM1,100 per month, if the rubber production incentive is RM2.20 per kg.