The pull effect of big rubber tree plantations


  • Business
  • Tuesday, 01 Sep 2009

MALAYSIA’S move to pioneer the usage of rubberwood as an alternative raw material for timber in its wood furniture industry has spurred investor interest in the cultivation of large-scale rubber tree forest plantations nationwide.

This interest has gone beyond the Sabah and Sarawak governments especially with the private sector now involved in the joint venture between China-based Guangdong Guangken Rubber Group and Bornion Timber Sdn Bhd to develop a 12,000-ha rubber tree forest plantation in Sabah at a whopping investment of RM230mil.

The project is part of Bornion Timber’s plan to develop a total of 25,000ha of rubber plantation under its concession area of 110,000ha.

There are two types of rubber forest plantations, one for the production of wood and latex while the second type is solely for wood production.

In this aspect, accolades must be given to the Malaysian Rubber Board (MRB) where the Rubber Research Institute’s hard work in producing high quality timber latex clones such as the RRIM 900 series, RRIM 2000 series and the latest RRIM 3000 series, have resulted in high-yield latex and bigger girth trunks for timber production.

Sabah and Sarawak have the potential to be major players in the domestic rubber plantation industry due to the availability of large tracts of land suitable for commercial agriculture.

According to rubber experts, those involved in rubber wood forest plantations could see an internal rate of return (IRR) in the region of 12.8% from rubber wood alone.

IRR is generally viewed as the rate of growth a project is expected to generate. The higher a project’s IRR, the more desirable it is to undertake the project.

When latex production is combined with the rotation of 15 years, the IRR is about 13.7% compared to other species of forest plantations which yield an IRR of 5.1% to 15%.

It is also comparable to oil palm cultivation which has an IRR of 15.6% based on fresh fruit bunches of RM260 per tonne, among other factors.

To date, the growth of rubberwood for the furniture industry is tremendous as reflected by the increasing export earnings of RM6.92bil in 2008 from RM6.66bil a year earlier.

Some 80% of the local furniture content are derived from rubber wood products either in the form of solid timber, laminated timber or reconstituted panel products such as particle board and medium density fibre board.

To further encourage investment in forest tree plantations including rubber forest, companies undertaking new forest plantation will enjoy 10 years of tax exemption from the first year the company makes profit while those carrying out reinvestments will get five years tax exemption from the first year it enjoys profit.

Hanim Adnan is assistant news editor at The Star. She recalls collecting rubber seeds for congkak games as an alternative to marbles during her childhood days.

For latest Bursa Malaysia indices, charts and other information click here

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
   

Did you find this article insightful?

Yes
No

Across the site