RM100 mln not profit but reserves – SRIB
KOTA KINABALU: The Sabah Rubber Industry Board (SRIB) denied that it made a profit of RM100 million in 2016 as stated by Warisan vice president Junz Wong yesterday.
The RM100 million mentioned was the accumulated fund of the board over six years and was not the profit for the year 2016, SRIB said in a statement yesterday.
“The accumulated fund represents the board's reserve used as working capital (revolving fund) to allow the board to pay for smallholders' rubber in cash on a daily basis to deter manipulation of smallholders by some private dealers,” it said.
“The board spends about RM1.5 million daily to buy rubber from smallholders and a revolving fund equivalent to 40 days of cash is needed from the date of purchase of rubber until it is processed, packed, sold, shipped and the final sale proceeds are received by the board.
“The board does not want to see a repeat of the problems faced by smallholders in 2008, 2009 and 2010 when the board could not pay smallholders in cash on the day of purchase. Private dealers took advantage of the smallholders by buying at a price up to 50 sen/ kg less than the board's prices then,” it said.The accumulated fund is also utilized to fund the replacement of many old vehicles and equipment required to provide efficient and reliable door to door purchasing service to the smallholders.
In addition, the board needs to fund the costs of providing tapping equipment to the smallholders when the rubber matures; the cost of repairing access roads to the farm gate, the costs of repairing offices, stores and quarters.
“The board has always and will continue to pay fair farm gate rubber prices to smallholders basing on the actual dry rubber content achieved after processing of the rubber. This can be seen from the comparison of farm gate prices of cup lumps between Sabah and Sarawak and Peninsula Malaysia,” SRIB said.
The farm gate prices of cup lumps in Sabah was higher than that in Sarawak. The price of rubber in Sabah was slightly lower than that of Peninsula Malaysia due to the following factors:
(a) Additional costs of freight, transshipment, port charges and insurance; (b) Higher processing costs; (c) Higher costs of door to door purchase of rubber.
SRIB said it also had to incur additional costs of freight, port charges, insurance and transshipment charges to ship processed rubber to buyers due to lack of mother shipping from Kota Kinabalu to international destinations.
“All processed rubber from Sabah has to be transshipped either at Klang or Singapore with an additional cost of 36 sen/kg. The processing costs of rubber in Sabah is higher than Peninsula by 10-15 sen/kg due to all spare parts, packing materials, chemicals have to be imported from Peninsular Malaysia which incurred additional freight charges. The prices of industrial diesel or natural gas are also higher in Sabah compared to Peninsula Malaysia.
“The costs of providing door to door purchasing service to rubber smallholders in Sabah are higher by 10-15 sen/kg due to the scattered and remote location of smallholdings, poor access roads to the smallholdings and the requirement to provide the marketing service to the smallholders on a regular schedule basis regardless of distance and quantity of rubber available as a social obligation of the board,” it said, adding that the board would look after the interests of rubber smallholders in Sabah, and their total welfare would remain its priority.