SUSTAINABILITY OF RUBBER INDUSTRY IN MALAYSIA: ECONOMIC AND SOCIAL PERSPECTIVE

Transcription

1 SUSTAINABILITY OF RUBBER INDUSTRY IN MALAYSIA: ECONOMIC AND SOCIAL PERSPECTIVE Muhamad Thalhah Ab Karim Paper Presented at IRRDB-CATAS International Rubber Conference October 2010, Hainan PRC

2 CONTENT 1.Concept of Sustainable Development 2.Status of Malaysian Rubber Industry 3.Way Towards Industry s Sustainability 4.Conclusion

3 CONCEPT OF SUSTAINABLE DEVELOPMENT IN MALAYSIA Meets present needs without compromising future generations: -zero burning -use of organic fertilizer -cover crop -composting -soil and water conservation Environment Increase income of rubber growers and remunerative return on investment Economic Social Rubber production and processing practices are required to carry out in a socially acceptable way.

4 STATUS OF THE MALAYSIAN RUBBER INDUSTRY

5 RUBBER PLANTED HECTARAGE Year Planted Hectarage ( ' 000 ha ) Estate Smallholding Total Area , , , , , , , , , , , , , Source: Department of Statistics Malaysia

6 RUBBER PRODUCTION BY SECTOR ( 000 TONS) 1, , , , , , e Estate Smallholding Total Production Source: Department of Statistics Malaysia

7 PROJECTION OF MALAYSIA S NR PRODUCTION 000 tonnes CAGR: 6.2%

8 With 94% of rubber planted areas and 93% of rubber production are from smallholding sector, acceleration of smallholding s development is needed to sustain NR industry Planted Area 2009 Estate Smallholding 6% 94% Production 2009 No. of Smallholders 400,598 Source: RISDA, DOA Sarawak, Sabah Rubber Industry Board 7% 93%

9 kg/ha/year 1,700 MALAYSIA LAND PRODUCTIVITY (KG/HA/YEAR) 1,600 1,600 1,620 1,630 1,525 1,520 1,500 1,450 1,500 1,400 1,358 1,361 1,344 1,372 1,381 1,320 1,370 1,420 1,414 1,430 1,420 1,440 1,500 1,300 1,200 1,100 1,289 1,226 1,184 1,211 1,167 1,237 1,211 1,280 1,270 1,300 1,296 1,320 1,358 1, p 2010e Estet Estate Pekebun Smallholders Kecil Purata Avg Yield *Based on survey conducted by MRB e-estimates

10 MAJOR ISSUES AND CHALLENGES - Declining rubber planted area - Inability to Attract New Participants to the Industry

11 Source: Dept of Statistics Malaysia PRODUCTION AND PLANTED HECTARAGE With the decline in total planted area, policy has been formulated to ensure that national production to be sustained at above 1.0 million tons to meet raw materials requirement of the downstream sector. In 000 ha In 000 tonnes 1,600 1, , , , , Planted Area Total Production

12 STRATEGIES TO INCREASE PRODUCTION Increase replanting area by 40,000 ha per year To expand rubber area new planting by 20,000 ha per year Accelerate replanting to high yielding clones Clone 1Malaysia Promote mechanization and automation Enhance adoption in the latest technology in latex harvesting (LITS) LITS Clone 1 Malaysia

13 REPLANTING RUBBER TO RUBBER (HECTARE/YEAR) Replanting is a strategic program to improve the condition of smallholdings sector 45,000 40,000 40,000 35,000 30,000 25,000 20,000 19,029 19,043 19,408 20,586 20,212 23,152 20,688 21,203 25,000 15,000 10,000 5,000-5,222 7,233 Source: RISDA e 2020p e: estimate, p: projection

14 LAUNCHING OF NEW CLONE RRIM 3001 OR 1 MALAYSIA CLONE ON 13 AUGUST 2009

15 INABILITY TO ATTRACT NEW PARTICIPANTS TO THE INDUSTRY The rubber industry has long been dubbed as a poor man s industry due to relatively low income. The consequences were abandoned holdings and productivity declines amidst uneconomic size holdings and skilled tappers shortage that plagued the industry. The scenario of the industry has now changed. The current encouraging price of rubber sustained at relatively high levels is a departure from the traditionally low NR price. This has tremendous impact on income and returns of the upstream sector.

