E 18 Sectoral - NIMP Rubber Based - Products - Industry

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MINISTRY OF INVESTMENT,

TRADE AND INDUSTRY

NEW INDUSTRIAL
MASTER PLAN 2030

RUBBER-BASED
PRODUCTS
INDUSTRY
NIMP 2030 Sector 18
Sectoral Plan Rubber-based Products Industry

e ISBN No. : 978-967-0020-39-6

PUBLISHED BY:

MINISTRY OF INVESTMENT,
TRADE AND INDUSTRY

Menara MITI, No. 7, Jalan Sultan Haji Ahmad Shah,


50480 Kuala Lumpur, Malaysia.

Tel : 603-8000 8000


Fax : 03-6206 4693
Email : [email protected]

© MINISTRY OF INVESTMENT, TRADE AND INDUSTRY

MITI, 2023

All rights reserved


No part of this document may be reproduced, stored in a retrieval system or transmitted, in any form or by any means,
electronic, mechanical, photocopying, recording or otherwise, without prior permission from Ministry of Investment,
Trade and Industry (MITI). The information in this document has been updated as accurately as possible until the date of
publication.

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan

TABLE OF CONTENTS

Preface i

Introduction 2

Overview of the Document 5

Section 1 Background 6

Areas Covered 6
Value Chain 6
Market Players 7
Policies, Laws and Regulations 9

Section 2 Performance 10

IMP3 Focus and Performance 10


Investments 10
Exports 11
Imports 12
Value-added 13
Employment 14
Labour Productivity 13
Consumption 14
Research and Development 16
Linkages with Other Industries 16

Section 3 Trends and Opportunities 17

Sustainable Rubber 17
Innovative Rubbers Products 18
Fourth Industrial Revolution and Digital Transformation 19

Section 4 Challenges 20

Raw Materials and Research and Development 20


ESG Compliance 20
Technology Adoption and Talent 21

Section 5 Strategies and Action Plans 22

NIMP 2030 Focus 22


Action Plans 22

Appendix 1: Incentives 23

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


NIMP 2030 Sector 18
i Sectoral Plan Rubber-based Products Industry

PREFACE

Malaysia’s strength in the manufacturing sector has been significantly driven by the
implementation of robust and forward-thinking Industrial Master Plans, first launched in 1986.

The success of the IMP3 (2006-2020) was anchored on innovation, research and development
(R&D) and human capital development to drive high value-added industries to transform Malaysia
into a knowledge-based economy.

The journey towards formulating the NIMP 2030 is underscored by the need to build a robust
industrial sector as an important prerequisite to achieve socioeconomic prosperity. Three previous
iterations of the Industrial Master Plans have driven industrial development in Malaysia, with the
Government adopting industrial development strategies relevant to the period to transform the
economy. Malaysia flourished from a low-productivity agrarian-based economy and is heading
towards achieving developed nation status, underpinned by robust manufacturing and services
sectors. The strategy has successfully raised the living standards of the Rakyat and propelled
remarkable growth in Gross National Income (GNI) per capita, increasing 34 times between 1967
to 2019, making Malaysia one of the fastest growing economies in modern history.

Industrial policies have since become more diverse and complex, incorporating new imperatives
including the integration into the global value chain (GVC), development of indigenous capabilities
in a knowledge economy, evolution of environmental, social and governance (ESG) criteria and
disruptions from the new industrial revolution. The question is not about the necessity of such
policies, but rather what new policies are required and how to proceed.

Given the current challenging environment, benchmarking and learning from other country’s
experiences are no longer sufficient. Malaysia needs to embark on its own path into unchartered
territory, to steer the nation into the challenging future. The combined impact of the new
imperatives and the recent pandemic has compelled the Government to rethink Malaysia’s
industrial strategy.

With the NIMP 2030, Malaysia intends to transform the industry into greater heights, capitalising
on emerging global trends, supply chain disruptions, current geopolitical landscape, digitalisation
and ESG considerations. These trends are moving at an unprecedented pace and Malaysia has to
act fast.

Therefore, the NIMP 2030 is designed to achieve the aspirations in a span of seven years and
takes on a Mission-based approach for industrial development. This approach unites Malaysia by
encouraging collaboration between the Government and the private sector to rally the industries.

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan ii

Purpose of the NIMP 2030

The NIMP 2030 sets forth Malaysia’s future direction in industrial transformation. It provides a
national integrated plan for resilient industrial development until 2030 – setting the fundamentals
for future policy development and enabling the industry at all levels. It articulates Malaysia’s
position and participation in the global economic environment.
The NIMP 2030 serves to:

• Provide national strategic direction to lead the industrial development policies;


• Be a conversation piece for investors and other economies on Malaysia’s position and direction;
and
• Feature the role of the Malaysian Government in shaping the economy.

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


NIMP 2030 Sector 18
1 Sectoral Plan Rubber-based Products Industry

INTRODUCTION
New Industrial Master Plan 2030
The Missions and Enablers identified will Projects (MBPs) have been identified to catapult
be executed through 21 Strategies and 62 the mission-based implementation. The NIMP
Actions Plans to unlock the needed enabling 2030 strategic framework is illustrated below:
ecosystems. Several catalytic Mission-based

Our vision for Malaysia is to have:


VISION Competitive industry with High income and skilled Strong domestic linkages
high economic complexity workforce

Increase economic Create high-value Extend domestic


GOALS complexity job opportunities linkages

MISSION 1 MISSION 2
MISSIONS Advance economic Tech up for a digitally
complexity vibrant nation

