Dato’ Dr Zairossani bin Mohd Nor is the Director General of the Malaysian Rubber Board (MRB). The MRB, an agency under the Ministry of Plantation Industries and Commodities, is the custodian of the Malaysian rubber industry and oversees the sector in its entirety. Appointed to the post in 2017, he is the youngest person to helm the MRB. Dato’ Dr Zairossani has a great background in rubber research, and holds a PhD in chemical engineering from Warterloo University, Canada. He has published over 80 scientific papers and holds 10 patents and trademarks. He has also won over 20 awards for his work in R&D.
R&D PAVING WAY FOR MALAYSIA’S RUBBER INDUSTRY
Since our first rubber plantation in Kuala Kangsar, we have gathered more than 100 years of experience. Today, our industry’s yield is some of the best out there, if not the best. Proudly, our raw rubber is highly sought after as the world’s premium. There is some historical precedent to our storied rubber industry’s past and why our Standard Malaysian Rubber or SMR is one of our flagship export products. What I can say is, this 100-year period in retrospect saw unprecedented growth for our rubber industry, especially in terms of upstream and downstream innovation as well as output.
We have, over the years, gone through various cycles of progress. We started humbly as a raw rubber producer before the first world war up to the 70s. We were then the largest rubber producer and held that position until 1982. Since, we’ve been overtaken over by other countries such as Thailand, Vietnam and Indonesia.
After that, we progressed to the processing sector where we became the world leader in processing concentrated latex. These developments however, didn’t happen by accident. In Malaysia, we are fortunate to have a strong industry spine. When we started the industry, we had our national framework for the rubber industry. Early on, Malaysian Rubber Board (MRB) was responsible for the industry’s scaling-up strategy. And in this structural framework, we had various implementing agencies that sprang up to support our rubber industry’s goals.
In addition to this, we also had an enterprising funding mechanism that continues until today. In social and economic terms, we have always been consistent in supporting our rubber industry. Our upstream and processing sectors, I can say, have some of the highest growth rates. Although our raw rubber production capacity was overtaken, but we are still a rubber industry leader to this day.
We’ve held on to this advantage simply because our ecosystem can’t be duplicated by other countries. Thankfully for us, we always have MRB overseeing all quality-related aspects of our SMR production. This way, although our production volume has somewhat declined, we have remained consistent and strong in terms of quality. For us, the challenge now is to maintain our leadership. The world is clearly changing and we need to make sure we’re not locked into old systems that stop us from diversifying our products and bringing new innovation to the market.
Although we are now in seventh place as a raw rubber producer, our smaller production footprint is in contrast to our superior quality and higher productivity. Our rubber is premium quality and is recognised all over the world. This rapid pace of change however can create hurdles. Therefore, going forward, we have to diversify to exit the commodity realm and go into niche specialty as well as increase our traction in new customised rubber product categories.
To this end, I’m fully convinced, our R&D experience and capability will help speed our transition to the latest innovation and technology. While we continue to produce premium rubber, we must act now to strengthen our leadership in rubber R&D and commercialisation.
CONSUMER NEEDS CHANGING THE RUBBER INDUSTRY
Currently, the industry is counting on greatly increasing the complexity of our raw latex and rubber. We have seen how a number of industrial and consumer sectors cosying up to what latex can do to improve their products. This actually started in the late 70s, and its development picked up tremendously across various other sectors in the mid 80s and early 90s. Taken together, with the right technology and R&D support, we can increase the diversity of our downstream sector.
Objectively, we will focus our effort on generating new income sources through more sophisticated products. As a world leader, our challenges in the rubber industry are well documented. Although we have surrendered our stronghold as the largest raw rubber producer, we are still the industry’s frontrunner as far as values are promised. However, to help us sidestep our challenges concerning underutilised land and labour shortage, we need to step up one or two notches in terms of technology to get ahead of our competitors.
One of our strategies is to develop our SMR into a specialty commodity. Surprisingly, not many know that when you tap a rubber tree, the latex the tree bleeds out only contains about 30% of rubber content. So, there’s a lot of room for us to take this further. Right now, we are exploring what we can do with the other 70% in terms of new products and value creation.
