A rubber tapper at work at a plantation in Mon State. Pic: Myanmar Times archive

LAX quality control procedures are placing Myanmar’s rubber industry at risk at a time when local entrepreneurs are investing heavily to expand production, said a number of industry experts recently.

U Khaing Myint, secretary general of the Association of Myanmar Rubber Planters and Producers (MRPPA), told The Myanmar Times that the industry is at a tipping point: If the industry does not improve, there is a danger that international clients will be discouraged forever and local production might collapse.

“Foreign buyers are deliberately paying lower-than-market price for our rubber because the quality is inconsistent,” he said.

Rubber quality is standardised into the Ribbed Smoked Sheet (RSS) grading system that sets RSS1 as the highest quality, while RSS5 is the lowest. Myanmar produces all five grades.

“Myanmar’s rubber only sells for US$1800 a tonne for RSS5, even though the international price is $2200 because we have significant quality control problems,” he said.

U Khaing Myint said the main reason these problems occur is that the majority of Myanmar’s rubber growers are small-scale operators without access to the proper equipment.

U Hla Myint, a rubber expert and MRPPA adviser, agreed with U Khaing Myint and said 90 percent of Myanmar’s rubber comes from small individual plantations of 50 acres or less. He explained why small-scale operations were hindering the industry.

“Such small plantations – some of which have less than 10 acres – don’t possess the machinery and infrastructure needed for rubber processing, so their finished products don’t meet international quality standards,” U Hla Myint said.

“This lowers the price for all rubber produced in Myanmar and this is the reason why we need to look at how stet are running the industry. Hopefully we’ll take necessary measures in time to prevent the loss of the whole market in the future,” he added.

Since the early 1990s Myanmar has worked hard to increase rubber production by expanding the amount of land being cultivated. In April this year that area was 558,000 acres according to statistics from Ministry of Agriculture and Irrigation. The ministry’s 30-year plan has a target of 1.5 million acres by 2030-31.

Total production has now reached 650,000 tonnes a year and is likely to continue to climb but processing problems are hindering attempts to forge a strong place in the world market.

U Tony is director of one of Myanmar’s biggest rubber companies – Myanmar Rubber and General Trading Co – that has 2000 acres in southern Mon State. He said some producers are destroying the industry’s image.

“We hear complaints from buyers after they’ve received a shipment that producers have embedded rock or bricks inside the rubber blocks to increase the weight.

“And I’ve also heard that some producers label their exports as RSS3 instead of RSS5 to get higher prices,” he said, adding that this now has a strong and obvious impact on the industry.

“We used to have many buyers in Singapore and Malaysia but we haven’t been able to hold onto them because our quality has been so inconsistent. Now we only export our rubber through our Chinese border trade,” he said.

Unfortunately, he said, the complaints continue.
“I’ve started hearing reports from Chinese buyers that the same quality control problems are re-emerging. These acts are destroying the industry’s image and it’s hurting all the producers who are doing the right thing.

“In my opinion, we will only be able to hold onto our international clients if we lift industry-wide quality standards and be more honest,” U Tony said.

U Khaing Myint said there was one other quality-control issue that must be addressed quickly. He said the use of lower-quality sulphuric acid in the production process instead of formic acid should be outlawed because it did not remove enough impurities.

Some producers, in an effort to save money, use sulphuric acid because it only costs half as much as formic acid.

U Hla Myint said Myanmar’s situation is comparable to that of Malaysia’s in the early 1980s. In that instance, producers were able to overcome their challenges to become the world’s leader in rubber production.

“Malaysia solved its quality control issues by building Group Processing Centres where small rubber producers could cheaply access the proper equipment, technology and machinery.

“Those centres allowed producers to turn raw rubber into export-quality rubber consistently and relatively cheaply. These centres solved nearly all of the quality-control problems and I think the same solution will work here,” he said.

However, the International Rubber Research and Development Board (IRRDB), which represents 95pc of the world’s rubber producing nations, announced at their annual meeting in mid-November that it will pledge $2 million to help develop Myanmar’s rubber sector. In a statement to the press, IRRDB’s chairman, Mr Chen Quidao, said Myanmar was given this funding instead of Bangladesh, the other competitor, because it has better potential as a rubber producer. Also, Bangladesh is not an IRRDB member, whereas Myanmar is.

U Hla Myint said that the IRRDB money will be used to establish group processing centres – just like those built in Malaysia.