1.1 Expand to high value-added activities of the 2.1 Accelerate technology adoption
value chain 2.1.1 Enhance Industry4WRD programmes to
1.1.1 Create global IC design champions from increase technology adoption
Malaysia 2.1.2 Accelerate digital infrastructure rollout
1.1.2 Attract global leader to establish wafer (JENDELA)
fabrication in Malaysia 2.2 Shift away from low-skilled labour model
1.1.3 Shift from basic to specialty chemical 2.2.1 Introduce multi-tiered levy mechanism for low-
1.1.4 Build Malaysian champions for game changing skilled labour to accelerate automation
advanced materials 2.2.2 Introduce automation condition in new
1.1.5 Identify high value-added opportunities in the Manufacturing Licence
aerospace, pharmaceutical and medical devices 2.3 Spur technology innovation
sectors 2.3.1 Nurture local technology solution providers to
1.2 Develop entire ecosystem to support the high support Technology Adoption Programme
value-added activities 2.3.2 Develop generative and industrial AI solution
1.2.1 Build strong local SMEs in manufacturing and leaders and system integrators
related services to support the industry 2.3.3 Drive data analytics through a national digital
champions platform for manufacturing
1.2.2 Integrate value chains between: 2.4 Accelerate government digitalisation and
• M&E and Medical Devices integration
• Semiconductor and EV 2.4.1 Digitalise end-to-end government touch points
• Chemical and Pharmaceutical across business life cycle
1.3 Establish cooperative ‘vertical integration’ for
STRATEGIES global value chain
1.3.1 Leverage alliance with ASEAN countries
AND ACTION to integrate the semiconductor, advanced
PLANS materials and clean energy value chain
1.3.2 Develop vertical integration programmes
21 Strategies through IndustryConnect conferences
62 Action Plans 1.4 Foster Research, Development,
Commercialisation and Innovation (RDCI)
ecosystem
1.4.1 Assign specific topics and KPIs to universities for
industrial-linked R&D
1.4.2 Digitalise IP application and launch enhanced
National IP Policy
1.5 Increase manufacturing exports
1.5.1 Implement national trade advocacy campaign
to increase industry utilisation of FTAs
1.5.2 Rejuvenate “Made in Malaysia” branding
1.5.3 Address trade restrictive non-tariff measures
(NTMs) and compliance of standards
1.5.4 Update FTA based on geopolitical conditions

5 Strategies, 15 Action Plans 4 Strategies, 8 Action Plans

Mission-based Projects: Mission-based Projects:


MBP 1.1 Create global IC design champions in EV, MBP 2.1 Transform 3,000 smart factories
RE and AI MBP 2.2 Establish Malaysia as Generative AI Hub
MBP 1.2 Attract new advanced wafer fabrication in
Malaysia
MBP 1.3 Deepen to specialty chemical vertical
MBP 1.4 Groom champions in 4 game changing
advanced materials

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan 2

New and existing industry Balanced and inclusive Sustainable development


clusters participation

Develop new & Improve Enhance ESG


existing clusters inclusivity practices

MISSION 3 MISSION 4
Push for Net Zero Safeguard economic ENABLERS
security and inclusivity

3.1 Accelerate transition towards 4.1 Develop resilient supply chain E.1 Mobilise financing ecosystem
sustainable practices 4.1.1 Identify specific supply chain E.1.1 Introduce NIMP Industrial Development
3.1.1 Develop sectoral decarbonisation resilience strategies for critical Fund and NIMP Strategic Co-Investment
pathways to guide transition sectors Fund
3.1.2 Decarbonise “hard-to-abate” 4.1.2 Establish supply chain E.1.2 Boost financing for digitalisation and
sectors cooperation and collaboration decarbonisation transition
3.1.3 Introduce carbon policy, through G2G and G2B E.1.3 Establish green sukuk to facilitate transition
accounting and tax programme E.1.4 Establish supply chain financing for SMEs
3.1.4 Launch iESG framework and 4.1.3 Introduce National Mineral Policy E.1.5 Increase utilisation of the capital market
transition programmes for downstream processing of E.1.6 Expand the imSME platform to show
3.2 Transition to renewable and critical minerals all available funding options including
clean energy 4.2 Foster climate resilient government funding and capital market
3.2.1 Enhance adoption scheme for development E.1.7 Review government funding for
energy efficiency or renewable 4.2.1 Develop sectoral adaptation consolidation
energy pathways E.2 Foster talent development and attraction
3.2.2 Accelerate availability and 4.2.2 Foster an adaptation industry to E.2.1 Leverage mynext and MYFutureJobs for
accessibility of renewable energy provide adaptation products and strategic workforce planning to address long-
source for the industry services (including exports) term demand-supply requirement
3.3 Catalyse new green growth 4.2.3 Instil climate resilience E.2.2 Introduce progressive wage system policy
areas measures for critical economic E.2.3 Improve policy to enable fast and hassle-free
3.3.1 Catalyse EV as a key growth infrastructure access to high-skilled foreign talents
driver 4.3 Strengthen industrial clusters E.2.4 Expand TVET programmes for high-skilled
3.3.2 Grow carbon capture, utilisation for regional development jobs in critical sectors
and storage (CCUS) as a new 4.3.1 Expand clusters for spillover E.2.5 Raise profile of high-tech manufacturing
sector regional impact career to attract interest in STEM subjects
3.3.3 Develop circular economy 4.3.2 Align industrial development E.3 Establish best-in-class investor journey for
framework for the industry plan between Federal and States ease of doing business
3.4 Shift towards green 4.4 Empower Bumiputera E.3.1 Establish a unified investment strategy
infrastructure participation and create and align investment evaluation to new
3.4.1 Accelerate transformation of inclusive workforce parameters under NIA
industrial estates into eco- 4.4.1 Uplift capabilities of Bumiputera E.3.2 Harmonise and streamline functions and
industrial parks companies in manufacturing KPIs across IPA landscape
via Tindakan Pembangunan E.3.3 Review and design competitive, agile and
Bumiputera 2030 relevant incentives
4.4.2 Develop programme to E.3.4 Improve One-Stop Portal for seamless
increase women participation investor experience
in high-skilled manufacturing E.4 Introduce whole-of-nation governance
employment framework
E.4.1 Establish public-private collaborative councils
E.4.2 Set up NIMP 2030 Delivery Management Unit
E.4.3 Develop NIMP 2030 dashboard system

4 Strategies, 10 Action Plans 4 Strategies, 10 Action Plans 4 Strategies, 19 Action Plans

Mission-based Projects:
MBP 3.1 Create decarbonisation
pathway role models
MBP 3.2 Launch locally-
manufactured EV
MBP 3.3 Deploy large-scale CCUS
solutions

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


NIMP 2030 Sector 18
3 Sectoral Plan Rubber-based Products Industry

NIMP 2030 SECTORAL PLAN

There are individual enclosures of 21 sectors included as a supplementary reference to the main
NIMP 2030 document.