MAINTAINING OUR STARRING ROLE IN THE COMMERCIAL LATEX SPACE
To sustain our industry and commodity advantages, we need to look at value multipliers that we can get out of technologically and knowledge-based innovations. At the same time, we can’t ignore the latest emerging trends that are going to frame economic prospects worldwide such as sustainability and green manufacturing.
I believe our industry needs a bit of a soft push to go further. We need to drill down on what sophistication we need to engineer to produce more latex and rubber-based product spin-offs.
Our downstream sector for example is dominated by latex-based products. However, in actual fact, the overall global market value of our products, 90% of it consists of dry rubber and our current export contribution from the latex space is only about 10% to 15%. Even if we can capture another 10% from our latex sector, this can almost double our expert revenue.
To date, we have more than 10,000 different types of rubber products. And these products are highly diversified. With that being said, we need to act imaginatively to move up the value chain. By aligning our excellent raw rubber quality with rapid advances in technology, we can produce more complex latex and rubber derivatives to serve a wider range of industries.
Doing this will help us to fully utilise our strength in manufacturing and sustainable production that we can count on to maintain our competitiveness for the next 10 to 20 years. So, it’s really up to us where to refocus our efforts as we have experience entering almost all niche dry rubber and latex segments. Significantly, this is very much in line with our ambition of being a world leader at both ends, the upstream and downstream sectors. We can draw on lessons from our R&D experience and take advantage of the ecosystem in place.
So, these are the areas we are looking at to implement technology industry-wide to enhance our value-creation activities. In one novel use-case, our glove manufacturing for example, one of the research areas that we can look into is the advancement of materials for glove manufacturing.
I would also like to bring your attention to the fact that Malaysia is the chair of the ISO/TC45. This international committee is responsible for developing international standards for raw rubber and rubber products. On the ground, with more certifications, we can ensure whatever we produce is of international quality. Plus, we also provide testing services through our global testing centre. This centre has been set up to assist our manufacturers to comply with all international standards in terms of export and technical requirements. By leveraging the cumulative impact of all these facilities, we can assist our manufacturers to become global players and get them to penetrate larger market places abroad. Ultimately, this will allow us to explore many new profitable niche sectors and build our long-term advantage.
REVEALING NEW OPPORTUNITIES FROM CHALLENGES
As we come to grips with industry changes, it’s actually a chance for us to turn our challenges into opportunities. Going forward, technology will be key. At the moment, it requires a systems approach to get our rubber farms to produce higher yield. Our main issue right now is the upstream sector where we are dealing with 95% of smallholders.
Many smallholders unfortunately have felt the sting of fluctuating rubber prices in recent years. Yet while it’s easier for downstream manufacturers to implement automation, tapping rubber trees still needs labour.
Although we have a fully automated rubber tapping system available today, its steep rental makes it difficult for us to transfer the technology to these smallholders. Currently, the production cost for the system is about RM2,000 at a pilot scale.
Eventually, when the technology gets widely commercialised, we can probably bring the cost down to about RM700 or RM1,000. In practice, a smallholder needs to have one machine for each tree they own. In one hectare, you have about 400 trees. Despite the low cost entry of the technology, it’s still very difficult for our smallholders to invest due to a lack of funds. Although we have other solutions such as semi–automatic systems, there’s still a lot to be done to make technology more accessible for our smallholders.
Another way to solve this problem is to get more participation from our locals. Of course, to hire local labour, our smallholders need to pay them more compared to foreign workers. Apart from this, there’s also training that’s needed. As such, we are working closely with all the implementing agencies, especially Rubber Industry Smallholders Development Authority (RISDA).
However, I do believe that with wider implementation of technology, this could be an attractive lure for our locals to work in our rubber industry, whether in the upstream or downstream sector.
