II. NATIONAL INSTITUTIONAL ARRANGEMENTS

[ II | II-A | II-B | II-C | II-D | II-E | II-F | II-G ]

C. Industry

[ C | C-1 | C-2 | C-3 ]

2. Rubber industry

Unlike the estate sector, which enjoys the advantage of size, technical expertise and the ability to take up new ideas quickly, smallholders operate independently They generally lack capital, knowledge and basic amenities, and have little choice of where their rubber can be sold and at what price. Recognizing that the development of the smallholder sector is the key to the continued viability of the industry, the government set up a number of agencies with clearly defined roles to ensure its orderly growth.

MRRDB is a government agency, established with the specific purpose of exercising overall control of the research, technical development and promotional work in support of the Malaysian natural rubber industry. Originally established under the name of the Malayan Rubber Fund Board in 1958, it is responsible for administering funds accumulated from the levy on research at the rate of 3.85 cents per kilogram of rubber exported from West Malaysia.

MRRDB determines policies and programmes for research, development and promotion, and provides the necessary funds for the functioning and pursuit of those activities by its operating units: RRIM; the Malaysian Rubber Producers' Research Association (MRPRA); and the Malaysian Rubber Bureaux (MRBs).

The main mission of the Board is to help achieve the modernization of the rubber industry. Important factors are the structure of the industry, its predominance in the national economy and the socio-economic dependence of a very large sector of the population on it for livelihood and employment. The overall objectives of the Board are:

• To promote research into the production, consumption and uses of natural rubber;
• To coordinate activities within and outside Malaysia related to research, development, publicity and other matters affecting the natural rubber industry;
• To obtain information on synthetic rubber and similar products and materials, and to stimulate the use of natural rubber in competition with or complementary to such products and materials;
• To control the activities and policies of all research and development organizations wholly or mainly financed by MRRDB;
• To ensure that MRRDB is kept fully informed about the activities and policies of all research and development organizations that are partly financed by MRRDB;
• To cooperate and liaise with all other national agencies responsible for research, extension, provision of agricultural credits, processing and marketing of rubber, and to generally promote the modernization of the rubber industry.

Established in June 1925, RRIM is concerned with research into all aspects of natural rubber cultivation and latex production, the development of new forms of rubber and consumption, and technical and end-use research on the processing and manufacture of natural rubber products. Its responsibility also includes extending the benefits of research and development to all sectors of the rubber industry through the provision of advisory and information services. The transfer of technology to the smallholder sector involves RRIM, RISDA and the National Association of Smallholders. The objectives of RRIM are:

• To improve the productivity, quality and competitiveness of Malaysian rubber;
• To maximize returns by optimizing resources in the rubber industry;
• To facilitate and extend the application of technologies to the upstream and downstream sectors;
• To encourage and establish RRIM as a centre of excellence in rubber production research, processed rubber goods manufacturing, information technology and training;
• To constantly improve the quality, consistency and environmental aspects of processing and manufacturing through a recognized quality management system, in order to meet the requirements of the industry;
• To develop and encourage the production of value added products, rubber goods and technologies, taking into consideration the safety of clients;
• To make available effective and efficient consultancy and technical services by paying particular attention to the development of small and medium-sized industries (SMIs) in order to make them viable;
• To make efficient and effective services (testing, advisory, training) available to the industry;
• To facilitate links between research laboratories and the industry in order to improve the commercialization of research findings;
• To promote natural rubber as a green industrial material.

The Institute has over 200 Malaysian senior staff specializing in such diverse disciplines as mycology, pedology, colloids chemistry, latex technology, pathology and economics. Supported by 1,700 auxiliary staff, they conduct research and development and undertake advisory activities encompassing all facets of the natural rubber industry. The main laboratories are located in Kuala Lumpur, while the two experimental stations are located in Sungei Buloh, 16 miles from the capital, and in Kota Tinggi, Johore. The third experimental station is run as a commercial mini-estate in Bukit Ibam, Pahang.

RRIM has also established the Technology Centre in Sungai Buloh, as part of its effort to help speed up the industrialization policy of the government. The Standard Malaysian Rubber (SMR) building, a laboratory complex in Kuala Lumpur, is the centre for quality control, licensing and test standardization under the SMR scheme introduced in 1965.

Since its inception in 1925, RRIM has been involved in extension education for rubber growers as well as training courses for its personnel in upstream and downstream activities. Prior to 1975, RRIM operated four training schools at Air Pa'abas in Melaka, Padang Rengas in Perak, Mentakab in Pahang and Bukit Sireh in Kelantan. The schools trained rubber smallholders and their children on all aspects of rubber planting, processing and marketing. The responsibility of training the smallholders was entrusted to RISDA when RRIM handed over the training schools at the end of 1976. In 1965, the RRIM Training School was opened at the RRIM Experimental Station in Sungai Buloh specifically to train potential factory managers to run the SMR factories that were set up to produce hevea crumb rubber for marketing under the SMR Scheme.

The Tun Abdul Razak Research Centre (TARRC) (formerly MRPRA), a company incorporated in the United Kingdom, is a unit partly financed by MRRDB. It is located in the United Kingdom simply because of that country's strategic closeness to the centre of rubber usage in the West. Its laboratories, located 20 miles north of London at Brickendonbury, near Hertford, possess extensive facilities that cater to the whole spectrum of rubber science and technology, from laboratory studies to large-scale development and testing.