They provide a view of the respective sectoral perspective in the context of the main NIMP 2030
document, and were developed with reference to individual sectoral roadmaps, where applicable.

The 21 sectors are:

Category Industry

1. Aerospace
2. Chemical
Priority
3. Electrical and Electronics (E&E)
Sectors
4. Pharmaceutical
5. Medical Devices

6. Digital and Information and Communication Technology (ICT)


7. Automotive
8. Food Processing
9. Global Services and Professional Services
10. Halal
11. Machinery and Equipment (M&E)
12. Manufacturing-Related Services (MRS)
13. Metal
Sectors
14. Mineral
15. Palm Oil-based Products
16. Petroleum Products and Petrochemicals
17. Rail
18. Rubber-based Products
19. Shipbuilding and Ship Repair (SBSR)
20. Textile, Apparel and Footwear
21. Wood, Paper and Furniture

This document is the NIMP 2030 Sectoral Plan – Rubber-based Products Industry.

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan 4

OVERVIEW OF THE DOCUMENT

This NIMP 2030 Sectoral Plan – Rubber-based Products Industry (Document) provides insights
into the sector and its prospects during the NIMP 2030 period.

This Document offers a comprehensive understanding of the industry’s direction during the
NIMP 2030 period based on its historical performance, opportunities and strategies to overcome
existing challenges and achieve its targets.

The Document is presented in five sections:

1. Background

• This section sets the foundation to help readers understand the industry.
• It delves into the industry’s focus area, encompassing its sub-sectors, for a comprehension of
the industry’s breadth.1
• Readers will find details about the industry’s value chain and its key players, including the
relevant industry associations, in this section.
• The section lists the policies that are related to the industry.

2. Performance

• This section reports the industry’s performance during specific periods.


• There are two notable periods for the review of the industry’s historical performance:
– the IMP3 period (2006 to 2020); and
– from 2021 to 2022.
• The performance review of the industry’s development includes its investment trends, export
and import dynamics, employment figures, value-added and productivity measures.

3. Trends and Opportunities

• This section highlights the opportunities and potential avenues for growth that the industry
can leverage during the NIMP 2030 period.

4. Challenges

• This section provides insights into potential obstacles that could impact the industry’s growth
and development.

5. Strategies and Action Plans

• The final section of the document outlines the future trajectory for the industry.
• This section provides the Strategies and Action Plans that are intended to catalyse the industry
during the NIMP 2030 period.
• The Strategies and Action Plans set in this Document have been aligned to the Missions set in
the main NIMP 2030 document.

1
Incentives available for this industry as of time of writing can be found in Appendix 1

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


NIMP 2030 Sector 18
5 Sectoral Plan Rubber-based Products Industry

SECTION 1 BACKGROUND
Areas Covered
1. Rubber can be broadly classified into two main categories:
i. natural rubber – obtained from the latex of hevea tree species and typically used in
the production of various types of rubber products such as tyres, automotive parts and
gloves; and
ii. synthetic rubber – derived from petroleum by-products and mainly utilised in the
production of rubber products either as an alternative to or complementing natural
rubber.

2. Malaysia’s rubber-based products industry consists of five sub-sectors:


i. latex products;
ii. tyres and tyre-related products;
iii. industrial rubber products;
iv. general rubber products; and
v. rubber footwear.

Value Chain
3. The rubber sector supply chain is divided into three segments (Figure 18.1):
i. upstream (plantation);
ii. midstream (processing); and
iii. downstream (rubber-based products).

Figure 18.1: Value Chain of Rubber Industry

Upstream Midstream Downstream


Value Chain
(Plantation) (Processing) (Rubber-based products)

Raw materials Processed Rubber Rubber-based products


• Latex • Standard Malaysian • Dry-rubber products
• Cuplumps Rubber • Latex-based
• Sheet rubber (ribbed • Latex concentrate products
smoked, air dried) • Speciality rubbers

Source: Malaysian Rubber Board (MRB)

4. Upstream activities, consisting of plantation and agricultural activities such as:


i. rubber cultivation;
ii. rubber planting; and
iii. rubber harvesting.

5. Midstream segment processes raw rubber into two types of intermediate products:
i. technically specified rubber (TSR) – called block or standard rubber; and
ii. latex concentrate.

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan 6

6. Downstream segment covers the manufacture of diverse products for:


i. transportation (such as tyres and belts);
ii. industry (such as plates and bearings);
iii. general use (such as threads and shoes); and
iv. hygiene and medical application (such as gloves and condoms).

7. Upstream segment is not part of the industry’s focus area for the NIMP 2030.

Market Players
8. Generally, industry players in the rubber-based products industry are concentrated within
the downstream segment of the value chain2 (Figure 18.2).

Figure 18.2: Presence of Industry Players along the Value Chain of Rubber Industry

Upstream Midstream Downstream


Value Chain (Plantation) (Processing) (Rubber-based products)

Latex Products High Presence

Tyre and Tyre-related


Sub-Sectors

Products Low Presence Low Presence

Industrial and General


Low Presence High Presence
Rubber Products

Rubber Footwear Low Presence

Source: Malaysian Investment Development Authority (MIDA)

9. Within the downstream segment, manufacturers are mainly present in the production
of latex, industrial and general rubber products. There is generally low presence of
manufacturers in the tyres and tyre-related products and rubber footwear.