16 COMPARISON OF PRICE AND PRODUCTION, 2009 vs 2010 tons 120,000 etimate sen/kg , , , , , January February March April May June July August September October Production 2009 Production 2010 Avg Price 2009 Avg Price With the increase in average price to a higher level this year, production has increased by 15% y-o-y

17 AVERAGE MONTHLY INCOME OF SMALLHOLDERS The price of NR once a disincentive to tapping turnout has now become the major driving force in exploitation of rubber , , , , ,900 1,440 2,395 1, * - Income ( RM ) Yearly Average Prices of SMR 20 (sen/kg) * SMR 20 yearly average as at 13 October

18 SOCIO-ECONOMY TRANSFORMATION OF RUBBER SMALLHOLDERS Before (1980s) Now The recent steady cash inflow from rubber cultivation has changed the lifestyle of rubber smallholders.

19 MEETING BALANCED DEMAND-SUPPLY OF NR On the international front, to sustain price at acceptable levels, the Tripartite cooperation among three major NR producing countries have managed their expansion programs to ensure future supply of rubber does not exceed anticipated demand. Yearly Average Prices of SMR 20 (sen/kg) World NR Production 9.6 mil tons World NR Consumption 9.5 mil tons * Source: Malaysian Rubber Exchange & International Rubber Study Group (IRSG) * SMR 20 yearly average as at 13 October

20 WAY TOWARDS INDUSTRY S SUSTAINABILITY: Strategies and Initiatives Transformation of Rubber Industry - Restructuring the Rubber Smallholdings - Increase Supply Chain Efficiency

21 ECONOMIC TRANSFORMATION PROGRAMME To transform Malaysia to become a high income and high productivity economy Two main targets: i.to increase national income per capita to RM 48,000 by 2020 (from RM 23,700) ii.to achieve real GDP of 6.0% per annum Current GNI per capita ( ) RM23,700 or US$6,700 HIGH-INCOME NATION Projected GNI per capita ( ) RM48,000 or US$15,000 MIDDLE-INCOME NATION 1 At 2020 prices, consistent with Economic Planning Unit (EPU) assumptions for inflation= 2.8% and population growth=1% population 27.9 million, 2020 projected population 31.6 million (EPU projection) Source: World Bank, Economic Planning Unit, Department of Statistics

22 MALAYSIAN RUBBER INDUSTRY STRATEGIES, Sustaining Malaysian Rubber Industry Contribution To A High Income Economy NR production to increase to 1.8 million tons with productivity of 1.8 tons per hectare by 2020 Annual income of smallholder to increase by 25% from RM28,000 to RM35,000.

23 INITIATIVES Effective TOT R&D High yielding clone made available Environmax method improvement in procedures of selecting hevea clones for planting recommendation Green Technology Financing Scheme - enhance Malaysia s competitiveness in low carbon economy.

24 RESTRUCTURING SMALLHOLDING Significant transformation took place in the smallholding sector by the way of land and management consolidation into cooperative or cooperation Agencies responsible in smallholder development FELDA, RISDA, FELCRA Central management/large scale holdings would benefit from economies of scale

25 IMPROVE MARKETING-CHAIN EFFICIENCY Smallholders Rubber Dealer(s) Processors Issues of transparency in farmgate price determination

26 April 06 Mei Jun Jul Ogos Sept Okt Nov Dis Jan 07 Feb Mac Apr Mei Jun Jul Ogos Sept Okt Nov Dis Jan 08 Feb Mac Apr Mei Jun Julai Ogos Sept Okt Nov Dis Jan 09 Feb Mac Apr Mei Jun Julai Ogos Sept Okt Nov Dis Jan 10 Feb Mac Apr Mei Jun Julai Ogos Sept (cont..) IMPROVE MARKETING-CHAIN EFFICIENCY 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 RRIMRAPID DRC RAPID & ACCURATE DRC DETERMINATION IMPROVE GROWERS ACCESS TO LATEST RUBBER PRICES Improve transparency in rubber trading activities Encourage production of quality raw materials to ensure rubber industry remain productive and competitive 1.7 million SMS subscription since its inception in 2006

27 CONCLUSION The approaches adopted for the development of rubber planting and processing industry in Malaysia takes into consideration of the concept of sustainable development. Improvement in productivity, efficiency and quality; attainment of sustainable remunerative rubber prices and balanced growth in all industry s activities are identified as major challenges faced by the industry. The strategies and activities implemented to address these challenges would lead to a more sustainable development of the rubber industry in Malaysia.

28 T H A N K Y O U MALAYSIAN RUBBER BOARD HQ, KUALA LUMPUR