MRB on the road to pumping up the Malaysian rubber sector

Dr-SalmiahRJA recently had the opportunity to catch up with Malaysian Rubber Board (MRB) Director-General Datuk Dr Salmiah Ahmad and asked her a few questions on the industry in the country. Below is an excerpt of the interview.

RJA: Please provide an update on the latest rubber yields and how MRB intends to increase these.

Datuk Salmiah: Based on the survey conducted by Malaysian Rubber Board (MRB), the average rubber productivity for 2011 is approximately 1,500 kg/ha/year, 1.4% more than 2010.

To increase the national productivity from its current level to 2,000 kg/ha/year and sustainability of the upstream sector, MRB will ensure that all nurseries have sufficient planting material of high yielding clones to meet the replanting target of 40,000 ha from current 20,000 ha/year and a new planting of 30,000 ha/year. Appropriate programmes have been implemented by relevant implementation agencies to the smallholders who are the backbone of this industry to adopt latest latex harvesting techniques and Good Agricultural Practices (GAP).

RJA: What R&D measures are being undertaken by MRB to improve rubber yields and clones?

Datuk Salmiah: MRB through the upstream R&D activities has given special priority to increase productivity through breeding and selection, agronomy and new latex harvesting techniques to meet the demand by the industry.

MRB has developed new clones and technologies to improve yield and production as well as economic return of rubber plantation. The major research areas undertaken are in the breeding programmes with the aim of producing clones that have the potential annual yield of more than 3,000 kg/ha. The success of the rubber breeding programme can be seen from the multi-fold yield increase, from about 500 kg/ha/year for unselected seedlings to about 3,000 kg/ha/year in the modern clones.

The objective to improve rubber yield was also the main focus under Rubber NKEA whereby the Entry Point Projects (EPPs) 1 goal is to Increasing Average National Rubber Productivity to 2,000 kg/ha/year by 2020. Under this EPP, numerous efforts have been outlined to crystallise the aim of increasing rubber productivity.

Among the efforts are establishing the Malaysian Rubber Budwood Centre (MRBC) in Peninsular Malaysia, Sabah and Sarawak. The purposes of establishing MRBCs are to ensure adequate supply of planting materials by licensed nurseries based on MRB’s recommendation clones. Currently, two MRBCs have been developed. These are located in Kota Tinggi, Johor, and Similajau, Sarawak, with the areas of 27 ha and 30 ha respectively.

In the second phase of developments, the two existing MRBCs will be extended and there are also two additional MRBCs to be developed at Bukit Kuantan, Pahang, and Penampang, Sabah. The total of MRBC areas under the second phase development are about 96.6 ha.

Apart from this, R&D also has been carried out with the purposes to identify the type of clones being planted scientifically. This could be seen through the introduction of i-Klon and Traceability Program. This involved tagging of planting material. i-Klon allowed the process of clone inspection to be done through an innovative system and traceability is ensured that only high yielding and quality planting material are planted as all planting material are tagged with a barcode.

RJA: Please provide an outline of the planted area and expansion plans (new areas for replanting).

Datuk Salmiah: Planted area under rubber continued to decline and in 2011, the figure stood at 1.02 million ha. Replanting with high-yielding clones and good agriculture practices will play an essential part in making Malaysia a leading NR producing country.  Replanting is a means of improving the economic well-being of the smallholders and also ensuring a sufficient supply of raw materials for the industry.

Besides the decreasing acreage, Malaysia’s average yield per hectare stands at about 1,500 kg, which is much lower than other major producing countries and this has led to a decline in total production.

MRB has charted a roadmap through the Malaysian Rubber Industry Strategies to sustain the viability and enhance competitiveness of the Malaysian rubber industry by increasing production to 1.8 million tonnes with a productivity of 1.8 tonnes/ha/year by 2020.

In October 2010, the rubber sector was included in 12 sectors in the National Key Economic Area (NKEA). There are four Entry Point Projects (EPPs) under NKEA, one of which is “Ensuring Sustainability of The Upstream Malaysian Rubber Industry”.  Under this EPP, total rubber area in this country will be increased to 1.2 million ha by 2020 from the current area of 1.02 million ha, of which 1 million ha will be in production.

To achieve this target, there is a policy to replant 40,000 ha/year (25,000 ha in Peninsular Malaysia, 10,000 ha in Sarawak and 5,000 ha in Sabah) from current 20,000 ha/year and a new planting of 30,000 ha/year in Peninsular Malaysia, Sabah and Sarawak effective from 2012.

Meanwhile, the government has increased the replanting grants from RM7,000/ha to RM9,230/ha in Peninsular Malaysia with effect from 2011 and this grant was extended to Sabah and Sarawak at the rate of RM14,000/ha and RM13,500/ha respectively. In addition, the government via various agencies like MRB and RISDA is committed to ensuring an adequate supply of planting materials for the industry. MRB has established and managed the Malaysian Rubber Budwood Centre (MRBC) of recommended Hevea clones with the aim to produce an adequate quantity and regulate the supply of quality planting material to the commercial nurseries for fulfilling the requirement of replanting and new planting programmes.

RJA: How does MRB promote the local industry in the export markets?

Datuk Salmiah: As part of the export strategy to encourage investment and increased sales of Malaysian rubber products that are currently available, MRB organises and manages Malaysian Rubber Industry’s participation in Technical Missions overseas.

