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NR: Need for new strategies

NR: Need for new strategies

Dr Zairossani bin Mohd Nor has taken charge as Director General of the Malaysian Rubber Board (MRB) at challenging times. The country’s natural rubber production is falling, traditional rubber growers are shifting to palm oil and shortage of skilled labour has been the issue there. In an interview with Tyre Asia, he said intensive measures are being taken by the government and the Board to increase productivity. He also emphasised on the need for the NR industry be re-strategized and re-positioned in order to make full use of the opportunities to enhance the rubber industry’s contribution to
the national economy. Dr Zairossani also spoke about the new clones with increased productivity of 1,800 kg per hectare, automated rubber tapping system and other initiatives of the Board.

Most of your work is related to research and technology. How do you see the new responsibility?

As the custodian of the rubber industry in Malaysia, the responsibilities of the Malaysian Rubber Board (MRB) are wide-
ranging and include all aspects of the rubber industry from production to end-usage. At the production side, its socio-
economic importance cannot be denied as it sustains the livelihood of about 440,000 smallholder families. Thus the main
functions of the MRB are to increase the land productivity and to improve the income of smallholders in line with the
government’s aspiration outlined in the New Economic Model.

Under the Economic Transformation Program (ETP), the government has in precise terms stipulated the direction in
which the country will develop. The main thrust in this Economic Transformation Program is to create a high income society, sustainability and inclusiveness. The ETP has set the target to increase the per capita income from US$7,000 (RM23,000) to US$15,000 (RM49,500) by year 2020. Therefore, it is important that the Malaysian rubber industry move in tandem with government policy.

The rubber industry in Malaysian is considered a strategic sector, apart from providing livelihood to a good proportion of the working population. It also plays an important role as supplier of raw materials to the rubber and rubber-wood product
industries. Therefore, in order to match the ETP’s objectives of high income, sustainability and inclusiveness, it is important that the NR industry be re-strategized and re-positioned in order to make full use of the opportunities to enhance the rubber
industry’s contribution to the national economy. In this respect, various enablers have been provided by the
Government to overcome various issues and constraints facing the rubber industry in Malaysia. The R&D in rubber industry will continue to focus in improving the productivity through breeding for the upstream and value-added products in the downstream sector. Efforts are currently being carried out to increase smallholder’s productivity to 1,800 kg/ha in 2020 from the current 1,500 kg/ha through innovation of harvesting technology and to enhance smallholders income through integrated farming. In the mid and downstream sector, incentives will be provided to processors and manufacturers to undertake automation to improve their efficiency and competitiveness, develop advanced and cost effective
processing technologies, manufacture of high value-added products, diversify the products based and provide fiscal
incentives to plantations to convert areas less suitable for oil palm to be planted back to rubber.

Malaysia has dedicated research and development 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) with extensive
facilities in Malaysia including the Tun Abdul Razak Research Centre (TARRC) in Hertford, United Kingdom. Both
establishments have 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 research and testing centres for rubber products in the region.

What are the main challenges in the Malaysian rubber industry?

The Malaysian rubber industry is facing challenges that will constrain the growth of the industry in a significant manner.
Among the challenges are:

Declining area for rubber
Although demand globally has grown, Malaysia’s rubber plantation area has been gradually declining at a compound
annual growth rate of negative 1.6 percent over the last 10 years. This is largely due to the conversion of rubber land to
other crops and for other economic activities.

Production by smallholders
The smallholding sector is the main sector of the natural rubber (NR) industry and it is now shouldering the responsibility to supply raw materials both for export and for the downstream sector. Issues faced by the smallholder sector are of grave
concern to the industry, as rubber cultivation is and will continue to be predominantly by smallholders. Challenges faced by the smallholder sector are scattered holdings of uneconomic size, low yield level, low tapping days and an aged population.

Low productivity
Productivity remains low due to existence of old and low- yielding clones, planting of non-recommended clones and low
adoption of latest latex harvesting technologies and mechanisation.