10. The latex products sub-sector comprises more than 125 manufacturers which produce
gloves, condoms, catheters, latex threads and others.3 This sub-sector accounts for 80 per
cent of total rubber exports:
i. The rubber glove industry has a strong ecosystem in Malaysia in terms of machinery,
equipment, spare parts, packaging materials, testing services and sterilisation services.
ii. Malaysia is home to leading rubber glove producers that have developed successful
brands which are recognised by laboratories, hospitals, pharmacists and medical
practitioners worldwide.
iii. Rubber gloves are also used for other applications including:
a. industrial or commercial gloves used in automotive, construction and food services;
and
b. individual gloves used in household work.
iv. According to the Malaysian Rubber Council (MRC), the ‘Made in Malaysia’ gloves are
highly recognised and accepted globally due to its high quality and competitive price.
v. Previously, local glove producers relied heavily on imported synthetic latex from countries
such as Korea, Japan and Taiwan. Presently, there are two manufacturers in Malaysia that
produce synthetic latex locally and two other projects are still under the commissioning
stage.

2
Midstream level is referred to the production of Ekoprena and Pureprena (modified natural rubber) which could be used
as raw materials for rubber tyres and tubes, industrial and general rubber products and rubber by-products/ footwear
3
Condoms, surgical gloves, examination gloves and catheters are classified as medical devices

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


NIMP 2030 Sector 18
7 Sectoral Plan Rubber-based Products Industry

11. Currently, there is sufficient production of tyres and tyre-related products in Malaysia.
However, the sub-sector requires more players to become more competitive.
i. Malaysia holds the third position among ASEAN countries in the production and
assembly of passenger car tyres and commercial vehicle tyres, following Thailand and
Indonesia.
ii. The country’s tyre industry is expected to grow in line with the expansion of the
automotive sector driven by increasing vehicle ownership, urban lifestyle trends and
improved infrastructure.
iii. Malaysia is experiencing growing demand for automobile tyres due to the presence
of major global original equipment manufacturers (OEMs) which have established
manufacturing plants in the country.
iv. However, Malaysia still imports a significant volume of tyres to meet certain specifications
for domestic needs. It is crucial for Malaysia to capture a larger share of the global tyre
market to emerge as a prominent tyre supplier.

12. The industrial and general rubber products sub-sector comprises 185 companies which
produce a wide range of rubber products for the automotive, electrical and electronics
(E&E), machinery and equipment (M&E) and construction industries for the domestic and
global market, such as:
i. mountings;
ii. beltings;
iii. hoses;
iv. tubing; and
v. seals and sheeting.

13. The industry associations in Malaysia’s rubber-based products industry play important roles
in representing the interests of industry stakeholders and promoting the industry as well
as developing standards. Non-exhaustive examples of these associations and organisations
include:
i. Malaysian Rubber Products Manufacturers Association (MRPMA);
ii. Malaysian Rubber Glove Manufacturers Association (MARGMA); and
iii. Tun Abdul Razak Research Centre (TARRC).

14. Related Ministries and Government Agencies that play a key role in the development of the
industry include:
i. Ministry of Plantation and Commodities (KPK);
ii. Ministry of Investment, Trade and Industry (MITI);
iii. Malaysian Rubber Board (MRB);
iv. Malaysia Rubber Council (MRC);
v. Rubber Research Institute of Malaysia;
vi. Malaysian Investment Development Authority (MIDA);
vii. Malaysia External Trade Development Corporation (MATRADE);
viii. Department of Standards Malaysia (DSM); and
ix. SIRIM Berhad (SIRIM).

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan 8

Policies, Laws and Regulations


15. The industry’s development is guided by the National Agricommodity Policy 2021-2030
(DAKN2030).

16. Non-exhaustive laws, standards and regulations applicable to the rubber-based products
industry are:
i. Malaysian Rubber Board Act 1996;
ii. Malaysian Rubber Board (Cess) Order 1999;
iii. Malaysian Rubber Board (Licensing and Permit) Regulations 2014; and
iv. Malaysian Standard on Rubber and Rubber Products.

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


NIMP 2030 Sector 18
9 Sectoral Plan Rubber-based Products Industry

SECTION 2 PERFORMANCE

IMP3 Focus and Performance


17. During the period of the IMP3 (2006 to 2020), six strategic thrusts were identified to promote
the growth of the rubber industry:
i. strengthening and enhancing Malaysia’s position as the leading producer and exporter
of latex products;
ii. expanding the export market for Malaysian rubber products;
iii. encouraging outward investment for low value-added rubber products to countries
with lower cost of production and availability of natural rubber;
iv. expanding the product range by developing the industrial and general rubber products
sub-sector;
v. developing Malaysia as a regional centre for the testing and certification of rubber
products; and
vi. upgrading the existing technology, especially in process automation and improving the
skills of the workforce.

18. In 2020, Malaysia was the largest producer and exporter of rubber gloves, contributing 67.0
per cent of global supply, and the world’s second largest producer of condoms and rubber
thread.

19. The rubber-based products industry contributed RM61.7 billion to Malaysia’s total exports of
RM1.2 trillion in 2021, with an increase of 48.2 per cent year-on-year.

Investments
20. The investment performance (2006 to 2022) of the rubber-based products industry is
recorded in Table 18.1 below.

