Rubber making a serious comeback in the region

Commodities Talk
By HANIM ADNAN

LONG perceived as a smallholder's crop, rubber has transcended into a hot commodity among the major world plantation players. In the past five-to-seven years, many players are making serious investment in the cultivation and also acquisitions of rubber plantations in South-East Asia and Africa.

The latest is Olam International Ltd, a commodity supplier partly-owned by Singapore's Temasek Holdings, which will initially invest about US$183mil in 28,000ha rubber plantations via a joint venture with the Gabon government, with the possibility of expanding to 50,000ha in the future.

Last year, two China-based companies, Mazhongdu International and Hainan Baisha Industrial, teamed up with Malaysia-based Hateg Corp to venture into rubber covering about 40,000ha in Indonesia, with an estimated investment of RM3.5bil within the next five years.

Malaysia, too, has become the target of China-based Guangdong Guangken Rubber, which has expressed interest to cultivate 10,000ha rubber in Sarawak, through a native customary land scheme.

So, given the renewed interest on rubber plantations, are local plantation companies going to join the bandwagon? Apparently, this is so.

TA Securities, in its latest report, said rubber had been gaining traction with mid-sized plantation companies like United Malacca Bhd and TSH Resources Bhd expressing interest to expand into rubber cultivation.

United Malacca is targeting 30% rubber plantation in terms of planted area in the next five to 10 years from its 100% oil palm currently.

TSH, meanwhile, plans to plant 1,000ha to 1,500ha of rubber annually in the next three years. According to analysts, Kuala Lumpur Kepong Bhd is believed to top in terms of rubber plantations estimated at 20,930ha among listed plantation companies.

Apart from the initiative by the private sector, the Government is also pledging serious commitment to rubber under the Rubber National Key Economic Area with some RM275mil investment.

In Malaysia, currently 94% of the total rubber production is contributed by smallholders.

The Government is also actively promoting replanting programmes and allocating more funds to beef up rubber-growing zones in Peninsular Malaysia.

Sabah and Sarawak are also making inroads in new and larger rubber planting hectarage totalling about 30,000ha under the Ninth Malaysia Plan. It is reported that Sarawak has about 1.5 million ha and Sabah some 400,000ha available for rubber cultivation.

In 2012, active replanting activities would cover about 38,000ha per year in the peninsula while new plantings would cover about 5,000ha each in Sarawak and Sabah.

Interestingly, rubber cultivation in Malaysia is no longer just skewered towards latex production. There is growing versatility of rubber from latex for tyre and rubber glove to rubberwood for furniture making which in turn are multi-billion ringgit integrated rubber industry.

The Malaysian Rubber Board (MRB) via the Rubber Research Institute, for example, has been producing high quality timber latex clones such as the RRIM 900 series, RRIM 2000 series and the latest RRIM 3000 series, that have resulted in high-yielding latex and bigger girth trunks for timber production.

http://biz.thestar.com.my/news/story.asp?file=/2012/3/20/business/10946618&sec=business