Excess processing capacity
A raw material shortage by processing factories has resulted in increases in excess production capacity and a relatively high
processing cost. There has been a noticeable decline the production of NR from 1,283,632 tonnes in 2006 to 673,513
tonnes in 2016 a decline of 47.5%. Meanwhile there has been considerable growth in the imports of natural rubber from
520,481 tonnes in 2006 to 930,335 tonnes in 2016, a 79% increase. The imports are to meet the shortfall between demand
and domestic supply.

Shortage of labour
High turnover of labour, dependence on foreign labour as well as difficulties in attracting local labour.

Many small natural rubber producers are switching to palm oil. Do you see this as a growing challenge for NR?

Rubber smallholders are faced with fluctuating rubber prices and old age. Hired tappers will reduce income of the smallholders. Replanting old tress with new rubber clones will increase production as the new clones have been tested to bring about 1,800 kg per hectare per year. However, the smallholders may still face the same challenges with age and hired tappers. Switching to oil palm is logical for these smallholders as they will be able to start harvesting after three years. Indeed, this is agrowing challenge for the NR industry as Malaysia is also a consumer country which requires raw material for its downstream activities.

The Malaysian rubber industry largely depends on latex goods. Don’t you think such kind of dependency makes the industry more vulnerable? Are you exploring to develop new rubber products?

Latex goods products are the largest contributor to exports accounting more than 80% of the total Malaysian export and
Malaysia is the world largest producer and exporter of gloves and accounting 63% of world market share. Worldwide, the
demand for latex-based products is valued at RM75 billion and the industry grew at 8.5% annually. There are huge market
opportunities for latex-based products especially gloves due to growing expectation for better healthcare and increasing
investment on health reforms globally.

In line with global growth, our glove manufacturers have positioned themselves well. Recently, one of the renowned
glove manufacturers in Malaysian and the world’s biggest producer of nitrile glove introduced the world’s first non-
leaching antimicrobial nitrile examination glove. Besides latex- based products, Malaysia produce niche dry rubber products for engineering applications such as structural bearings and fenders.

What efforts are being taken to increase yield and commercialization of new rubber products?

The government is giving grants under the NKEA (National Key Economic Area) to do replanting and new planting with high yielding clones. The new clones have been tested to produce at least 1,800kg per hectare per year. Ongoing technical advice and training on good agricultural practice can also bring higher yield as not all smallholders are using fertilizers as this is additional cost and the price of rubber gives no room for additional cost of production. Separate projects by MRB as models for indigenous Malaysians (Rubber for Natives Project) accounts for 700 hectares are closely monitored in production and yield. The Rubber for Natives Project has, to some extent, assisted MRB in terms of transfer of technology through on-going research with results that will be used extensively by the target group which in turn will be able to provide benefits to all.

Under the National Key Economic Areas for Rubber, strategic programs have been identified to spur GNI contribution from the Malaysian rubber industry. These programs are being undertaken and headed by MRB with concerted effort with
relevant industry players, the Ministry of Plantation Industries and Commodities, government linked companies and agencies. Among the efforts are to ensure the availability of NR as industry source of materials, thus over 1 million hectares of rubber areas are maintained with the target of production of 1800 kg/ha/year, the sustainability of the latex products industry in Malaysia and the push towards speciality rubbers for various product application.

MRB is well known as a technology & knowledge provider for the rubber industry, providing effecting technology transfer to the industry and having a respectable consultancy and industry services for rubber. MRB has taken the approach of producing commercial prototype products in collaboration with the products manufacturer, and market the products to potential customers. New products from MRB geared on the technology established by MRB on two speciality rubbers, trademarked as Ekoprena and Pureprene. MRB looks at new products to penetrate new markets, thus, increasing new demand of natural rubbers that eventually contributes towards better return to rubber smallholders. Latest from MRB is the technology for rubberised road pavement, green tyre for new passenger, green tyre retread, various non tyre products from MRB speciality rubbers, including shoes, anti-fatigue mat, flame retardant mat, interlocking sport mat, foam products, water-based adhesives, water colours, sound deadener and various engineering products for automotive, structural and civil applications. These products either are substituting synthetic materials or offering better performance such as better mileage for tyres, oil resistivity, flame retardant sound proofing and other functionalities such as anti-fatigue, memory foam. I am pleased to inform Tyre Asia that these MRB new products have received great review for our collaborators, and are being taken up by them towards commercialization.