Table 18.1: Approved Investments of Rubber-based Products Industry

IMP3
Items Units 2021 2022 2021-2022
2006 2020 2006-2020
Total Investment RM billion 0.7 4.3 28.9 5.8 3.6 9.3
Domestic Investment RM billion 0.5 3.9 16.4 4.9 3.2 8.0
Foreign Investment RM billion 0.3 0.4 12.6 0.9 0.4 1.3
Number of projects # 38 42 388 40 22 62
Employment persons 5,045 11,498 89,048 12,229 7,592 19,821

Source: MIDA

21. During the IMP3 period, a total of 388 projects were approved in the rubber-based products
industry with a total investment of RM28.9 billion. These investments committed a total of
89,048 job opportunities.

22. In 2021 and 2022, a total of 62 projects were approved with total investment of RM9.3 billion.
These investments committed a total of 19,821 job opportunities.

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan 10

23. The investments in the industry were supported by tax relief incentives and allowances
in the latex sub-sector for automation, process improvements, product development,
streamlining of manufacturing facilities and plant expansion – making the industry remain
competitive against strong competition from neighbouring countries.

24. From 2006 to 2022, a total of 374 (83.1 per cent) of the 450 approved projects were
implemented.

Exports
25. The export performance (2006 to 2022) of the rubber-based products industry is depicted
in Table 18.2 below.

Table 18.2: Exports of Rubber-based Products Industry

IMP3 2006-2020 2020-2021 2021-2022


Item 2021 2022
2006 2020 2006-2020 CAGR Annual Growth
Exports
9.3 41.6 259.7 61.7 27.2 11.3% 48.2% -56.0%
(RM billion)
Source: MRB, Department of Statistics Malaysia (DOSM)

26. During the IMP3 period, total exports grew by a CAGR of 11.3 per cent, from RM9.3 billion
(2006) to RM41.6 billion (2020).

27. In 2021, exports grew by 48.2 per cent to RM61.7 billion. Subsequently, in 2022, exports
declined by 56.0 per cent to RM27.2 billion due to oversupply of rubber gloves in the market
as countries began to recover from the COVID-19 pandemic.

28. Overall, the export growth was driven by increased global demand for rubber gloves,
supported by the:
i. increased production capacity due to reinvestment allowance and public listing of
rubber glove manufacturers;
ii. product innovation and technology due to intensive research and development (R&D);
and
iii. increased use of rubber gloves during the COVID-19 pandemic.

29. Malaysian rubber-based products were exported to more than 190 countries. In 2022, major
export destinations were:
i. United States (US) (RM7.8 billion, 28.8 per cent);
ii. China (RM1.8 billion, 6.6 per cent);
iii. Germany (RM1.5 billion, 5.6 per cent);
iv. Japan (RM1.5 billion, 5.6 per cent); and
v. Brazil (RM0.9 billion, 3.5 per cent).

30. In 2022, major export products included:


i. rubber gloves (RM19.0 billion, 70.1 per cent);
ii. new pneumatic tyres (RM1.8 billion, 6.6 per cent);
iii. tubes, pipes and hoses (RM0.9 billion, 3.2 per cent);
iv. rubber thread and cord (RM0.7 billion, 2.7 per cent); and
v. insulated cable, wire and electric conductors (RM0.7 billion, 2.5 per cent).

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


NIMP 2030 Sector 18
11 Sectoral Plan Rubber-based Products Industry

Imports
31. Table 18.3 presents the imports performance of the industry (2006 to 2022).

Table 18.3: Imports of Rubber-based Products Industry

IMP3 2006-2020 2020-2021 2021-2022


Item 2021 2022
2006 2020 2006-2020 CAGR Annual Growth
Imports
2.4 6.8 74.8 8.9 11.1 7.9% 29.6% 25.6%
(RM billion)

Source: MRB, DOSM

32. During the IMP3 period, total imports grew by a CAGR of 7.9 per cent, from RM2.4 billion
(2006) to RM6.8 billion (2020).

33. In 2021 and 2022, imports grew by 29.6 per cent and 25.6 per cent to RM8.9 billion and RM11.1
billion respectively – attributed to the higher import of:
i. reclaimed and waste synthetic rubber;
ii. rubber gloves and surgical rubber gloves;
iii. hard rubber and articles of rubber;
iv. tyres, threads, flaps and inner tubes; and
v. unvulcanised compounded rubber.

34. In 2022, major import sources of rubber-based products included:


i. China (RM3.7 billion, 33.2 per cent);
ii. Thailand (RM2.0 billion, 18.0 per cent);
iii. Indonesia (RM1.2 billion, 10.8 per cent);
iv. Viet Nam (RM0.9 billion, 8.1 per cent); and
v. US (RM0.6 billion, 5.8 per cent).

35. Major import products in 2022 were:


i. new pneumatic tyres (RM3.3 billion, 30.0 per cent);
ii. footwear (RM2.2 billion, 19.7 per cent);
iii. insulated cable, wire and electric conductors (RM1.4 billion, 12.4 per cent);
iv. gloves (RM1.1 billion, 9.7 per cent); and
v. gaskets, washers and other seals (RM0.6 billion, 5.7 per cent).

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan 12

Value-added
36. The industry’s value-added (GDP) is recorded below (Table 18.4).

Table 18.4: Value-added of Rubber-based Products Industry

IMP3 2006-2020 2020-2021 2021-2022


Item 2021 2022
2006 2020 CAGR Annual Growth
Value-added4
3.9 12.1 14.5 12.1 8.4% 19.8% -16.6%
(RM billion)
Source: DOSM

37. During the IMP3 period, the contribution of the rubber-based products industry to GDP
grew by a CAGR of 8.4 per cent from RM3.9 billion (2006) to RM12.1 billion (2020).

38. In 2021, the industry’s GDP contribution grew further by 19.8 per cent to RM14.5 billion.
Subsequently, the industry’s GDP contribution declined by 16.6 per cent to RM12.1 billion in
2022.

39. Overall, the industry’s GDP growth was driven by the increased production capacity of
rubber-based products resulting from technological advancements.

Employment
40. The rubber-based products industry’s employment is tabulated below (Table 18.5).

