Getting back to the top-Notwithstanding the fact that Malaysia’s slide from the top spot was due to a commodity shift to palm oil that provided higher returns, interest also intensified on downstream activities, further strengthening the segment.
Malaysia now produces 1 million tonnes/year of NR tapped from its 1 million ha of rubber plantations, trailing behind Indonesia and Thailand, which produce 2.9 million and 3.5 million tonnes/year respectively. On the export front, Malaysia’s rubber products account for 2% of the country’s total exports. But reclaiming the top spot is the sector’s goal now, said Kong Ping Yee, Executive Director of the Malaysian Rubber Products Manufacturers’ Association (MRPMA), speaking at the recent MPlas exhibition. “We see this target as something realistic, especially with more new rubber plantations coming up. Although at third position, in terms of production, we are quite strong in downstream activities,” Kong added.
Speaking at MPlas, Malaysia’s International Trade and Industry Deputy Minister Datuk Jacob Dungau Sagan also affirmed that the government is seriously rekindling its interest in the sector with its aim to plant more rubber trees Sabah and Sarawak as well as to implement new technology to enhance the rubber tapping process.
In fact, RM140 million has been allotted towards rubber planting programmes in the country’s 2012 national budget. This is expected to benefit some 20,000 smallholders who will be paid about RM14,000/ha each for the replanting, thus eradicating rural poverty. In news reports , Sarawak ’ s Rubber Industry Smallholders’ Development Authority (Risda) Director, Sopian Abu Bakar, said the government had allocated RM53 million to Sarawak, the biggest sum for any state, to fund the 2012 re-planting programme. Risda is a statutory body under the Ministry of Rural and Regional Development.Currently, Sarawak’s Betong district has seen soaring rubber activity with the establishment of a processing plant by China’s Guangken Rubber and planting of rubber trees on 11,000 ha of land.
Land shortage a problem in the region– While Malaysia has found a solution to the scarcity of land, NR production in Thailand is stagnating due to the shortage of land, said Kong. “In Indonesia, most of
the players are Malaysian companies,” he said, adding that large tracts were still available in Kalimantan, Java and Sumatra.
Meanwhile, the land situation is becoming tighter in India, the world’s fourth largest rubber producer, said a spokesperson from the Indian Rubber Board at MPlas. According to KG Vijayakavanar, the Managing Director of Kavanar Latex, a processor and exporter of NR, the shortage is an outcome of many factors. “For one, with the growing population land is being converted into housing areas . The rate things are going, land availability will be reduced by half,” he said.
India’s traditional rubber tracts in Kerala and Tamil Nadu states have already been exhausted and planting has been extended to the Northeast as well as in West Bengal, Goa and Andhra Pradesh. Plus, the country is moving further ashore to Africa, which due to its good climatic conditions allows for rubber cultivation.
According to the All India Rubber Industries Association, a deficit in NR output is expected from 175,000 tonnes in 2012 to 687,000 tonnes in 2015 and 840,000 tonnes by 2020.
China, the largest NR consumer in the world, is not spared from the limited rubber plantation conundrum. This is because the planting is concentrated in remote mountainous and undeveloped areas. And in newly opened areas, the extreme weather conditions render poor maturity conditions for the rubber trees.
Suppliers secure raw materials-To secure its supply of latex, one Malaysian producer is buying up land for rubber planting in Malaysia, Cambodia and Indonesia. The world’s largest glove producer, Top Glove, expects to develop its own rubber plantations to meet its requirements, the company’s Assistant Manager Zulazmi Zakiuddin said at the show.
To expand its production, last year, the company invested RM100 million in its five existing plants, four of which are in Malaysia and one in Thailand. According to Zakiuddin, the company anticipates a higher
global demand for its gloves, especially in the healthcare sector, and a steady supply of raw materials is required. Moreover, the company, which encountered a profit docking to RM26.1 million in the fourth quarter of the fiscal year, from RM45 million in the previous year, due to higher latex costs and weakened US dollar viz the ringgit, views its expansion into plantations as a buffer from increases in NR prices.
Meanwhile, Malaysian synthetic rubber producer Hateg Corporation has partnered with Chinese companies Mazhongdu International and Hainan Baisha Industrial in a RM3.5 billion rubber plantation project in Indonesia. The first phase will inject an investment of RM40 million and cover 1,000 ha in Kalimantan, followed by a further RM40 million over five years to plant 40,000 ha. The joint venture partners are also in discussions to expand the plantation to 200,000 ha, which will bring the total investment to about RM8 billion.
Sideswiping the shortage-Countering NR shortage is crucial now that the higher fuel prices are affecting demand for synthetic rubber, which determines the price cap for NR. The disproportionate NR supply and demand, although causing alarm in the sector, also leads to a push in innovation and technology to improve capacities and provide stop-gap measures for shortages.
Malaysia is responding by introducing clones to expedite NR production, said the Rubber Research Institute (RRI). At MPlas, it was promoting a new automated rubber tapping machine to improve latex tapping.
Another way of countering the shortage is through recycling, according to Indonesian reclaimed rubber specialist, PT Pura Agung, which offers a solution through recycling used rubber scrap like tyres and bladders that would otherwise just end up in landfills.
Managing Director Robert Mulyono Putra said that the company continues to innovate solutions to abate the wastage problem and has already benefited various rubber sub-sectors including, but not limited to, automotive tyres, rubber sheets, adhesives, footwear, fabrics and flooring.
The company is currently improving further properties of its product offerings in terms of tensile strength, elongation and surface smoothness. “By 2012, we will launch a new product,” said Robert,adding that the company is also making headway in the Malaysian market. To date, Pura Agung exports to Singapore, Thailand, India and the Philippines as well as the US, South America, Turkey and Europe.
Top Glove, which currently exports to 850 countries – with most of its clients coming from Europe, also shares the recycling concept advantage. According to Zakiuddin, the company sells its waste glove scraps to local companies in Malaysia. (PRA)
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