Thammasat University
Bachelor of Economics Semester 1/2018
Public Policy and Industrialization
The Effectiveness of Rubber Industry Approach:
A Case of Thailand and Malaysia
Dr. Paul Vandenberg
Kochakorn Sutaruksanon 5804640075
Supisara Hongkou 5804641230
1
The Effectiveness of Rubber Industry Approach: A Case of Thailand and Malaysia
Rubber industry has played an important role in both Thai and Malaysian economy. In 2017, it
represented 8.8% and 3.9% of exports respectively. The two have taken different approach to rubber
industry development, especially in the early stage of economic development. The differences in industrial
policies are probably one of the factors that drives differences in growth of the rubber industry.
Thailand is world’s largest natural rubber producer and exporter in South East Asia. Initially, the
country focused on developing upstream industries and indeed, the majority of rubber products exported
has been upstream products. Nonetheless, Thailand’s emphasis has recently shifted toward high-value
products. The shift in policies have yet to materialize or reflect in its production and exports structure.
Even though Malaysia was not a global top rubber producer, it has always been one of the top
exporters. The country has always focused more on value creation in the downstream industries. The
downstream goods in the supply chain are major exports of the rubber sector, particularly gloves and
condoms. Indeed, Thailand is its main supplier of upstream inputs. As a result, Thailand is not a direct
competitor of Malaysia.
This paper first investigates Thailand and Malaysia’s rubber policies. It then compares and contrasts
the policies between the two. Finally, the effectiveness of the policies is explored in various aspects. As it
will later be illustrated, Malaysia’s and Thailand’s approach are effective in different aspects.
Thailand’s rubber policies
The Thai economy has undergone structural changes since the 1960s, when the first National
Economic and Social Development Plan were enacted. Indeed, the first two plans (1961 – 1971) were
characterized by intense industrial policies, including import substitution and export promotion.
Nonetheless, there are no evidence that the rubber industry was specifically targeted. It was not until 1999
that a clear strategic plan for the industry was established.
The list of public entities that oversee rubber policies is extensive. At the highest level are the
Ministry of Agriculture and Cooperatives (MOAC), focusing mainly on upstream development, and the
Ministry of Industry (MOI), focusing mainly on the downstream development
1
. Each of which has its own
rubber industry strategic plans (Appendix 1). Additionally, the Ministry of Commerce oversees export
policies.
1
Extracted from Doner and Abonyi (2013)
2
The strategic plan of the MOAC favors market development and productivity enhancement in the
upstream industries. Although the 2009 – 2013 plan mentioned the development of downstream
industries, they were not much emphasized and the policies toward them – such as “supporting
productions to substitute imports” - were rather vogue. There were no clear specific or functional industrial
policies toward each product, except for “improving efficiency” of a few products. In fact, the goal was
primarily to increase raw natural rubber productivity (per rai).
Only until 2012 did an industrial strategic plan be created specifically for the rubber industry by the
MOI. The primary goals of the plan were to encourage reallocation of production bases by foreign investors
into Thailand, to expand domestic manufacturers’ production, and to create further R&D as well as skills
development. It included various industrial policy tools (table 1). Above all, it included selective, functional
industrial policies that favors some rubber products over others. The favored products were; automotive
tires; rubber gloves, and; rubber products used for engineering applications. It can be said that the plan is
heavily oriented toward strong industrial policy and value creation in the downstream industries.
Apart from these plans, the Board of Investment (BOI) designs investment specifically for both mid
and upstream rubber product producers. The specific incentives for some rubber products – Technically
Specified Rubber (TSR), automotive tires, pharmaceutical rubber products, latex, and etc. – have been
evident since 2011. In 2018, the BOI have come up with investment promotion policies for local agricultural
products (from upstream to downstream), including rubber. BOI’s recent policies come in forms of; a
minimum 3-year tax holiday for natural rubber products
2
, and; an import duty exemption on machinery
and inputs.