Labour is a growing challenge and the same time the government is pushing for automation. However, around 95% of NR producers are smallholders which are hard to be convinced. So how do you promote automation for tapping in this situation?

Labour shortages is one of the issues confronted by the rubber industry which could be due to various factors such as working condition and better jobs opportunities in the other economic activities. About 40% of plantation employees are foreign workers. In the smallholding sector, however there was no official statistics that could be referred to. However, based on MRB observation through survey on cost of production in individual smallholdings, number of foreign workers in the smallholdings is insignificant which is around 2-3 per cent.

The latest MRB technological innovation such as automated rubber tapping system (ARTS) is expected to help the rubber
growers particularly smallholders to improve productivity and overcome the shortage of labor. To promote automation in
tapping, MRB is exploring the benefits automation in terms of optimizing the total supply chain of rubber from productivity and quality improvement as well as value-added products and overall cost reduction.

What are the initiatives of the government to promote the Malaysia rubber industry?

Malaysia is the fifth largest NR producing country and has an advantage of having easier access to 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.

In ensuring adequate supply of NR for local consumption as well as export market, MRB has implemented strategies like
replanting program, improved exploitation techniques, enhance production efficiency through consolidation of smallholdings and improve transfer of technology delivery system through better inter-agency cooperation.

The strategic geographical location, which is close proximity to both Thailand and Indonesia, had reduced importation cost. In addition, NR imports into Malaysia are exempted from duty. Both factors benefited Malaysian downstream activities, which could produce end products at competitive price.

R& D and the Future
MRB is approaching the shift in R&D through two main methods. The first method will be through extensive research and
development efforts, beginning with the creation of the integrated rubber processing centre in MRB Research Station in
Kota Tinggi. The first of its kind in the world, it would propel MRB to a global standard of excellence in rubber research.
Within the grounds of the 57,000 square foot complex are the latex processing centre, the specialty rubber processing centre, the bio processing centre, and the effluent treatment plant.

What makes MRB’s research so ground-breaking is the fact that they are focusing their efforts on developing the different
properties of natural rubber, which will yield more value from the raw material. These kind of developments have not been
seen before in the Malaysian rubber industry and we are looking forward to creating more value from the production of rubber.

Meanwhile, on the development of green rubber in the rubber industry, namely Ekoprena and Pureprena which are advanced, chemically modified derivatives of natural rubber. Green rubber possesses superior properties for improved processing technology and they are also environmentally-friendly. Besides developing green rubber, MRB has also honed in on maximising the use of the non-rubber components found in natural rubber, like proteins and ‘quebrachitol’, which is a derivative of latex.
Proteins and quebrachitol are materials extracted from natural rubber which can be used in the medical and pharmaceutical
industries in the future.

Clustering of Smallholders

The second method by which MRB will approach the shift in the industry will be through the clustering of the rubber
smallholders across Malaysia through vertical integration. MRB’s plan is essentially to integrate smallholders into the business side of rubber production, as opposed to the role they play now in the rubber supply chain, which is one of a mere supplier of raw rubber material. We want to get smallholders involved in the business aspect of rubber by giving them an opportunity to produce rubber on their own plantations. They can then dictate the price at which to sell that rubber back into the market.

Integrating smallholders into the business system would ultimately mean that they will be involved in the real rubber
processing activities and can therefore create their own self- sustaining rubber factories within their plantation areas. The
point of clustering the smallholders is to move them up the rubber supply chain and increase their participation in the
rubber production process. Currently, their position within the industry is one without any bargaining power or power to
negotiate. We aim to change that by allowing them to produce and sell their own rubber.

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