Kuala Lumpur: Malaysia is exporting about 1.1 million tonnes of Standard Malaysian Rubber (SMR) products, annually, accounting for between RM8 billion and RM9 billion in export revenue.
Malaysian Rubber Board (MRB) Managing Director Datuk Dr Zairossani Mohd Nor said there was no issue in selling SMR products as they were highly sought after for its quality.
He said Malaysia has the capacity to produce about 1.5 million tonnes of SMR, which is made from natural rubber.
Speaking to reporters after opening a seminar on SMR and subsequently launching the Standard Malaysian Rubber Bulletin No 7 (Revised Edition) here today, he said Malaysia could only produce an estimated 700,000 tonnes of natural rubber (NR) while the balance was imported.
Despite the high demand (for SMR) and lack of local production of natural rubber, he said prices remained sluggish due to external factors like higher stocks of 350,000 tonnes in China, the biggest consumer, coupled with excess production in other producing countries.
Currently there is a stock overhang of 2.0 million tonnes in the market due to excess production, he said.
Zairossani also said in 2005 and 2006 when prices were higher, traditional producers like Thailand, Indonesia and Vietnam opened up land under rubber cultivation, totalling one million hectares.
"Non traditional producers like the Ivory Coast, Cambodia and Laos, also joined the bandwagon to produce natural rubber and this resulted in excess supply," he said, adding that Malaysia exported about 70 per cent of its SMR production to China.
But, the ongoing trade war between the republic and the United States has somewhat dampened the performance of the manufacturing sector, and in turn affected demand for SMR.
While saying that rubber prices traditionally tracked developments in crude oil prices, the recent trend was not truly reflective of the actual situation.
"Although the price of synthetic rubber increased in tandem with crude oil prices, natural rubber prices did not follow suit," he said.
Zairossan added that Malaysia would work together with the International Tripartite Rubber Council, which would meet in December, in Kuala Lumpur, to propose a supply management scheme by imposing production quotas for major producing countries in an effort to reduce the surplus and shore up prices.
He also revealed that rubber smallholders accounted for about 90 per cent of the natural rubber produced in Malaysia.
But, when prices are low, only 20-30 per cent of the rubber smallholders continue tapping their rubber trees while about 55 per cent of them totally abstain from doing so as they feel 'it's not worth their while' and turn to alternative sources for income.
Meanwhile, Deputy Minister of Primary Industry Datuk Seri Shamsul Iskandar Mohd Akin said effective January 2019, the government would raise rubber production incentives, for all rubber tappers, to RM2.50 per kg, from the current RM2.20 a kg, to make up for the shortfall in prices.
Smallholders with an average rubber smallholding of two hectares will receive an income of about RM1,100 per month, if the rubber production incentive is RM2.20 per kg .
"With the additional 30 sen they would now earn another RM75 per hectare," he said, adding that only 15 to 20 per cent of allocation set aside for the incentive was claimed by rubber tappers.