In conclusion, Thai rubber policies can be divided into two main phases; the early phase (strategic
plan of 1999 – 2003 and 2009 -2013) where there was an indication of weak targeted industrial policy by
the MOAC with strong emphasis on upstream, low value-added industries, and; the phase of strong and
selective industrial policy by the MOI (strategic plan of 2012 -2016) with emphasis on downstream, high
value-added industries.
2
Manufactures of primary processed rubber receive 3 years tax holiday. Manufactures of other rubber products
(except for rubber bands, rubber balloons, and rubber rings) receive 8 years tax holiday.
3
Table 1: Summary of Thailand’s industrial policy tools for rubber industry
Type of industrial policy
Activity
Finance
Low-cost, long-term credit through the Bank for Agriculture
and Agricultural Cooperatives (BAAC) for SMEs and price
stabilization via delayed production
Complementary Investments
Establishment of rubber special economic zones (rubber
cities) and related infrastructure
Technology
- Low-cost credit, subsidies, and tax breaks for private R&D
and technology adoption
- Establishment of R&D facilities
Regulating Investment
Encouraging FDI conditional on technology transfers
Trade promotion
- Marketing supports
- Promoting quality standards corresponding to international
standard
Skills training
- Training programs/curriculum
- Tax breaks for private investments in skills development
Tax policy
Tax breaks for specific rubber products
Source: Thailand Ministry of Agriculture and Cooperatives (MOAC); Thailand Ministry of Industry (MOI); Thailand Board of
Investment (BOI)
Malaysia’s rubber policies
Malaysia’s period of intense industrialization started in the 1980s. Since then, the rubber industry
has been a targeted industry of Malaysia’s industrial policies. There were three main generations of the
economic transformation, each with its own industrial plans (Appendix 2). All plans involved the
industrialization of rubber industry,
The first industrial master plan (1986 – 1995) set export-led growth as a primary objective in seven
specifically-targeted resource-based industries: rubber is one them. The plan was to shift from primary
commodity exporter to raw material base in order to serve the vertical integration, export-oriented,
manufacturing intermediate and consumer rubber goods. In addition, the relaxation of foreign direct
investment allowed the technological transfer, know-how, and creating medium to high value-added
manufactured products.
4
The second industrial master plan highlighted industry promotion and R&D in a cluster of resource-
based rather that specific sector. The rubber products were diversified into the wider ranges.
Developments of high value-added products and linkages improvement among industries (strengthening
vertical integration) were considered as following goals. However, there is no clear industrial policy in IMP2.
There are only a few examples of institutions that were established during the second plan such as Malaysia
Rubber Board (MRB) or The Malaysian Rubber Export Promotion Council (MREPC).
The third industrial master plan continued the second plan in more deepening and broader scope.
The plan is for Malaysia to be a global leading producer through 5 main channels (Appendix 2). The key goal
is towards global competitiveness and high-income economy in 2020. There are also several interesting
industrial policies that were launched - for instance, the Testing and Certification requirement, which
encourage rubber products to meet international standards. Due to the fact that the key objective is
becoming a high-income country, Malaysia will further diversify to a wider range of the products.
Table 2: Summary of Malaysia’s industrial policy tools for rubber industry
Type of industrial policy
Activity
Finance
- Low-cost credit from the Rural Transformation Center (RTC)
- Financial aids to smallholders and financial transfer through
the Domestic Investment Strategic Fund
Technology
- Grants for R&D-related activities and institutions through the
MREPC Industry Linkage Fund
- Assisting firms in transferring emerging technologies as they
become available under the A5 program
Regulating Investment
-Requiring foreign companies to obtain Manufacturing License
- 100% foreign-ownership allowance
Trade promotion
- Import duty exemption on machinery equipment, spare parts
& consumables, and raw materials & components
- 0.2% export tax
Skills training
Technical training program
Tax policy
-Tax breaks for those holding pioneer status
- Investment tax allowance
Source: various sources
5
Rubber policies comparisons: Thailand and Malaysia
Thailand’s and Malaysia’s approach to rubber industry development differ considerably in terms of
their underlying elements – institutional settings, objectives, and types of industrial policies- especially
during the early development plans (1980s – early 2000s). However, the differences have disappeared
during the past decade (late 2000s – present), primarily owing to Thailand’s fresh emphasis on downstream
development. In addition, the policy tools are more or less similar.
