Many years ago, a minister jokingly said rubber tappers were ‘fooling around behind the trees instead of tapping’ due to the plummeting rubber prices then.
His remarks naturally hurt the feelings of rubber tappers who were feeling the pinch, with their financial problems worsening during the monsoon season when they could not go out to tap rubber.
The minister apologised to them. The incident, however, opened the eyes of the authorities to the need to protect the welfare of rubber tappers and smallholders.
Two decades later, in 2015, the government extended the Rubber Production Incentive (IPG) as well as monsoon aid (BMT) to this group, especially smallholders, which gave them some relief.
The backbone of the national economy at one time, this country’s century-old rubber industry remains the main source of income for its smallholders, who are benefiting from the support of the Malaysian Rubber Board (LGM), which remains dedicated to advancing and sustaining the sector.
SUSTAINABLE, COMPETITIVE PRODUCTS
Despite facing various challenges, including competition from other commodity crops, the rubber industry has remained relevant over the years, recording an average export growth rate of 5.8 percent from 1990 to 2023.
The export value of the national rubber industry for 2023 has also reflected its continued importance as a key economic contributor to Malaysia, with a revenue contribution (including rubberwood) of RM37.2 billion.
The export value of the national rubber industry for 2023 has also reflected its continued importance as a key economic contributor to Malaysia, with a revenue contribution (including rubberwood) of RM37.2 billion.
Nevertheless, the passage of time inevitably compels the industry to evolve. This is especially true given the growing environmental concerns raised by exporting countries, not to mention the competition from synthetic or artificial rubber which is often cheaper and sometimes of comparable quality to natural rubber.
LGM, as the agency responsible for regulating the rubber industry through the issuance of licenses and permits to industry players in line with the Malaysian Rubber Board (Incorporation) Act 1996 (Act 551) and the Malaysian Rubber Board (Licensing and Permit) Regulations 2014, also reviews and improves related policies, regulations and procedures.
This aligns with the implementation of licensing and permit liberalisation policies, which came into effect on Jan 1, 2020. The objective is not only to enhance governance and regulatory compliance but also to facilitate business operations and reduce bureaucracy, thereby strengthening Malaysia’s position in the global rubber arena.
LGM, an agency under the Ministry of Plantation and Commodities, has implemented several sustainable development initiatives across the upstream (production), midstream (processing) and downstream (manufacturing) sectors to ensure the national rubber industry meets international requirements, in line with the United Nations Sustainable Development Goals (SDG2030).
According to LGM director-general Datuk Dr Zairossani Mohd Nor, one of these initiatives is the development of the Malaysian Sustainable Natural Rubber (MSNR) national agenda, which will be launched by the Minister of Plantation and Commodities Datuk Seri Johari Abdul Ghani on Oct 7 in Baling, Kedah.
“MSNR is a sustainability recognition given to LGM license and permit holders through the regulatory and enforcement approach, aimed at ensuring that the rubber they produce can enter the global market as a sustainable and competitive product.
“Since July 1, LGM has been actively conducting MSNR compliance inspections among rubber smallholders and LGM license holders through face-to-face surveys and the collection of information on plantation locations and premises,” he said.
He told Bernama in an interview here recently that MSNR enforcement will begin on Jan 1, 2025, with LGM license and permit holders required to comply with MSNR standard operating procedures in order to obtain MSNR recognition from LGM.
FIVE PRINCIPLES OF MSNR
Zairossani explained that MSNR has five principles, namely No Deforestation for Rubber Planting, Rubber Planting in accordance with the National Land Code, Environmental Sustainability, Social Compliance and Supply Chain Traceability.
The first principle, No Deforestation for Rubber Planting, refers to avoiding the opening of new rubber plantings in forest areas after Dec 31, 2020.
Malaysian Rubber Board (LGM) director-general Datuk Dr Zairossani Mohd Nor.
He noted that forest management, planning, protection and development come under the responsibility of the Forestry Department of Peninsular Malaysia, in line with the Malaysian Forestry Policy, National Forestry Policy 1992 and National Forestry Act 1984.