MRB annually organise a number of technical missions to major existing and emerging markets. By participating in these missions, Malaysian rubber companies can develop business contacts and network with foreign officials, business leaders and international buyer.

During the mission, MRB will organise special meetings with counterparts in order to explore and identify trade opportunities for selected products and services.  In order to display and disseminate information on Malaysian rubber and rubber products and services, MRB will take part in selected trade fair/exhibitions. This is as an alternative and cost-effective way for Malaysian rubber exporters to promote their products and services.

RJA: What are the challenges and opportunities that lie ahead for the Malaysian rubber sector?

Datuk Salmiah: Several challenges will need to be addressed to ensure the sustainability of the industry. MRB recognises the importance to review and to re-position the industry in order to bring the rubber industry to the next level of development in the coming decade. As such, a series of brainstorming sessions and discussion on the issues and challenges have been held.

Among the issues and challenges identified include:

a)      The continued decline in rubber area since 1982 due to conversion of rubber area to other crops and economic activities that promise better returns.

b)      Lower productivity compared with other major producing countries and this has led to loss in competitiveness.

c)       Insufficient supplies of domestic latex concentrate and as a result, the downstream sectors continue to depend on the imports of latex, which may place the domestic latex-based industries in a precarious position, especially on the security of supply.

d)      Low level of adoption of mechanised and automatic system in rubber plantations and processing sector, thus leading to a high dependency on foreign labour.

e)      Narrow product-based as 80% of the exports are latex-based products such as gloves, condoms, catheters and so on.

To ensure that the above challenges and issues are well addressed, all R&D activities undertaken must be market driven with the necessary support services provided for the development of the Malaysian rubber industry.

For instance, for the Malaysian rubber industry to remain competitive, the main priority of R&D in the upstream sectors will be focussed in the areas of breeding, harvesting and Good Agricultural Practices (GAP) to improve productivity and ensure an adequate supply of raw materials to the downstream sector. The transfer of technologies by the implementing agencies such as FELDA, FELCRA, RISDA and state development agencies will be improved further by enhancing networking in rubber community.

In the processing sector, R&D on advanced rubber processing through automation will be emphasized to minimise the cost of energy and resources. Higher processing and labour cost makes it less competitive compared with its counterparts in other producing countries.  In addition, priority also would be given to ensure rubber processing is sustainable and environmentally-friendly that meets the stringent environmental regulation. Meanwhile, in the downstream sector, R&D in areas related to rubber in engineering applications relating to seismic and vibration isolation, marine, railways industry and automotive are ongoing to meet the needs of the industry.

Meanwhile, amongst the opportunities that exist in rubber industry, which are attractive to investors are:

i. Malaysia is the third largest NR producing country and has an advantage of having easier access to a reliable source of raw material, which is instrumental in ensuring Malaysia continues to be the world’s competitive manufacturer of rubber and rubber products.  Malaysia is one of the largest producers and exporters of top quality, technically specified rubber. This country is also a competitive source of raw materials synthetic elastomers and chemical suppliers. These have helped the rapid growth of the Malaysian rubber product manufacturing industry.

ii. In ensuring adequate supply of NR for local consumption as well as export market, MRB has implemented few strategies like replanting programmes, improved exploitation techniques, enhanced production efficiency through consolidation of smallholdings and improved TOT delivery system through better inter-agency cooperation.

iii. Besides local supply, rubber is also easily available from neighbouring countries like Thailand and Indonesia. Due to the expansion in rubber downstream activities and increasing demand for Standard Malaysian Rubber (SMR), NR imports increased from over 500,000 in early 2000 to about 670,000 in 2011. The strategic geographical location, which is close proximity to both Thailand and Indonesia, had reduced import cost. In addition, NR imports into Malaysia are exempted from duty (0%). Both factors benefited Malaysian downstream activities, which could produce end products at competitive price.

iv. Malaysia has dedicated R&D support for development of the rubber industry. This country has the world’s largest single research establishment dedicated to rubber – the Malaysian Rubber Board (MRB). The two laboratories are the Rubber Research Institute of Malaysia in Kuala Lumpur and the Tun Abdul Razak Research Centre (TARRC) in Hertford in the UK. Both establishments have had at their disposal throughout their existence a pool of the highest calibre, internationally recognised researchers and experts. In addition, the Rubber Technology Centre of the MRB has become one of the principal testing centres for rubber products in the region.

v. Continued support from the government in promoting development of Malaysia’s resource-based industries to broaden the country’s sources of growth. In addition to fiscal incentives that are currently available for promoting products and activities, the government has further fine-tuned the incentives to promote specific activities among which include rubber products industry. To further encourage investments in resource-based industries, local companies that reinvest to expand their projects are given incentives such as Pioneer Status or Investment Tax Allowance, Re-Investment Allowance and many more incentives offered by Malaysian Industrial Development Authority (MIDA).

vi. The establishment of Malaysian Rubber Export Promotion Council (MREPC) to undertake the market promotion of Malaysian rubber and rubber products in the world markets. MREPC has set up offices in the US and Europe to serve as a centre of information on Malaysian rubber and rubber products for the American and European public and end-users, and to increase trade opportunities in that markets for Malaysian rubber product manufacturers. Apart from carrying out promotion activities, MREPC also provides financial programme (Incentives) to assist aspiring and current exporters of Malaysian rubber products to promote their products in the international marketplace.