Institutional bodies involved
Because they play role in the design, administration, and implementation of industrial
policies, the organization and management of institutional bodies determine the direction as well
as the effectiveness of the policies. For Thailand, there is a clear division of management along
different fragments of the supply chain. Namely, the MOAC focuses on upstream industry, the MOI
focuses on downstream industry, and the MOC focuses on exports.
On the other hand, Malaysian government established the Malaysian Rubber Board and
the Malaysian Rubber Export Promotion Council with extensive and definitive influence over the
development of rubber industrial policies. The Malaysian Rubber Board oversees the entire supply
chain.
Goals and emphasis of rubber policies
Perhaps the most striking dissimilarity in the policies are their goals. During the early
development plans (1980s – early 2000s), Thailand focused on the development of upstream
industries, more specifically by the MOAC, with no evidence of concrete industrial policies to
increase value-added, support downstream industry, and upgrade the rubber industry (Appendix
1). In contrast, the Malaysian government has been supporting strong industrial policies since the
first Master Plan (Appendix 2).
However, the tide has been changing under recent development plans (late 2000s –
present). The Thai government started to put more emphasis on value creation in upstream
industries through various tools (table 1). Even so, Malaysia has already gone deeper in rubber
industrial development during the same period. Its third Master Plan is now focusing on outward
investment and diversifying products range while still maintaining emphasis in skills and
technology.
6
Types of industrial policies
Although both countries employed targeted industrial policies in which supports are
specific to the rubber sector, Malaysia has been much more selective since the early plans. That is,
it has targeted high value-added products such as condoms and gloves, while Thailand has only
been similarly selective during recent strategic plans.
All in all, Thailand’s and Malaysia’s have taken difference approaches toward the industrialization
of the rubber industry, especially during the early development plans (table 3). Malaysia seems to have
taken an approach of early, strong and integrated industrial policies in support of value creation. It has also
taken the path of selective, targeted policies since the 1980s. In contrast, Thailand’s approach was rather
broad-based, non-selective, with strong focus on lower-value upstream products until very recently.
Table 3: Comparison of Thailand and Malaysia’s policies focus
Emphasis
Thailand
Malaysia
Institutional bodies
Various uncooperative, uninfluential
agencies
Only a couple of extensive, strong
agencies
Types of policies
Selective only recently
Selective since 1980s
Goal of the strategic
plans/policies
- 1980s – early 2000s: increase
upstream productivity
- Late 2000s – present: support
downstream industrial development
(R&D, skills development, standards,
technology transfers, FDI, etc.)
- 1980s – early 2000s: support
downstream industrial development
(export promotion, R&D, value
addition, FDI, etc.)
- Late 2000s – present: outward
investment, standards, skills, R&D,
diversification, etc.
Section of the value
chain
- 1980s – early 2000s: upstream,
- Late 2000s – present: downstream
- Little emphasis on midstream
Mid and upstream since 1980s until
present
Vertical cooperation
and integration
Little cooperation along the supply chain
Comprehensive integrated system
along the supply chain
Source: Doner and Abonyi (2013), Thailand Ministry of Agriculture and Cooperatives, Thailand Ministry of Industry
Despite differences in these fundamental elements of the policies, the policy tools used are quite
similar (table 4). In fact, they are almost identical. Nonetheless, it is worth noting that Thailand, again, has
employed these tools selectively to rubber industry only recently, while Malaysia has moved ahead since
7
its early Master Plan. Besides, the way the policies are employed is likely to be more relevant than policy
tools choices.
