Tapping the market
Chinese firm makes inroads into Southeast Asian rubber industry
Ramli Amin, a 27-year-old native of the eastern Malaysian state of Sabah, gets up at 3:30 am in the morning and rides his motorbike to his lot several kilometers from the dormitory, just on time for the day’s rubber tapping.
Ramli’s job is to slice into the bark of the rubber tree and harvest the latex with a cup. Weather permitting, he can finish his daily task of tapping 600 trees in three hours.
There are now currently more than 400 rubber tapping workers in the plantation, located about 150 kilometers from the state capital of Kota Kinabalu. Each of them is responsible for 1,800 trees on average.
Recent slump
Malaysia used to be the third largest rubber-producing country in the world, behind only Thailand and Indonesia. Due to sluggish rubber prices in recent years and Malaysia’s shift to other crops such as palm, rubber tapping is gradually going out of fashion among local people as rubber plantation areas are shrinking.
But Guangdong Guangken Rubber Group, a Chinese firm that has invested millions of dollars leasing lands and introducing new technologies here since 2008, believes otherwise. The company has worked together with its local partner Bornion to create one of the largest rubber plantations in Malaysia.
Lai Xionghui, general manager of Bornion Guangken Rubber, the 5050 joint venture between Guangken Rubber Group and Bornion, said that as the number of rubber trees ready for tapping goes up, costs will be further reduced and the company will be able to withstand longer periods of low prices.
Lai said that in Southeast Asia, natural rubber productivity is higher than in China but labor costs are lower. “A rubber tapper in China, normally in his or her 40s, earns 40 percent to 50 percent more than one in Southeast Asia,” said Lai.
Currently, there are some 770,000 rubber trees in the plantation, and the company aims to raise that number to 2 million in a couple of years. To meet that target, more workers are needed.
New opportunity
A former air-conditioner repairman, Ramli used to work in Kuala Lumpur, the capital city of Malaysia. But hearing about the opportunity, he came back to become a rubber tapper.
“As the company provides accommodation for my whole family, I can earn almost the same amount as working in Kuala Lumpur,” Ramli told Xinhua, adding he earned more than 2,000 ringgit ($512.90) in the last month.
Ramli said he also planned to let his wife take the rubber tapping training course soon so that they can earn more to support their three kids.
According to Ho Fung Shan, a director of the joint venture, a skilled and hard-working rubber tapper can earn as much as 5,000 ringgit a month. However, it is still proving difficult to hire enough workers. In addition to rubber tapping, the plantation also needs people to take care of nursery seedlings, which Lai says is a job that local people are not willing to take.
Normally, it takes almost five years for a newly planted natural rubber tree to be ready for tapping, which means the plantation needs hundreds of millions of nursery seedlings annually.
“After some pay raises, we are still short of 200 workers,” said Lai, noting that though there are plenty of Indonesian workers to hire in the market, local authorities fear that an influx of foreign workers willing to take the job at lower pay could jeopardize the local labor market.
The Malaysian rubber plantation is not the only Guangken project in Southeast Asia. Amid industry-wide consolidation caused by the rubber price slump, the Chinese firm has also made inroads into Indonesia, Thailand and Vietnam, becoming one of the world’s largest natural rubber companies after it bought a Thai competitor, according to a brief introduction on the company’s website.
Lai declined to reveal the timetable for Guangken’s Sabah plantation business to make profits, saying that will be subject to market prices.
He said there are also plans to build a factory to process rubber latex into dry rubber or a liquefied form known as latex concentrate, which will raise profit margins.
“The most important thing for us is to take root here and let the people see we are making a long-term commitment,” said Lai.