Table 18.5: Employment in Rubber-based Products Industry

IMP3 2019-2022
Item 2021 2022
2019 2020 CAGR
Employment5
117,846 121,606 122,498 122,297 1.2%
(persons)
Source: DOSM

41. Employment grew by a CAGR of 1.2 per cent, from 117,846 (2019) to 122,297 persons (2022).

42. The employment growth was in line with the increased demand for rubber-based products,
which created more job opportunities in the industry.

Labour Productivity
43. The industry’s labour productivity is tabulated below (Table 18.6)

Table 18.6: Labour Productivity of Rubber-based Products Industry

IMP3 2019-2022
Item 2021 2022
2019 2020 CAGR
Labour
Productivity6 67,368 99,304 118,549 98,996 13.7%
(RM)
Source: DOSM

4
Value-added is measured by the GDP of the industry; 2006 GDP data is based on constant 2005 prices, while 2020 to
2022 data are based on constant 2015 prices
5
This employment data is based on Monthly Manufacturing Statistics December 2022
6
Annual labour productivity is derived from value added per employment

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


NIMP 2030 Sector 18
13 Sectoral Plan Rubber-based Products Industry

44. The labour productivity of the industry grew by a CAGR of 13.7 per cent from RM67,368 (2019)
to RM98,996 (2022).

45. The increase in labour productivity was largely due to the adoption of more efficient
processes through usage of Industry 4.0 technologies.

Consumption
46. Table 18.7 presents the consumption of rubber (2006 to 2022).

Table 18.7: Consumption of Rubber

IMP3 2006-2020 2020-2021 2021-2022


Items 2021 2022
2006 2020 CAGR Annual Growth
Total (tonnes)
495,709 1,072,566 1,026,044 852,315 5.3% -4.3% -16.9%

Natural rubber
383,324 518,732 501,961 426,594 2.0% -3.2% -15.0%
(tonnes)
Synthetic
112,385 553,834 524,083 425,721 11.2% -5.4% -18.8%
rubber (tonnes)

Source: MRB, DOSM

47. During the IMP3 period, the consumption of rubber grew by a CAGR of 5.3 per cent, from
495,709 tonnes (2006) to 1,072,566 tonnes (2020), driven by the increase in synthetic rubber
consumption of 11.2 per cent.

48. In 2021 and 2022, consumption declined by 4.3 per cent and 16.9 per cent to 1,026,044 tonnes
and 852,315 tonnes respectively.

49. The decline in consumption was largely due to:


i. oversupply of rubber glove in global market;
ii. slowing demand from major consumers such as China, Europe and the US;
iii. impact from global economic recovery of COVID-19;
iv. higher minimum wage in Malaysia;
v. increased competition from countries such as Thailand, Indonesia and China; and
vi. higher prices of natural gas.

50. From 2006 to 2020, the consumption of synthetic rubber in Malaysia increased while the
consumption of natural rubber remained in a relatively steady state (Figure 18.3).

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan 14

Figure 18.3: Malaysia’s Rubber Consumption by Type


(Tonnes)
600,000
Natural rubber Synthetic rubber
500,000

400,000

300,000

200,000

100,000

0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: MRB, DOSM

51. The consumption of rubber-based products is influenced by demand, which is dependent


upon:
i. sustainable economic growth – related to income and living standards;
ii. growth in automotive sector; and
iii. growth in health and medical services – resulting in an increased demand for rubber
medical products (Table 18.8).7

Table 18.8: Output of Selected Rubber-based Products

Inner Rubber Rubber


Items Tyres Catheters Gloves Footwear Condoms
tubes band sheet
Million Million
Unit Million Million Million Tonnes Tonnes ‘000
pairs pairs
2006 11.6 20 75.9 20,554.0 4.0 6,750 5,677 9,254
2007 13.4 21 108.9 21,118.9 5.7 6,175 4,392 9,768
2008 14.4 21.2 145.1 22,585.6 6.9 5,506 4,420 11,118

2009 13.1 14.6 119.4 23,132.7 5.6 3,301 2,638 11,632


2010 14.7 15.4 129.5 26,257.3 6.7 3,592 3,806 13,344
2011 14.9 15.4 140.2 30,897.8 6.7 3,452 4,542 12,744
2012 16.6 17.4 148.5 31,754.0 6.4 2,197 4,570 11,780
2013 15.2 13.3 160.5 34,628.2 6.3 3,527 3,988 14,587
2014 12.9 10.9 139.8 32,469.6 5.5 2,709 5,554 11,749
2015 12.2 7.9 n.a 34,269.1 4.5 n.a n.a 12,278
2016 15.8 5.6 n.a 44,426.7 6.1 n.a n.a 11,358
2017 15.2 5.4 n.a 37,524.7 5.8 n.a n.a 13,019
2018 13.7 4.8 n.a 54,184.3 5.2 n.a n.a 9,678

Source: MRB, DOSM

7
n.a. = not available. The survey was conducted under the provisions of the Statistics Act 1965 (Revised - 1989). In conformity
with the stipulations of this Act, only aggregated figures are published

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


NIMP 2030 Sector 18
15 Sectoral Plan Rubber-based Products Industry

Research and Development


52. MRB contributes to the development and modernisation of the Malaysian rubber industry
in all aspects including:
i. cultivation of the rubber tree;
ii. extraction and processing of raw rubber;
iii. manufacture of rubber products; and
iv. marketing of rubber and rubber products.

53. MRB actively promotes the commercialisation of R&D activities, facilitates the transfer of
technologies to industry partners and explores new areas of research to support the industry
sustainability.

54. MRB continuously conducts R&D on new clones and technologies to improve yields and
the management of rubber smallholdings in the upstream sector as well as to improve the
rubber processes and to develop new products in the downstream industries.

55. Apart from that, MRB provides calibration services through Global Testing and Consultancy
for Rubber (G-TACR) in addition to a wide range of training programmes for businesses to
improve skills and knowledge.