Table 4: Policy tools
Tools
Thailand
Malaysia
Low-cost credit provisions
✓
✓
Financial aid
✓
✓
Selective complementary investments
✓
-
Financial supports to R&D
✓
✓
Regulation on technology imports
✓
✓
Regulating FDI
✓
✓
Import protection
-
-
Export promotion
✓
✓
Selective training system
✓
✓
Tax breaks for FDI
✓
✓
Source: Thailand’s Ministry of Agriculture and Cooperatives, Thailand’s Ministry of Industry,
Effectiveness of approaches to rubber industry development: Thailand and Malaysia
To compare the effectiveness of the policies, simple indicators and past studies are used. Three
main aspects are compared; the way in which the institutional bodies involved in rubber policies are
organized; the effectiveness of rubber policies in industrializing the rubber industry ,and; the effectiveness
of each country’s approach in attaining its own objectives of rubber policies.
The effectiveness in the organization of institutional bodies
The critical factor in the success of enterprise clusters is the effectiveness of cluster-related
institutions
3
. There is a differences in the organization and management of government agencies
in the administration of rubber policies. However, Malaysia’s institutional management approach
seem to has been more effective in the ability to deploy and administer policies along the supply
chain.
Thailand’s approach of separated fragment management has not been very effective in
terms of integration and cooperation along the supply chain. In essence, “none of Thailand’s
players develop any authority and influence” (Doner and Abinyi, 2013). Above all, there are little
3
Doner and Abonyi (2013)
8
coordination between agencies. The MOAC, the MOI and the MOC, have limited interest and
involvement in each other’s area of oversight. The result is the lack of integrated promotion
between upstream, midstream, and downstream industry
4
. In contrast, the Malaysia’s approach of
having few agencies, but with definitive power allows for a “comprehensive integrated system”
from upstream to downstream industry
5
.
The effectiveness in the policy’s ability to facilitate industrialization process
Industrialization is defined as a process which constitutes the expansion of production, the
creation of value addition and/or the increase in competitiveness: each of these are compared
using simple indicators to see the progress of industrialization in the rubber industry. Note that it
is not possible to conclude which country’s approach has been more effective using these
indicators, as the policies’ contributions to their changes is unknow – it could be the case that these
indicators would move such way despite the policies.
It is inconclusive which country has been progressing in the process of industrialization.
Essentially, Thailand’s production expanded more and competitiveness increased. While Malaysia
may do better in terms of value creation, it competitiveness decreased. Nonetheless, the changes
in these indicators went in line with Thailand’s emphasis on production expansion and Malaysia’s
emphasis on value creation.
In the case of Thailand natural rubber production increased rapidly since 1999 (figure 1).
By 2015, the production more than doubled. In contrast, Malaysia’s upstream production dropped
marginally (figure 2). Due to the lack of data, the changes in downstream production cannot be
illustrated.
4
Thammasat Research and Consultancy Institute (2012)
5
Thammasat Research and Consultancy Institute (2012)
9
Figure 1: Thailand’s upstream natural rubber production, 1999 – 2015
Source: Thai Rubber Association
Figure 2: Malaysia’s upstream natural rubber production, 1999 – 2015
Source: Department of Statistics Malaysia
In terms of value addition, Malaysia’s exports constitute higher shares of high-value
products than Thailand. Thailand’s largest rubber exports (figure 3) was natural rubber in primary
form - an upstream, low value-added product used for further processing. Nonetheless, the share
of natural rubber had been declining continuously while the share of tyres -an upstream product -
started to pick up.
In contrast, Malaysia’s largest rubber exports (figure 4) was articles of apparel and clothing
accessories, which command much higher value. Moreover, the gap between shares of low-value
0
1,000
2,000
3,000
4,000
5,000
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Thousands Metric Tonnes
Total Production Exports
Domestic Consumption Stock
-
200
400
600
800
1,000
1,200
1,400
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Thousands Metric Tonnes
Dry Latex Total
10
and high-value product has been widening as high-valued exports rise. That is, Malaysia has been
much more progressive in its ability to create value addition. In fact, current trade structure (figure
5) reflects that Thailand is Malaysia’s main supplier of inputs to produce higher value-added
product.
