Future Direction and Aim of Malaysias Rubber Industry The rubber industry in Malaysia has since evolved through

the years and has transformed itself into more integrated industry. This was vastly aided by the tremendous progress made in Research and Development sector of rubber cultivation and harvesting as well as rubber processing. An orchestrated growth of the integrated rubber industry is critical to ensure a synergistic development of both sectors. The greater trade liberalization and globalization the need for consolidation is more urgent than before in order to be in a position to face competition. In order to make a better future for our rubber industry sector, several aspects need to give more attention. First the value added. The greater earnings can be derived as the commodity is further processed. With the decline in the replanting activities the future growth of the downstream industries of rubber manufacturing is likely to be affected due to diminished raw material supplies. Second, the consolidation of the processing sector. The establishment of new processing plants is unlikely with tight material supply and heavy investment requirement. The objective in this aspect is to have a smaller but more competitive processing sector and capable the meeting production requirements of the country. Another aspect is the downstream sector. The development of locally based multinationals in the rubber product manufacturing sector through merges and consolidation in some sub sectors should be encouraged. The creation of a few Silverstone and DMIB of the tire sector in the non-tire sector will be desirable.

Consolidation will provide an answer to the problems faced by the SMIs and will enable the attainment of economies of scale along the value chain from R&D to marketing.

In marketing sector, whilst the industry can claim that every pound of rubber produced is sold, the marketing of NR needs to be re-looked. The coming together of tire manufacturers on the purchasing side is putting a squeeze on the producers. Whilst there are a few big buyers there are thousands of producers. This, amongst other factors, weakens the bargaining position of the producers. It may be necessary for Malaysian exporters to consolidate themselves into a few major entities and seek strategic alliance with selected tire manufacturer. Moreover, with e-commerce becoming the order of the day, it is inevitable that the marketing of NR and rubber-related products will have to

embrace this form of trading. A paradigm shift is needed in order to remain competitive and to widen markets. Aged long trading practices must give way to the electronic way of doing business. Supporting institutions in the rubber need to be reoriented to meet the changing scenario. With the declining interest of smallholder implementing institutions in rubber cultivation, the provider of extension service to the sector need to be re-examined. At the same time, R&D institution may need to tailor its activities in line with the changing structure and to meet requirements of the stakeholders in the industry