The Sabah Rubber Industry Board (LIGS) today denied Warisan Sabah’s allegation that the raw rubber cess imposed on raw unprocessed rubber taken out of the state as why the rubber prices in Sabah has been low.
It said in a press statement that there was no export duty for processed rubber exported out of Sabah and that smallholders did not pay this cess. Abolishment of this tax, it said, would only benefit factories outside the state.
LIGS was responding to a challenge by Warisan vice-president Junz Wong to abolish “the 10% export tax and allow smallholders to export their products directly to Sarawak or other places”.
Currently, smallholders were forced to sell to LIGS and could not export their products directly, he had said.
Wong had claimed that the 10% export tax was the reason for the exploitation of rubber smallholders and that this was one of the reasons why Sabah rubber prices were lower.
LIGS said the lower farm gate prices of rubber in Sabah compared with that of Peninsular Malaysia were due to logistical reasons and had nothing to do with the raw rubber cess.
“The raw rubber cess is to ensure that all raw rubber are processed in the state and not sent to Peninsular Malaysia or Sarawak for processing to protect the local industry.
“It is the policy of the government to process raw rubber in the state to produce value added SMR that can be exported to earn foreign exchange for the state as well as to provide employment to Sabahans rather than merely exporting the raw unprocessed rubber.”
Wong had also urged LIGS to reveal how it determined the dry rubber content (DRC) of the smallholders’ products, which determined their prices.
He had said there were claims that the DRC content of rubber sheets in Sabah were as high as 70-80% but that smalholders were usually paid the price for 50% DRC. Wong, however, had not said who had made those claims.
To this, LIGS said the DRC of rubber was always determined by standard laboratory testing and also by actual output achieved after processing of the raw rubber from the factory.
“As LIGS buys weekly, this means smallholders sell their raw rubber which is one day to six days old. The actual average DRC of unsmoked rubber sheets in Sabah is only 55-65% and not 70-80% as claimed by Warisan Sabah while for cuplumps, the actual DRC is only 48-60% .”
LIGS said with efficient management and cost cutting measures, it had been able to build up a sufficient revolving fund to assist smallholders.