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Parliament.

Parliamentary Speeches & Debates.

14th Malaysian Parliament
Issue of Domestic Rubber Supply and Government Financial Incentives to Increase Domestic Supply
05:07

Issue of Domestic Rubber Supply and Government Financial Incentives to Increase Domestic Supply

I had a question today in Parliament, on the issue of domestic rubber supply and the government financial incentives to increase our domestic supply. The deputy minister gave an unsatisfactory reply on financial support, so in my follow up question I asked the minister to prepare a RM10 billion fund for replanting of rubber trees. You can watch the video of the question and answer here. The key issues are as follow: 1. 92% of the rubber supplied to Malaysian rubber gloves factories come from Thailand. Domestic supply is a miserable 8%. This is a very dangerous position to be in. 2. Thailand has announced a few months ago, that they will reduce the export of rubber latex to attract/force rubber gloves companies to relocate rubber glove factories to Thailand. 3. We have 1 million hectares of rubber trees. We have 18 million hectares of palm oil trees. In order to have a sustainable domestic supply of rubber latex and keep our rubber glove factories in Malaysia, we need domestic supply to reach at least 70%. 4. By my calculation we need to increase rubber trees from 1 million to 3 million hectares. We can reduce the palm oil hectarage from 18 million to 16 million and then replant 2 million hectares with rubber trees. 5. In order to do this, the government must incentivise estates to shift from palm oil to rubber. The incentive is to deploy soft replanting loans at 2% to 4% interest rates. 6. Planting cost of rubber trees for each hectare is around RM5,000. As such to replant 2 million hectares, the government must prepare and make available RM10 billion of soft replanting loans. 7. Failure to do so will see the closures of many rubber glove factories in Malaysia, as they migrate to Thailand to secure rubber latex supply. We have to act now and decisively or we will see this RM50 billion industry evaporate. Malaysia is great for starting businesses but we seem to have a big problem retaining these businesses. 8. The only slightly good news from this question and answer session, is the deputy minister agrees with my views and he said he will bring the matter up to the Minister of Finance. - Wong Chen, Facebook (8 December 2020)
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