Sabah rubber board denies making RM100 million profit in 2016

sabah-rubberKOTA KINABALU: The Sabah Rubber Industry Board (LIGS) has denied making a profit of RM100 million in 2016, as claimed by Parti Warisan Sabah (Warisan) vice-president Junz Wong yesterday.

The RM100 million mentioned was the accumulated fund of the board over six years and was not the profit for the year 2016, LIGS said in a statement today.

“The accumulated fund represents the board’s reserve used as working capital (revolving fund) to allow the board to pay for smallholders’ rubber in cash on a daily basis to deter manipulation of smallholders by some private dealers,” LIGS said.

It added: “The board spends about RM1.5 million daily to buy rubber from smallholders and a revolving fund equivalent to 40 days of cash is needed from the date of purchase of rubber until it is processed, packed, sold, shipped and the final sale proceeds are received by the board.

“The board does not want to see a repeat of the problems faced by smallholders in 2008, 2009 and 2010 when the board could not pay smallholders in cash on the day of purchase. Private dealers took advantage of the smallholders by buying at a price up to 50 sen/kg, less than the board’s prices then.”

The accumulated fund, the LIGS explained, was also utilised to fund the replacement of old vehicles and equipment required to provide efficient and reliable door-to-door purchasing service to the smallholders.

In addition, the board needs to fund the cost of providing tapping equipment to the smallholders when the rubber matures, the cost of repairing access roads to the farm gate, and the cost of repairing offices, stores and quarters.

“The board has always and will continue to pay fair farm gate rubber prices to smallholders basing on the actual dry rubber content achieved after processing of the rubber. This can be seen from the comparison of farm gate prices of cup lumps between Sabah and Sarawak and Peninsula Malaysia,” LIGS said.

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The farm gate price of cup lumps in Sabah was higher than that in Sarawak, LIGS said, adding that the price of rubber in Sabah was slightly lower than that in Peninsula Malaysia due to the following factors:

  • Additional costs of freight, transshipment, port charges and insurance;
  • Higher processing costs; and
  • Higher cost of door to door purchase of rubber

LIGS further said it had to incur additional costs of freight, port charges, insurance and transshipment charges to ship processed rubber to buyers due to a lack of mother shipping from Kota Kinabalu to international destinations.

“All processed rubber from Sabah has to be transshipped either at Klang or Singapore with an additional cost of 36 sen/kg,” it said.

It added that the processing cost of rubber in Sabah was higher than in the peninsula by 10-15 sen/kg as all spare parts, packing materials and chemicals had to be imported from Peninsula Malaysia. This incurred additional freight charges.

It also noted that various other costs – such as industrial diesel and providing door to door purchasing service to rubber smallholders – were also higher in Sabah compared with Peninsula Malaysia.