Figure3: Thailand’s exports of rubber products, 2001 - 2017
Note: Yellow = upstream, low value-added; blue =downstream, high value-added
Source: ITC
Figure 4: Malaysia’s exports of rubber products, 2001 - 2017
Note: Yellow = upstream, low value-added; blue =downstream, high value-added
Source: ITC
0%
10%
20%
30%
40%
50%
60%
70%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Natural rubber in primary forms New rubber pneumatic tyres
Synthetic Rubber Articles of apparel and clothing accessories
Articles of vulcanised rubber Tubes, pipes and hoses, of vulcanised rubber
% of total
rubber products exported
0%
10%
20%
30%
40%
50%
60%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Articles of apparel and clothing accessories Synthetic Rubber
Natural rubber in primary forms New rubber pneumatic tyres
Articles of vulcanised rubber Tubes, pipes and hoses, of vulcanised rubber
% of total rubber products
exported
11
Figure 5: Malaysia’s rubber imports structure
5A: Malaysia’s rubber imports by countries of origin, 2017 (% of total rubber imports)
Note: Orange = South East Asia; blue = East Asia; grey = others
Source: ITC
5B: Malaysia’s rubber imports from Thailand by products, 2017 (% of total rubber
imported from Thailand)
Note: Yellow = upstream, low value-added; blue = downstream, high value-added
Source: ITC
In terms of competitiveness, between 2001 and 2017, Thailand’s share of rubber exports
to world’s total rubber exports has almost doubled (figure 6), reflecting an increase in
competitiveness. On the contrary, Malaysia’s share is relatively more stable. In addition, revealed
comparative advantage index (figure 7) suggests that Thailand’s competitiveness increased
Thailand
31.33%
12.48%
10.06%
7.63%
5.80%
5.30%
5.28%
4.13%
3.82%
14.17%
Thailand
Korea, Republic of
Côte d'Ivoire
Japan
Taipei, Chinese
Viet Nam
China
Indonesia
Philippines
Others
Natural rubber in
primary forms
69.34%
18.20%
4.01%
2.54%
2.53%
1.09%
2.28%
Natural rubber in
primary forms
New rubber pneumatic
tyres
Synthetic Rubber
Articles of apparel and
clothing accessories
Articles of vulcanised
rubber
Hygienic or
pharmaceutical articles
Others
12
between 1989 – 2015 while that of Malaysia has remained stable. The gap between the two has
widen.
Figure 6: Thailand and Malaysia’s rubber products exported, 2001 - 2017
Source: ITC
Figure 7: Thailand and Malaysia’s Revealed Comparative Advantage index, 1989 – 2015
Source: World Integrated Trade Solution
4.5
5.1
6.2 6.2 6.2
7.4
6.9
7.5
7.2
8.7
9.5
7.9
8.2
7.4
7.3
7.5
8.8
3.1
3.2
3.3
3.4 3.4
4.1
3.8
4
3.9
4.7
4.5
4.1
4
3.6
3.7
3.5
3.9
2
4
6
8
10
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Thailand
Malaysia
% of total world exports
2.6
2.2
1.7
1.6
1.7
1.6
1.8
1.8
1.8
1.8
1.7
2.1
2.0
2.1
2.2
2.3
2.3
2.4
2.3
2.6
2.3
2.6
3.1
3.0
2.9
2.7
2.4
2.2
1.7
1.6
1.4
1.3
1.2
1.3
1.2
1.1
1.1
1.0
1.0
1.0
1.0
1.0
1.1
1.1
1.2
1.2
1.3
1.2
1.3
1.4
1.3
1.3
1.2
1.2
0
1
2
3
4
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Thailand
Malaysia
13
The effectiveness in the ability to achieve selected strategic objectives
The goal of the policies may not be exclusively to facilitate industrialization. It which case,
it is useful to see whether the policies are effective to the extent of their ability to achieve their
own objective or not. In essence, Thailand has not been much effective in achieving some of its
goals.