Founded in 1938 (as the British Rubber Producers' Research Association), TARRC has become a world leader in the art and practice of rubber science and technology. Today, as part of the multinational MRRDB organization, it is identified with Malaysian aspirations and plays a key role in helping to sustain the well-being of the Malaysian rubber industry. The functions of TARRC include:

• Undertaking consumption research and development stemming from, or related to, the needs of the rubber consuming industry in the West;
• Providing assistance in the development of rubber-based manufacturing industries in Malaysia.

The overall objective of TARRC is to promote the interests of Malaysian rubber in the Western hemisphere. Its principal activities include scientific research, technical development to the point of commercial exploitation, the provision of technical advice and assistance to rubber product manufacturers, techno-economic investigations and wide-ranging communications to disseminate the output of all those activities. TARRC is also involved in providing assistance in the development of rubber-based manufacturing industries in Malaysia.

Recognizing the need for an effective "after-sales service" to the rubber manufacturers as a means of partly but not exclusively countering the growing threat of synthetics, MRRDB set up MRBs to provide consumers with technical advice on processing, handling and design. That channel of communication between producers and research workers on the one hand, and the product manufacturers on the other, ensures that consumers are aware of the latest developments in the processing and application of natural rubber. Research results from RRIM and MRPRA are also conveyed to the manufacturers through that channel. MRBs are also responsible for all promotional work on natural rubber, while at the same time providing a feedback of information on the changing requirements of the manufacturing industry.

RISDA was established in 1973 with the mandate to accelerate the modernization of rubber smallholdings by providing replanting grants, extension and technical advisory services on the implementation of innovations emanating from research in planting techniques, and training in farm management, processing and marketing. RISDA is also responsible for group processing development and has established processing centres throughout the country to provide smallholders with facilities for processing their raw materials. The functions of RISDA are, inter alia:

• To administer the Rubber Industry (Replanting) Fund;
• To manage and operate approved projects and schemes;
• To implement all innovations emanating from research that are appropriate to the smallholder sector;
• To cooperate and maintain liaison with all government agencies concerned with research, extension services, the provision of agricultural credits, processing and marketing of rubber;
• To ensure that the smallholder sector is modernized in every sense in order to improve its economic well-being.

Services to the rubber smallholders are provided through various development programmes/projects. Replanting is the main activity, although other related activities and supporting services are provided. Block or group replanting is being encouraged, coupled with the latest technologies through the transfer of technology.

The Production Incentive Programme covers two major projects, i.e., the supply of agricultural inputs and an increase in production and processing. Human development is also given priority so that smallholders will readily accept new development concepts. One of the strategies for developing the rubber smallholder sector is through cooperative movement where available resources (i.e., human resources, capital and management skills) are pooled.

FELDA, which was established on 1 July 1956 under the Land Development Ordinance, is governed by a board responsible to the Minister of Land and Cooperative Development. The original FELDA objective was to develop forest land for agriculture and resettlement of rural poor. Those land schemes provided the basis for improving their livelihood and the means towards narrowing the rural-urban economic gap. Since its final intake of settlers in 1989, there has been a shift in emphasis. Today, its corporate objective is "to improve the quality of livelihood of the settlers with dedicated and efficient management at all times, while contributing towards the accomplishment of the nation's Vision 2020 through increased productivity to develop a competitive industry which is progressive and profitable".

FELCRA was established under the National Land Rehabilitation and Consolidation Authority (Incorporation) Act 1966 (Revised 1989). Under the Act, FELCRA is entrusted to consolidate, rehabilitate or develop land (including group settlement areas) either:

• On its own initiative and with the approval of the appropriate State authority, or at the request of such State authority;
• Or at the request of the owner thereof, and upon such terms and conditions as may be agreed to between the said owner and the authority any land other than those specified above.

• To improve the standard of living of the rural people and reduce disparities of income through its land consolidation and rehabilitation programme;
• To increase productivity and thereby improve the incomes of the rural community through new modes of farm management, use of modern agricultural and technical practices, systematic planning, use of high yielding planting materials and supervision by trained personnel.

The land consolidation programmes are undertaken to ensure that projects have economically-sized holdings. The transfer of the population from underdeveloped villages to more developed sectors represents the FELCRA approach to the consolidation and development of idle areas with the objective of increasing productivity. The main activity in land rehabilitation is the development of idle land found in traditional villages all over the country. Those programmes were and are in line with government policies such as the National Development Policy, the National Agricultural Policy and the concept adopted in the New Approach to the Restructuring of Villages Policy.

MARDEC is a wholly-owned company of the government, incorporated under the Malaysian Companies Act in 1969. MARDEC is primarily involved in the processing and marketing of rubber from smallholders. Its primary objective is to improve the quality of their rubber and in that way help them to obtain premium prices for their produce. Specifically, the MARDEC objectives are:

• To maximize the income of the rubber smallholders through the provision of improved processing and marketing facilities;
• To upgrade the quality of rubber produced by smallholders into technically specified rubber such as SMR and latex concentrates.

MARDEC directs its activities into three key areas: buying, processing and marketing. MARDEC has established 10 factories throughout peninsular Malaysia. Those factories purchase smallholders' rubber through representatives appointed by MARDEC. Almost 100,000 smallholders benefit from the direct-selling scheme. The rubber is processed according to technical specifications of SMR. Rubber exported by MARDEC accounts for about 25 per cent of all smallholder rubber production in Malaysia. In addition to its export market, MARDEC also sells its rubber locally to the rubber-based industries. Smallholder rubber processed by MARDEC is on a standing with, if not superior to, the quality of estate processed rubber.

Top