“As for the second principle Rubber Planting in accordance with the National Land Code, it means illegal land clearing is not allowed for rubber planting. Rubber plantation owners must possess legal land ownership documents or recognised by the relevant authorities as confirmed in the Rubber Transaction Authority Permit (PAT-G) system issued by LGM to smallholders.
“Likewise, (rubber plantation) operators must also have legal documents from the landowners authorising them to cultivate rubber on their land,” he said, adding illegal land clearing constitutes an offence under Section 425 of the National Land Code 1965.
Regarding the third principle Environmental Sustainability, Zairossani said it prohibits the establishment of new rubber plantations on peatland after Dec 31, 2020, as peatland clearings contribute to the highest emissions of greenhouse gases (GHGs), which can harm the environment and contribute to global warming and climate change. Rubber tree plantings must also consider creating buffer zones (green areas free from human activity) and implementing Good Agricultural Practices developed by LGM.
“The fourth principle, Social Compliance, incorporates three elements: no exploitation of child labour in rubber plantations or rubber processing premises; foreign workers employed in plantations or factory premises must have valid work permits; and employers providing accommodation to workers must meet the minimum standards for such facilities.
“Under the Children and Young Persons (Employment) Act 1966 (Act 350) and the International Labour Organisation Minimum Age Convention 1973, no child labour exploitation is allowed in any work premises including rubber plantations.
“According to Act 350, ‘child’ means any person under the age of 15, while ‘young person’ means any person aged 15 and above but has not reached 18 yet. Children are allowed to do light work suited to their capacity within family enterprises, provided they are 13 years old and above,” he said.
As for the fifth MSNR principle, Supply Chain Traceability, Zairossani said it refers to the ability to trace the origin, processes, movements and monitoring of materials or products throughout the supply chain, from the sourcing of raw materials to their use or final disposal.
“This principle enables industry players, including consumers, authorities and operators, to obtain detailed information about the origin and production methods of a product as well as the environmental, economic or social impacts associated with the product,” he said, adding one of the main challenges facing the rubber industry globally is the lack of the element of traceability in terms of raw materials.
BENEFITS FOR SMALLHOLDERS
Pointing out that MSNR has the capacity to transform the landscape of the nation’s rubber industry through its focus on producing high-quality rubber that meets international standards, Zairossani said smallholders too have the opportunity to enjoy various benefits including earning higher incomes.
Malaysian Sustainable Natural Rubber (MSNR) national agenda also empower smallholders by giving them access to wider markets and better prices.
“There is no denying that rubber smallholders grapple with many issues such as low market prices for rubber. We have numerous smallholders but many of them don’t tap rubber due to the low prices, which they feel are not worth their efforts.
“Most rubber tappers today, whether they are owners (of smallholdings) or tap rubber (in plantations owned by others with their permission) are over 50 years old or veterans. Some also tap rubber to supplement their main income. So, when rubber prices are low, they don’t tap," he said, adding currently, there are 239,000 active smallholders nationwide.
He said MSNR’s focus is on producing rubber that is not only of high quality but also more competitive in international markets as it meets global industry requirements, thus opening opportunities for smallholders to get better prices.
“Compliance with international standards helps stabilise rubber prices in the global market. With more stable and higher prices, smallholders can plan their finances better, add value to their products and enjoy more consistent income.
“Overall, MSNR not only aims to improve the quality of the country's rubber but also empower smallholders by giving them access to wider markets and better prices.
“Smallholders will also benefit from the training, inspections and guidance provided by LGM to help them comply with MSNR, including through surveys and information collection methods,” he said.
EUDR CHALLENGE OR OPPORTUNITY?
Touching on the challenges posed by the European Union Deforestation Regulation (EUDR), which is part of the global fight against deforestation and forest degradation, Zairossani said under EUDR, products must come from areas that have been deforestation-free before Dec 31, 2020.
“This means natural rubber cannot enter the EU market if its production comes from deforested areas after that date,” he said, adding this aligns with MSNR’s principles.