56. Other organisations involved in R&D activities include:


i. MRC – provides the MRC Global Funding for Rubber Innovation to seed innovative inter-
disciplinary non-fundamental research with the potential to promote investments in
high-value products and technologies within the rubber and rubber products industry;
ii. SIRIM – provides funding, training and technical assistance to businesses and
organisations in the rubber industry as well as conducting R&D activities;
iii. TARRC – provides training and technical assistance to businesses and organisations in
the rubber industry as well as conducting R&D activities; and
iv. research universities – provides training and technical assistance to businesses and
organisations in the rubber industry as well as conducting R&D activities.

Linkages with Other Industries


57. The downstream activities of the rubber-based products industry contribute to other
industries including:
i. medical devices – medical gloves, condoms and catheters;
ii. automotive – production of tyres amongst others;
iii. construction – seismic and vibration isolation;
iv. marine – rubber shock cells to protect against damage to structures;
v. railway – production of rail pads to reduce noise and vibrations; and
vi. apparel industry – production of latex thread that is mainly used as elastic bands and
supports.

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan 16

SECTION 3 TRENDS AND OPPORTUNITIES


58. The global rubber market is expected to reach RM328.9 billion8 by 2029.9

59. The demand for industrial and general rubber goods will be influenced by the growth of the
following industries across the Asia-Pacific region:
i. automotive – tyres, hoses, seals and gaskets;
ii. E&E – connectors, gaskets and seals;
iii. construction and infrastructure – roofing, waterproofing, insulation and engineering
rubber products;
iv. consumer, healthcare and handcraft products – footwear, medical devices and
homewares; and
v. technology advancements – examples include new rubber compounds or composites
for special application.

60. It is essential for Malaysia to diversify its product offerings to sustain and increase its market
share in new and emerging areas. The trends and opportunities for the rubber-based
products industry include:
i. sustainable rubber products;
ii. innovative rubber products;
iii. circular economy; and
iv. Industry 4.0 technologies and digital transformation.

Sustainable Rubber
61. Sustainable rubber is considered a high value-added product as it includes materials that
replicate natural rubber properties and are produced in a more environmentally friendly
approach and process.

62. Sustainable rubber helps to reduce deforestation and carbon emissions, which in turn helps
to mitigate climate change and conserve natural resources. The targeted products include:
i. renewable plant and bio-based fillers for rubber applications;
ii. enhanced biodegradable materials;
iii. lignin dispersion and its utilisation in rubber technology; and
iv. green preservatives and modifiers for rubber products application.

63. Sustainable rubber aligns with the growing consumer demand for eco-friendly and
responsibly sourced products. This provides opportunities for companies to cater to the
market demand and gain competitive advantage.

64. Apart from that, sustainable rubber encourages the adoption of high technology/ Industry
4.0 technologies to help reduce the environmental impact of rubber production. For
example, sensors can be used to monitor the health of rubber trees and to collect data on
water usage and soil quality.

65. Refer to Action Plan 3 (AP3) in Section 5 for strategies and action plans related to sustainable
rubber.

8
USD73.42 billion, converted based on exchange rate USD1 to RM4.48
9
Source: Maximize Market Research

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


NIMP 2030 Sector 18
17 Sectoral Plan Rubber-based Products Industry

Innovative Rubbers Products


66. The development of graphene-enhanced rubber products is a rapidly growing field, as
these products offer superior strength and durability.

67. Graphene is a nanomaterial which consists of single layer sheets of carbon atoms in a
honeycomb structure used as an additive. Adding graphene to rubber films can increase its
strength and elasticity by up to 50.0 per cent.

68. Graphene is known to be a sustainable solution and the application can be used in a wide
range of consumer-based products, including tyres, condoms, sports and fitness footwear,
antibacterial gloves and reusable face masks.

69. The other targeted products for nano materials or advance materials include rubber
composites based on multiwall carbon nano tubes (MWCNT) and electrical-conductive
rubber blends for corrosion inhibition of carbon steel.

70. Apart from that, increasing demand for Electric Vehicles (EVs), mobile gadgets and
wearables are expected to drive battery technology such as stretchable battery.

71. Promotion of circular economy will benefit the environment and offers economic
opportunities. Recovered carbon blacks from end-of-life tyres can be utilised as fillers in
rubber product application, while rejected gloves and condoms as co-component in low-
end rubber products.

72. Other opportunities for enhancements in the industry include:


i. razor thin armour;
ii. soft rubber sensor for smart textiles;
iii. anti-seismic rubber for construction, marine and railway;
iv. rubber-based bitumen for road pavement;
v. magnetorheological fluid (MRF) in automotive rubber devices;
vi. green rubber sound insulators for automotive applications;
vii. high-performance glow in the dark thermoplastic vulcanisate (TPV) blends;
viii. specialty gloves – including metal detectable nitrile gloves;
ix. electrostatic dissipative (ESD) products for semiconductor industry;
x. anti-tack technology; and
xi. smart tyres such as tyre products integrated with sensors to increase safety, airless tyres
and self-healing rubber tyres.

73. Malaysia has the potential to strengthen the local rubber industry, expand global market
reach and enhance local brand recognition through the development of innovative rubber
products.

74. Refer to Action Plan 2 (AP2) and AP3 in Section 5 for strategies and action plans related to
innovative rubber products.

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan 18

Fourth Industrial Revolution and Digital Transformation


75. 3D/ 4D/ 5D printing is the printing of rubber-like material for mass customisation of products
which will accelerate prototyping processes, decrease lead times, reduce the error rate to
zero and shorten the product development cycle.

76. Other digital transformation areas include precision farming and smart plantation, smart
manufacturing advanced harvesting, crop sensors and digital apps for information access,
business transactions and monitoring activities.

