RJA Malaysian Rubber Industry 2011 December

Malaysian rubber Industry

The ergonomics for a leading position Currently the third largest natural rubber (NR) producer in the world, Malaysia held top billing in the mid-1980s until Thailand took over the slot, with Indonesia trailing behind. Angelica Buan went behind the scenes of the recently held MPlas exhibition in Kuala Lumpur, Malaysia, to find out how the country intends to reclaim its leading position.

Getting back to the top RM53 million to Sarawak, the biggest sum for any Notwithstanding the fact that Malaysia’s slide from state, to fund the 2012 re-planting programme. Risda the top spot was due to a commodity shift to palm oil is a statutory body under the Ministry of Rural and that provided higher returns, interest also intensified Regional Development. on downstream activities, further strengthening the Currently, Sarawak’s Betong district has seen soaring rubber activity with the establishment of a segment. processing plant by China’s Guangken Rubber and the Malaysia now produces 1 million tonnes/year of NR tapped from its 1 million ha of rubber plantations, planting of rubber trees on 11,000 ha of land. trailing behind Indonesia and Thailand, which produce Land shortage a problem in the region 2.9 million and 3.5 million tonnes/year respectively.

While Malaysia has found a solution to the scarcity of On the export front, Malaysia’s rubber products land, NR production in Thailand is stagnating due to account for 2% of the country’s total exports. the shortage of land, said Kong. “In Indonesia, most of But reclaiming the top spot is the sector’s goal now, said Kong Ping Yee, Executive Director of the the players are Malaysian companies,” he said, adding Malaysian Rubber Products Manufacturers’ Association that large tracts were still available in Kalimantan, (MRPMA), speaking at the recent MPlas exhibition.

Java and Sumatra.

“We see this target as something realistic, especially Meanwhile, the land situation is becoming tighter in India, the world’s fourth largest rubber producer, with more new rubber plantations coming up. Although said a spokesperson from the Indian Rubber Board at at third position, in terms of production, we are quite MPlas. strong in downstream activities,” Kong added.

A c c o rd i n g t o K G Vi j a y a k a v a n a r, t h e M a n a g i n g Speaking at MPlas, Malaysia’s International Trade Director of Kavanar Latex, a processor and exporter and Industry Deputy Minister Datuk Jacob Dungau of NR, the shortage is an outcome of many factors.

Sagan also affirmed that the government is seriously “For one, with the growing population land is being rekindling its interest in the sector with its aim to converted into housing areas. plant more rubber trees in T h e r a t e t h i n g s a re g o i n g , l a n d Sabah and Sarawak as well as to implement new technology In fact, RM140 million has a v a i l a b i l i t y w i l l b e r e d u c e d b y half,” he said. to enhance the rubber tapping process. been allotted towards rubber India’s traditional rubber tracts in Kerala and Tamil Nadu states In fact, RM140 million has been allotted towards rubber have already been exhausted and planting programmes in planting programmes in the planting has been extended to country’s 2012 national budget. the country’s 2012 national the Northeast as well as in West This is expected to benefit Bengal, Goa and Andhra Pradesh. some 20,000 smallholders who Plus, the country is moving further budget. will be paid about RM14,000/ ashore to Africa, which due to its ha each for the replanting, thus eradicating rural good climatic conditions allows for rubber cultivation. poverty.

According to the All India Rubber Industries Association, a deficit in NR output is expected from In news reports, Sarawak’s Rubber Industry Smallholders’ Development Authority (Risda) Director, 175,000 tonnes in 2012 to 687,000 tonnes in 2015 and Sopian Abu Bakar, said the government had allocated 840,000 tonnes by 2020.

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3 rubber journal ASIA • DECEMBER 2011

Malaysian rubber Industry 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 shortages 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. ◆