For example, we have a funding instrument that provides salary incentives to help our industry players reduce their dependency on foreign workers. This funding incentive pays the difference between the minimum wage and the amount needed to hire local labor. So far, from the 10,000-job target, we have already managed to create 5,000 jobs. Similarly, our goal is to extend this kind of funding support to our upstream and midstream operators that largely consist of smallholders.
This is to make sure our smallholders don’t abandon their farms and continue tapping. Unfortunately, these underserved smallholders are the most vulnerable. Going forward, MRB’s critical role is to introduce fitting technology packages that can assist our smallholders and downstream players to achieve a reasonable degree of automation. What we do is we facilitate a case-by-case solution to help them access the technology they need.
On the contrary, if you look at the glove industry, they have achieved a lot on the automation front. Case in point, when our rubber glove industry started, for 1 million gloves, they then required more than 30 workers. But now, thanks to technology, we’ve been able to bring it down to 1.5 workers.
As far as the technology goes, our rubber glove industry has automated as much as possible.
However, there are certain processes that are still difficult to automate. I would say that they are about 90% automated. Now as to their productivity rate, ours is one of the highest in the industry, having increased our production output from about 3000 pieces to 50,000 pieces a day. So you can see what productivity improvement automation can have on the industry. Even at this rate, our rubber glove industry is still complaining about labour shortage. Currently, our players need an additional 25,000 workers to cope with surging demand worldwide as well as restrictions imposed by the MCO.
STRENGTHENING OUR LOCK ON RAW RUBBER AND LATEX R&D
We have long been a pioneer of rubber innovation. Since the start of our rubber industry, we have made this component a central part of our growth. So, when we speak about sustainability, it’s the same. Considering our environmental challenges, we now need to be deliberate about our forward action. This therefore throws a spotlight on sustainability and it asks us to make a series of smart, tailored judgement calls.
At MRB, we play a crucial role in this period of uncertainty. Our incentives and technology assistance are important to help our players pivot to greener technology. As the industry calls for more responsible practices, apart from our work to enhance the properties of our SMR, we need to make sure that our chemical and physical processes comply with international standards.
Ultimately, this will alter the content and properties of our rubber produce. Through R&D, we can sample and prototype new specialist rubber types. For example, our rubber industry is currently working on reducing the use of synthetic rubber. In tire manufacturing for example, we need to find new ways to help us clinically replace some of the synthetic rubber properties that are currently in use. Tire manufacturing typically combines both synthetic and natural rubber. However, we can now fuse nanotechnology in existing industry practices to produce a new type of specialty rubber. Potentially, this could help us reduce the use of synthetic rubber that’s largely harmful to the environment in its afterlife.
One more potential use-case we can look into is the modification of the latex properties in our glove products. By infusing the latest nanomaterials in our product line, we can engineer new types of advanced composite materials. In turn, this could help us tackle common issues with our glove products such as improving our rubber products’ oil resistivity. On this count, we have a high ceiling as to what our R&D and ecosystem can do. Not only that, we could potentially produce thinner gloves, something that conventional gloves struggle to match therefore giving us an added value and a formidable product advantage.
So in this new chapter, we need to get our industry players to pick up greener rubber production practices and technologies. In the upstream sector for example, we can certainly move our sustainability needle by using lesser hazardous toxic chemicals. In essence, these specialty rubber materials could open up new niche applications and reduce our raw material dependence that constitutes about 60% of production costs.
As the industry’s frontrunner, we can’t afford to be denied by the opportunities that we can make out of our challenges. I just can’t stress this enough. This will make an exponentially greater difference than anything else, as we get to reduce our carbon footprint and help us to prepare for future regulatory changes around manufacturing sustainability simultaneously. For example, the European Union recently announced regulatory changes that introduced tighter compliance measures. I’m pretty sure these changes will ripple out nearly everywhere across the industry. Nonetheless, improving our readiness to turn all these challenges into opportunities will be pivotal. It is our responsibility to up the pace of our R&D to secure and sustain our rubber industry. Last but not least, to get more export contribution from our rubber industry, it is crucial for us to think about breaking our challenges into parts and solve the challenges simultaneously, rather than one at a time for our industry to be able to carry out the work efficiently.