77. By investing in Industry 4.0 technologies and digital transformation, the industry can reduce
dependency on unskilled labour and shift towards a more knowledge-based, IoT-enabled
sector to increase local businesses competitiveness. To achieve this, it is essential to provide
incentives and encourage smart partnerships in technology adoption/ acquisition.

78. Refer to Action Plan 1 (AP1) and AP3 in Section 5 for strategies and action plans related
to Industry 4.0 technologies and digital transformation to increase local business’
competitiveness.

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


NIMP 2030 Sector 18
19 Sectoral Plan Rubber-based Products Industry

SECTION 4 CHALLENGES
79. As demand for rubber-based products is expected to grow, there are several challenges
faced by the industry in meeting the demand, including:
i. raw materials and R&D;
ii. ESG compliance; and
iii. technology adoption.

Raw Materials and Research and Development


80. There is limited land availability due to low rubber prices, resulting in more valuable crops
prioritised over land competition.

81. The industry is vulnerable to climate change as rubber trees are affected by the increase
in temperatures, dry spells and prolonged wet season. The scarcity of rubber tappers has
caused increasing abandonment of many rubber smallholdings. This results in shortages of
natural rubber latex in Malaysia.

82. Separately, research universities conduct highly innovative R&D with limited industry
collaboration, leading to low commercialisation rates.

83. There is an opportunity to overcome this challenge by pivoting towards green rubber such
as Ekoprena and Pureprena to command higher prices, develop sustainable synthetic
rubber alternatives and invest in R&D that is in line with industry.

84. Refer to Action Plan 1 (AP1) in Section 5 for strategies and action plans related to R&D.

ESG Compliance
85. The growing use of rubber-like materials (e.g. silicone, nitrile butadiene rubber (NBR), vinyl
and neoprene) has increased Malaysia’s carbon footprints.

86. Globally, there is a growing trend towards carbon pricing, with the European Union’s (EU)
Carbon Border Adjustment Mechanism (CBAM) being one of the latest initiatives aimed at
reducing the risk of carbon leakage.

87. Local SME face challenges in complying with ESG requirements due to the high costs and
limited resources.

88. There is an opportunity to address these challenges by adopting sustainable practices to


reduce carbon emissions through the development of a carbon footprint policy, including
tighter carbon audit and reporting.

89. Refer to Action Plan 4 (AP4) in Section 5 for strategies and action plans related to ESG
adoption.

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan 20

Technology Adoption and Talent


90. Currently, there is limited adoption of new technologies and capabilities in downstream
activities.

91. The adoption of advanced manufacturing technologies and processes is crucial in meeting
the growing demand while remaining cost-effective and competitive. Furthermore, the
industry faces insufficient skilled talents and relies heavily on low skilled labour.

92. The industry’s readiness to adopt new technologies is limited as financial challenges
and unwillingness of companies to diversify or change due to the risks in recouping its
investment.

93. To address these challenges, reskilling and upskilling programmes are necessary to
accelerate the adoption of Industry 4.0 technologies.

94. Refer to Action Plan 5 (AP5) in Section 5 for strategies and action plans related to technology
adoption and talent development.

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


NIMP 2030 Sector 18
21 Sectoral Plan Rubber-based Products Industry

SECTION 5 STRATEGIES AND ACTION PLANS

NIMP 2030 Focus


95. During the period of the NIMP 2030, the industry focus includes:
i. increasing competitiveness of local businesses;
ii. intensifying focused initiatives and involvement in trade shows and e-marketplace; and
iii. intensifying accountability towards preserving the environment and compliance to ESG.

Action Plans
96. Strategies and Action Plans relating to the NIMP 2030’s Missions and Enablers are applicable
to this industry (Figure 18.4).

Figure 18.4: Strategies and Action Plans for Rubber-based Products Industry

Alignment to NIMP 2030


Missions

AP1 Increase local businesses competitiveness MISSION 1:


via incentives and smart partnerships in Advance economic complexity
tech adoption/acquisition 1.2 Develop entire ecosystem
to support the high value-
added activities
AP2 Expand global market reach and
brand recognition via trade shows and 1.5 Increase manufacturing
e-marketplace exports
Expand to high value-
1.1 added activities of the
value chain
AP3 Encourage industries to focus more
on high value-added activities, high MISSION 2:
technology, advanced automation and Tech up for a digitally vibrant
Industry 4.0 adoption nation
2.1 Accelerate technology
adoption

MISSION 3:
Increase industry accountability via carbon Push for Net Zero
AP4
footprint policy and tighter carbon 3.1 Accelerate transition
accounting principles towards sustainable
practices

ENABLERS
AP5 Boost innovative capabilities of talents via E2 Foster talent development
reskilling and upskilling programmes and attraction

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY


Sector 18 NIMP 2030
Rubber-based Products Industry Sectoral Plan 22

APPENDIX 1 INCENTIVES
There is an array of incentives offered for key players of the rubber-based products industry, these
include the following:

Incentives Agency
Incentives for General Investments Malaysian Investment
Development Authority (MIDA)
Incentives for Small Scale Companies
Incentive for Strategic Projects
Incentive for Reinvestments by Existing Company
Second Round Incentives for Investment by Subsequent
Company Formed by Existing Company
Incentives for Research and Development (R&D):
• In-House R&D
• Contract R&D Company
• R&D Company
Commercialisation of Public Sector R&D Findings in
Resource-based and Non-Resource-Based Industries
Incentive for Automation Capital Allowance (Automation
CA)
Import Duty and/ or Sales Tax Exemption on Machinery/
Equipment/ Raw Materials/ Components
Reinvestment Allowance Inland Revenue Board of Malaysia
(LHDN)
Kedah Rubber City: Northern Corridor
• Full tax exemption Implementation Authority (NCIA)
• ITA
• Stamp duty exemption
• Deduction on pre-operational expenditure

MINISTRY OF INVESTMENT, TRADE AND INDUSTRY

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