The implementation of Malaysian Sustainable Natural Rubber (MSNR) national agenda also provides an opportunity for the country to advocate for the sustainability cost of natural rubber to be borne by buyers or importers, in line with efforts to comply with sustainability and traceability requirements, including European Union Deforestation Regulation (EUDR) compliance.
He noted that the implementation of MSNR is crucial for maintaining Malaysia’s market share of natural rubber to the EU which is around 10 percent, with the export value amounting to RM636.81 million in 2023. Meanwhile, Malaysia’s market share for rubber products to the EU stood at 16 percent or RM3.235 billion during the same period.
Zairossani added the main export markets for Malaysia's natural rubber in 2023 were China (68 percent), followed by the EU (10 percent) and the United Arab Emirates (six percent).
“Current trends show a high demand for sustainably produced rubber products. This means compliance with sustainability requirements is critical, especially to meet export conditions. Hence, the MSNR initiative is a preparation to meet these needs.
“The implementation of MSNR also provides an opportunity for the country to advocate for the sustainability cost of natural rubber to be borne by buyers or importers, in line with efforts to comply with sustainability and traceability requirements, including EUDR compliance. Factoring sustainability costs into rubber prices enables smallholders to cope with increased production costs and enjoy better incomes,” he said.
“The Ministry of Plantation and Commodities and LGM remain committed to formulating policies and strategies, giving priority to the implementation of high-impact flagship programmes to boost the competitiveness of the national rubber industry.
“This is to meet the needs and demands of the international market as well as demonstrate the sustainability of Malaysian natural rubber, ensure continued acceptance of Malaysia's natural rubber in the global market, and, at the same time, protect the livelihoods of smallholders,” he added.
He added that on the international stage, Malaysia will continue to strengthen cooperation with major rubber-producing countries under the International Tripartite Rubber Council and the Association of Natural Rubber Producing Countries platforms to ensure both production and sustainability costs are taken into account in the rubber trade.
SIDEBAR
LGM was established in 1998 through the merger of three key agencies responsible for Malaysia's rubber industry: the Rubber Research Institute of Malaysia, Malaysian Rubber Research and Development Board and Malaysian Rubber Exchange and Licensing Board.
LGM plays a vital role in developing and maintaining the capability of the rubber industry through research and development as well as by providing both technical and non-technical support services and regulatory functions that encompass the upstream (production), midstream (processing) and downstream (manufacturing) sectors.
Malaysian Rubber Board (LGM) has been actively conducting Malaysian Sustainable Natural Rubber (MSNR) national agenda compliance inspections among rubber smallholders and LGM license holders through face-to-face surveys and the collection of information on plantation locations and premises.
Meanwhile, it is worth highlighting that Malaysia’s rubber research will mark its centennial milestone in 2025.
The national rubber industry continues to receive support through various initiatives including government policies such as the Malaysian Rubber Board Strategy 2021-2025, National Agricommodity Policy 2021-2030 and New Industrial Master Plan 2030.
He said LGM already has a comprehensive traceability system in place at the upstream, midstream and downstream levels, which is set to position Malaysia as a leader in the production of sustainable natural rubber and rubber products through the MSNR Trace System platform which is integrated with existing online systems such as PAT-G, RRIMniaga, e-Estet, e-Rubber Processor (e-RP) and e-Rubber Product Manufacturer (e-RM).
LGM license and permit holders are required to use these systems to achieve the objectives of rubber supply chain traceability, in line with the licensing conditions stipulated under the Malaysian Rubber Board (Licensing and Permit) Regulations 2014.
By implementing the supply chain traceability system, LGM license and permit holders will be able to identify and address sustainability risks such as illegal logging and labour exploitation in their supply chains.
Although MSNR regulatory enforcement will be carried out in Peninsular Malaysia, LGM hopes it will also be adopted by the authorities in Sabah and Sarawak to ensure uniform and comprehensive implementation of the national agenda.
The implementation of the MSNR regulatory programme requires the collaboration of all stakeholders, especially rubber industry players, through promotions and campaigns, ensuring all local authorities in each state monitor licensed premises to make sure they practice and comply with sustainability principles, while also fostering collaboration in terms of data sharing and integration of related systems.
