Sustainability On Rubber Production In Malaysia Commerce

Essay add: 29-10-2015, 11:20   /   Views: 276

The determination of sustainability on rubber production in Malaysia was analysed using the Ordinary Least Square method. However, before we could test all the secondary data by using the Double Log Regression, we first need to identify the coefficient using the Unit of Root Test, which primarily tests the characteristics of data using the Augmented Dickey-Fuller (ADF)Test. The analysis consists of series of data covering the year of 1961 to 2006. The problem statement of this paper is determined in order to respond to the growth of rubber production in Malaysia, whereby there were a few factors called production factors that need to be considered including the areas of which the rubbers were planted, labours hired, and the yields gained from the rubber production. From the analysis of production factors, it can be identified whether the Malaysian NR production can be sustained compared to other countries such as Thailand and Indonesia. In accordance to that, the objective of this paper is to determine the relationship between each variable in order to show whether Malaysia can achieve its target to sustain in NR production or not by comparing its production factors to another country, Thailand.

Rubber can be classified into two main categories; natural rubber (NR) and synthetic rubber (SR). The NR is obtained from latex, which is the milky white fluid and easy to find in many plants. However, most of the plants are coming from the Brazilian rubber-tree (HeveaBrasiliensis). In Malaysia, HeveaBrasiliensis covers 2 million hectares areas in Peninsular Malaysia. The main states that are known as the main producers of rubber latex are Johor, Kedah, Perlis and Negeri Sembilan. Other regions include Perak, Sabah, and Sarawak. Even though large areas have been covered but SR is the main threat to NR, which is due to the price of SR still competitive compared to NR. Meaning, if possible occurs fall in price of fuel in the world market will make the SR cheaper than NR. Actually, SR is formed as of unsaturated hydrocarbons.

According to MIDA (2008), Malaysia is ranked third behind Indonesia and Thailand in producing NR in the world. It produces approximately 40 percent of NR annually. Furthermore, there are 500 manufacturers in the Malaysian industry producing related rubber-based products such as gloves, tires, and shoes. For instance, in 2005, Malaysia was known as the largest producer of the rubber gloves in the world. Meaning, the contribution of rubber industry is very important to the nation, especially to the small holders of rubber plants.

2. Literature Review

According to Kittipol (2008), Malaysia was declared as the third largest producer of NR after Thailand and Indonesia in 2007. Malaysia produced 1.22 million tons of rubber production compared to Thailand, which was the first largest producer over the world with the volume of 3 million tons followed by Indonesia with 2.79 million tons of rubber production. Thailand has maintained its position as the largest rubber producer in the world due to its consciousness in sustaining and maintaining their position as the main NR producer in the world. Pathanasriskul (2005) elaborated on Rubber Research Institute of Thailand (RRIT) where in the report; Thailand has taken into consideration two ways in order to sustain its position, i.e. up-stream industries and down-stream industries of rubber production. For example, in the up-stream industries of rubber production, the industry does tapping training to their workers and an activity such as farmer group meetings. For down-stream industries, their objective is to increase the domestic consumption of NR within five years from the total number of rubber production worldwide.

The Economic Planning Unit (2009) stated that because of the anticipated yield improvements from 900 kilograms to 1500 kilograms per hectare in 2003 to 2005, the rubber productions were forecasted to increase by 3.8 per cent per annum in the following years. In this case, in order to ensure the sustainable of NR for the long-term period, effort would be continued in producing more the downstream furniture production. Besides that, the EPU asserted that the area of rubber plantation was expected to decline because of the use of land for oil palm plantation and others. According to Carrere (2006), in the case of Cambodia, both rubber and oil palm need larger areas of plantations. Meaning, the decreasing in the area was not a good outlook to sustain in the NR production.

According to Wahid et. al. (2008), in their journal entitled Review ofMalaysian Agricultural Policies with Regards to Sustainability; there was a significant result of contribution of small holders in the agriculture sector. But, they were also the majority group which is suffered due to uneconomic size of land and also being the lowest income group. Furthermore, because of that, the area of agriculture land declines. In contrast, in Menglun Township, Southwest China, the area of rubber plantation was rapidly expanded between 1988 and 2003 (Liu et. al., 2006). The change shows that increasing in land came from forested areas approximately covered 42 per cent(4150 ha) and fallow fields covered 23 per cent(3001 ha).

According to Kaur (2008), labour is very important factors that can give effect in the NR production. In his journal, he said that the availability and ability to control, labour would be the important part of production. It is also important in the social relations of transformation. This statement is also supported by Ke et. al. (2006) which stated that labour intensive productivity is quietly closer to NR production. This is due to their ability and skill can be maintained for a long time period. According to Mesike et. al. (2009), smallholder had a responsibility in increasing and sustaining the rubber production. This can be explained by their job characteristics, which provide a highly labour intensive, although there was a low level of productions operating.

3. Data and Methodology

The determination of rubber production in Malaysia was analysed by using the Ordinary Least Square (OLS) method. However, before we could test all data by using Log-Log regression, we must first identify its coefficient using the Unit of Root test, which is a test to determine their characteristics by using ADF tests. The analysis was presented by the time series of data covering the year of 1961 until 2006.

3.1 Analysis of Data

Regression Analysis concerns with a study of relationship between a dependent variableand other or more independent variables.

Y= βâ‚€ + β₁X1 + βâ‚‚ X2+ β₃ X3 +µ

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