Up until 2012, Thailand’s main goal was to increase natural rubber productivity.
Nonetheless, such objective was not attained as productivity (per Rai) rapidly decrease since 2005
(figure 8). During the late 2000s to early 2010s, there was also an emphasis on increasing domestic
use of natural rubber products – either directly in primary form or in further processing. The
objective was not attained either as the change in domestic uses of natural rubber products was
negligible (figure 1).
At later stage (late 2000s – present), Thailand has shifted its rubber policy emphasis toward
the development of selective rubber products, which are automotive tyres, gloves, and rubber
used in engineering (including conveyor belts). Over the period, only exports of automotive tyres
increased (figure 9). However, this may come as a result of a boom in automotive industry.
Therefore, it is not possible to conclude whether the policies are effective in terms of picking
winners or not.
Figure 8: Thailand’s natural rubber productivity, 1996 - 2012
Note: Productivity increased in 2014 due to a loss of plantation area from flood.
Source: Author’s computation from Thai Rubber Association and the Rubber Authority of Thailand
174
189
186
209
228
229
237
190
173
166
161
160
166
165
179
264
254
100
150
200
250
300
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Kg. per Rai per year
14
Figure 9: Thailand’s exports of rubber products prioritized by the Ministry of Industry (USD
thousand)
Source: ITC
In the case of Malaysia, when IMP1 and IMP2 were launched, a steady increase in
manufacturing rubber firms reflect industrial upgrading. Plus, the export level also moved
accordingly to the rise in production level (figure 10). Most importantly, Malaysia’s rubber exports
were heavily concentrated in articles of apparel and clothing accessories since 2001, including
glove (figure 11). Gloves exports continued to increase between 2001 – 2017 (figure 12). Thus,
overall, Malaysia’s data complies with the primary goal of the policy and the policies are, indeed,
effective in its ability to attain its goals.
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Automotive Tyres
Gloves
Conveyor Belts
USD Thousand
15
Figure 10: Malaysia’s rubber industry indicators, 1985 - 2005
Source: Malaysia Rubber Board
Figure 11: Malaysia’s exports of rubber products, 2017 (% of total rubber products exported)
Note: Yellow = upstream, low value-added; blue = downstream, high value-added
Source: ITC
0
50
100
150
200
250
300
350
400
0
2000
4000
6000
8000
10000
12000
1985 1990 1995 2000 2005
Output Export (RHS) No. of companies (RHS)
RM millions
Articles of
apparel and
clothing
accessories
51.15%
17.63%
15.21%
4.03%
2.89%
2.72%
6.38%
Articles of apparel and
clothing accessories
Synthetic Rubber
Natural rubber in primary
forms
New rubber pneumatic tyres
Articles of vulcanised rubber
Tubes, pipes and hoses, of
vulcanised rubber
16
Figure 12: Malaysia’s exports of rubber products prioritized by the Malaysia rubber board, 2001
– 2017
Source: ITC
In conclusion, Malaysia’s approach is effective in terms of the organization of institutional bodies
overseeing policies, the ability to create value addition and the ability to attain policy goals while Thailand
is effective in terms of production expansion and export competitiveness, especially for upstream product.
In addition, it is inconclusive whether the industrial policies have actually contributed to industrialization
or not, because the changes in these indicators can be the result of other factors as well.
-
1,000,000
2,000,000
3,000,000
4,000,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Gloves Condom
USD thousands
17
Appendix 1: Main rubber strategic plan under the MOAC and MOI
Strategic Plan
Relevant Details and Notes
The Rubber Authority of Thailand under the Ministry of Agriculture and Cooperatives
Rubber Development
Strategy Plan (1999 –
2003)
Enhancing rubber production
- Supporting the adoption of appropriate technology and rubber tapping process
- Providing Tax reduction on chemical inputs used for processed rubber products
Developing rubber markets
- Establishing central rubber price
Rubber Structure and
Product Restoration Plan
(2006 – 2008)
Did not materialize due to changing government bodies
Rubber Development
Strategy Plan (2009 -
2013)
Enhancing productivity and efficiency in (upstream) rubber production
- Supporting the usage of proper production technology, inputs and methods
- Improving quality and primary processing
Developing processed rubber industry (downstream)
- Increasing the use of domestic rubber directly and for further processing
- Supporting production to substitute exports
- Providing production, exporting and innovation adoption incentives
- Increasing efficiency on processed rubber, rubber gloves and rubber tire production for SMEs.
