Malaysia Seeking to Lessen Its Dependence on Rubber

KUALA LUMPUR, Malaysia â€”  The plantation manager jerked the Land Rover to a stop, got out and waved his hand at the red earth scraped clean of all but a few stumps.

“No more rubber will be planted here,� he said. “No profit. We’ll be putting in oil palms.�

Rubber and tin have been the great economic sustainers of the Malay Peninsula over the past century. They will continue to be important but no longer the unquestioned bedrock of the Malaysian economy. The country is diversifying.

And, with rubber’s expected decline, a familiar and storied part of life here will begin to pass from the scene: the rubber tapper moving along a line of plantation trees, the leafy grove dappled like an Impressionist painting, his careful cuts sending the latex dripping into the cup.

It’s a nice picture--but not what the government has in mind to meet the aspirations of the people here.

Malaysia is the world’s No. 1 producer of rubber, tin, palm oil and pepper.

“Give us 10 years and we’ll be the biggest producer of cocoa, too,� Deputy Prime Minister Musa Hitam said recently.

But the government has other plans for what Musa called “that very elastic commodity known as natural rubber.� The rubber industry is Malaysia’s biggest employer and paid the bill for the country’s ambitious development programs after independence from Britain in 1963.

In its effort to reduce the gap between rich and poor, the authorities have identified three persistent pockets of poverty: fishermen, rice farmers and what are called rubber “smallholders,� families who own two to 10 acres of trees and produce about 60% of the country’s rubber.

The economic planners have launched a program to turn small-holders toward other, more profitable crops or to combine their holdings for a more efficient, plantation-style rubber operation.

Meanwhile, the large plantation companies themselves--outfits like Guthries, Harrison & Crosfield and Sime Darby--are abandoning rubber in favor of oil palms, a crop that delivers a quicker and, for now, better return on their money.

Just Breaking Even

“We’re just breaking even on rubber now,� said an official of one of the plantation companies. “I don’t see things getting better.�

For the decades after World War II, increased productivity on the plantations contained costs and assured profits in the face of cyclical world prices.

The gain in productivity came through the widespread introduction of trees “cloned� by bud-grafting and similar techniques. The cloned trees replaced those grown from seedlings of the original stock brought here from South America in the 1890s and quadrupled the output of rubber per acre.

But, according to the plantation company official, the big gain in productivity has been made. And now rising wages and flat prices have closed the profit gap. Rubber is selling for about 35 U.S. cents a pound, leaving a narrow profit at best.

It remains a major foreign exchange earner for Malaysia, $1.5 billion in 1984. But there are better returns to be made from other commodities and, in the government’s view, now is the time to break away from overdependence on rubber and tin.

It is not important for Malaysia to be the world’s top producer of natural rubber anymore, Musa told a group of reporters. “In fact, we don’t want to be No. 1,� he said. Instead, Malaysia’s goal is to be the top producer of specialized and quality rubber and a manufacturer of rubber products.

Most Malaysian rubber now goes into automobile tires, foam products and so-called “dipped goods�--gloves and condoms, for instance--manufactured outside the country.

Cheaper Labor Costs

If the trends and policies continue, Malaysia’s predominance in rubber exports (35% of world exports) will give way to other producers, including neighboring Indonesia and Thailand where labor costs are cheaper.

A drive through the Malaysian countryside shows the change well under way. The rubber groves that used to march across the rolling hills are coming down, replaced with squat legions of new oil palms.

In the natural rubber business, there is no product for seven years after the decision has been made to plant: one year for soil preparation and another six years before the trees are ready to bear the natural latex. That’s a long time to tie up money for an uncertain price.

Oil palms begin producing in three years. The palm produces “fruitlets� that are crushed to yield an oil for cooking and other uses.

“I have 500 workers here now,� the plantation’s manager said. “I’ll need half that many when we make the changeover to oil palms.�

Rubber trees are tapped every other day for maximum yield. It’s a job that takes a fine touch, handed down through families that have been on the plantations here for generations.

“An oil palm worker, on the other hand, just needs brute strength,� the plantation boss said.

In a mature palm grove, the worker moves through the trees looking for bunches of fruitlets high among the fronds. Then he hacks or saw them down with a scythe-like knife attached to a long pole. The fruit is gathered from the ground and taken to a crusher to be made into oil.

The rubber tapper’s job requires finesse, not force. A diagonal cut is made through the bark of the tree, taking a thin peel from the edge of bark exposed by the previous cut. A thick peel is a waste, for it takes very little to start the latex running. Too deep a cut, into the wood of the tree itself, will scar the surface and make a second tap more difficult once the bark grows back.

The tapping is done in the morning. At midday the latex that has run into a small cup below the cut is taken to the plantation factory for processing. In the afternoon, the work force turns to maintenance tasks around the plantation.

“There have been efforts to mechanize rubber tapping,� the company official said. “The Japanese came up with a motorized knife, but it’s not as dependable.�

Whatever the economics from the planters’ point of view, plantation rubber producers were already facing problems with their work force.

Caught up in the rising expectations of other Malaysians, the plantation workers were steadily drifting into the cities in search of a better life.

“We may have to start looking for immigrant labor, perhaps Bangladeshis,� the plantation manager said.

Most Malaysian plantation tappers are Tamils with roots in southern India, brought here by British colonial planters as indentured laborers early in the century. The majority of smallholders are ethnic Malays.

The smallholders, private landowners, generally have unproductive trees and make a meager income from rubber. A plantation worker averages close to the nation’s per-capita income of $2,000 U.S. a year, and the planter provides housing, medical care and day-care facilities. He also gives the worker a bit of land for planting vegetables for his own use or for sale.

A national rubber workers union has pushed wages up, but not enough to dim the city lights.

“I don’t want to be a tapper,� said Saravalain, a 14-year-old Tamil boy who was gathering latex from the trees for his worker-parents during a break from school. “I want to be a lawyer.