Malaysia is expected to produce about two million tons of natural rubber by 2020, and the industry is expected to contribute MYR52.9bn ($16.8bn) in terms of Gross National Income (GNI). What is being done to achieve this lofty goal?
AHMAD: In 2010, the Government decided to place the rubber industry under the Economic Transformation Programme (ETP), listing the rubber industry as one of the 12 National Key Economic Areas (NKEAs) after considering the potential strength of the downstream rubber industry. In addition, the rubber industry is also a source of income to more than 400,000 smallholders. Realizing the importance of the rubber industry and its contribution to the smallholders, four Entry Point Projects (EPPs) have been identified to further strengthen the Malaysian rubber industry. The four EPPS are: EPP-1, increasing average national rubber productivity to 2,000 kg/hectare/year by 2020; EPP-2, ensuring the sustainability of the upstream rubber industry; EPP-3, increasing world market share of latex gloves to 65% by 2020, which would be worth MYR30bn ($9.4bn); and EPP-4, commercialising Ekoprena and Pureprena.
By implementing the four EPPs, the contribution of the Malaysian rubber industry to Gross National Income (GNI) is expected to rise to MYR52.9bn ($16.8bn) by 2020 from MYR18.5bn ($5.8bn) in 2009. Based on the NKEA, the total production of natural rubber is expected to increase to 2 million tonnes, with a productivity of 2,000 kg/hectare/year in 2020. Total rubber planted area is expected to increase to 1.2m hectares, while the total export value of natural rubber and rubber products would amount to MYR78bn ($24.5bn). In order to increase and maintain the rubber planted area at 1.2m hectares, a policy to replant 40,000 hectares per year (25,000 hectares in Peninsular Malaysia; 10,000 hectares in Sarawak; and 5,000 hectares in Sabah), up from the current 20,000 hectares per year, and a new planting of 30,000 hectares per year in Peninsular Malaysia, Sabah and Sarawak has begun in 2012.
As for EPP-3, the project is to increase the market share of latex-based products from 62% to 65%. EPP-4 is to commercialize Ekoprena and Pureprena, advanced rubber for engineering and eco-efficient applications. In 2009, our GNI was MYR18bn ($5.7bn). By implementing projects number one and two, we can increase GNI by an additional MYR8bn ($2.5bn). By implementing project number three, which is to increase the market share of latex-based goods, we will increase our GNI by an additional MYR20.7bn ($6.6bn). Lastly, by implementing project number four, our GNI will increase by an additional MYR1.3bn ($400m). If we do nothing, the organic growth of the industry is about MYR6bn ($2bn). If you add all of that up, that will give us MYR52.9bn ($16.8bn) come the year 2020.
What impact do you expect the Automatic Rubber Tapping System (ARTS) to have on Malaysiaâ€™s rubber industry?
AHMAD: If you were to look at the current way of doing things, we have people going to the fields to tap and collect rubber. Because they are subject to the weather, so they go at a time most convenient to them. What happens is that the number of tapping days cannot be explicitly determined because it dependent upon the weather. The smallholders will not produce the latex that the downstream industry needs because it is too hot for them to carry. The pressure inside the tree when latex is highest occurs between 2:00am and 3:00am, an inconvenient time for smaller-holders to tap. A new method needs to be introduced as an alternative because latex harvesting relies entirely on the tapping knife and skills developed over the years by the tappers. Based on that issue, research was initiated combining the expertise in engineering and agriculture to develop an automatic tapping machine that is economically viable, technically feasible, and socially acceptable. The Automatic Rubber Tapping System or ARTS, is an automatic latex harvester attached to the tree with the concept of bark incision. The machine is capable of performing the tapping task automatically according to the programmed time.
If the smallholders were to have an Automatic Rubber Tapping System that is able to be attached to every single rubber tree, they can program it so that it will tap exactly at the highest pressure, which would increase productivity and reduce labor. As the latex is flowing out, it is able to be channeled into a collection system. Therefore, we are not collecting the solid but instead we are collecting the latex that the downstream industry wants. Because a machine is not subject to weather, we would be able to tap 365 days per year. Currently, the smallholders are tapping between 90 and 120 days per year. With the Automatic Rubber Tapping System, we can actually tap every day when the tree is at highest productivity in order to collect the latex. This helps to enhance the rubber industry in Malaysia by reducing the labor, increasing the productivity, and producing the right raw materials to support the downstream industry.
The contribution of the Malaysian rubber industry to Gross National Income (GNI) is expected to rise to MYR52.9bn ($16.8bn) by 2020 from MYR18.5bn ($5.8bn) in 2009.
When do you expect the Automatic Rubber Tapping System to be available for commercial use?
AHMAD: We hope to launch this new technology by October, but the launching is what we call a commercial trial. Once we have a new technology, we have to test it out first. We hope to launch for commercial trial this October and hopefully after one year, we will get everything perfect, and it will then be available for commercial use.
What opportunities exist for foreign investors?
AHMAD: The Malaysian Investment Development Authority (MIDA) provides incentives such as pioneer status and investment tax allowance for investors. In Malaysia, we try to be business friendly. Should an investor require any kind of incentive from Malaysia, we ask you to please bring it to our attention. I am sure MIDA will be happy to address your needs. When I talk about the downstream, I am talking about solid rubber and latex. When it comes to solid rubber, we want to produce Ekoprena and Pureprena, which is meant for the green products. So we would like investors to come and work with Malaysia to produce green products, like green tires. Malaysia is not a big consumer, so it is good for the country to work with investors in developed countries and where potential consumption is high. Everyone talks about wanting green products, but often times they are not willing to pay for them. So it is good if we are able to work with foreign investors to develop these new green products, and they should receive investment incentives that I mentioned just now. On the latex side, we have another strong agency that we work with. The Malaysian Rubber Export Promotion Council (MREPC) currently promotes latex-based goods and will be concentrating on both solid-based and latex-based goods in the future. They also provide incentives for people to invest in Malaysia, especially in latex-based goods.