18
Strategic Plan
Relevant Details and Notes
Developing domestic and external markets
- Developing rubber database and early market indicators
- Supporting private-public cooperation in export promotion
- Upgrading price stabilization scheme
- Promoting Thai rubber products in global market
Promoting R&D and skills development
- Establishing R&D and testing facilities
The Office of Industrial Economics under the Ministry of Industry
Strategic Plan for Rubber
Product Industry
Development
(2012 – 2016)
Strengthening (downstream) rubber product industry
- Developing and upgrading production standards to meet international standards
- Providing low-interest loan to enhance production capacities
- Providing tax exemptions to rubber product manufacturers
Creating specific strategic plans for important rubber products
6
- Constructing separate strategic plans with varying policies for vehicle tire products, rubber gloves
products, rubber products used for engineering applications (tubes/conveyer belts), and other rubber
products
- Promoting financial investment to manufacturers and joint ventures
- Encouraging FDI on condition of transfer of technology
6
Policies presented are chosen and concluded from strategic plans of different rubber products. In reality, different products were subjected to different
policies.
19
Strategic Plan
Relevant Details and Notes
- Providing low-interest, long-term loans for research and innovation, and for SMEs
- Strengthening supporting industries
Promoting exports
- Promoting industrial standards
- Promoting bilateral cooperation
Promoting technology, R&D and skills development
- Strengthening R&D to create value-added to existing products and develop new viable products
- Promoting the development of machinery technology
- Provide short-term training course for personnel
Creating supportive environment
- Establishing Special Economic Zones for rubber and rubber product industry
- Providing necessary infrastructure
Source: Rubber Authority of Thailand, Thailand’s Ministry of Agriculture and Cooperative, Thailand’s Ministry of Industry, Thammasat Research and Consultancy
Institute (2012)
20
Appendix 2: Malaysia’s industry rubber plan related to the rubber industry
Strategic Plan
Relevant Details and Notes
First Industrial Master
Plan - IMP1
(1986 - 1995)
Export promotion and selected rubber products development
- Gaining competitiveness through improving productivity, quality and cost reduction especially tyre
and latex.
Extending foreign direct investment (FDI)
- By multinational corporations in order to transfer technology and access the export markets.
Providing credit facility to support R&D
- Financing to both local and abroad institutions for R&D in natural rubber production and
manufacturing products.
Second Industrial
Master Plan - IMP2
(1996 - 2005)
MRB - Malaysia Rubber Board (1998)
- To research and promote industrial activities particularly downstream.
MREPC - The Malaysian Rubber Export Promotion Council (2000)
- to support and promote rubber products to world markets.
Third Industrial Master
Plan - IMP3
(2006 - 2020)
Expanding the export markets
- Promote trade into new markets such as Latin America, Africa, and West and Central Asia
Encourage outward investment
- Shifting low value-added factories to lower-cost countries to complement the high value-added
factories in Malaysia.
21
Strategic Plan
Relevant Details and Notes
Diversifying product range
- Standardized in health and safety.
- Increase the linkages between the rubber industry and other industries.
- R&D in high technological products, high value-added products.
Testing and Certification
- Upgraded testing and certification.
Improving skills and technology
- Increase the collaboration among experts.
- Extending R&D on downstream and new products.
- Skills requirement for development.
Source: Rubber Manufacturing in Malaysia, Resource-based Industrialization in Practice, National University of Singapore (2015) and Third Industrial Master Plan3
(2006-2020), Official Portal of the Ministry of international trade and industry (2006).
22
23
References
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