Industries in Malaysia

Rubber-based Industry

The Malaysian rubber products industry is made up of more than 510 manufacturers producing latex products;
tyres and tyre-related products; and industrial and general rubber products. The industry employed more than
68,700 workers and contributed RM10.58 billion to the country's export earnings in 2007. Rubber products
accounted for 1.7 per cent of Malaysia's total exports and 2.3 per cent of Malaysia exports from the
manufacturing sector.

Malaysia's natural rubber production in 2007 amounted to 1.20 million tonnes compared with 1.28 million
tonnes in 2006. The major natural rubber consuming industries for 2007 were rubber gloves 63.8%, rubber
thread 13.0% and tyres and tubes 11.8%. The total consumption of the three industries constitutes 88.6% of
the overall domestic consumption of natural rubber. The rapid growth of the industry has enabled Malaysia to
become the world's largest consumer of natural rubber latex.

The latex products sub-sector is the largest sub-sector within the rubber products industry and comprises 163
manufacturers producing medical, household and industrial gloves, catheters, latex threads, balloons, finger
stalls and foam products. This sub-sector accounted for 72 per cent of the total value of exports, largely
contributed by gloves, catheters and latex threads. Malaysia continued to maintain its position as the world's
leading producer and exporter of catheters, latex threads and natural rubber medical gloves, supplying more
than 80 per cent of the world market for catheters, 70 per cent for latex threads and 60 per cent for rubber
gloves.

There are currently 126 companies in the tyres and tyre-related products sub-sector comprising nine tyre
producers while the remaining companies produce retreads, tyre treads for retreading, valves and other
accessories. There are three major tyre producers producing passenger car tyres, commercial vehicle tyres and
earthmover tyres, and another six manufacturing other types of tyres. Exports value of rubber tyres, flaps and
inner tubes in 2007 amounted to RM891.6 million.

The industrial and general rubber products sub-sector comprises 194 companies producing a wide range of
rubber products such as mountings, beltings, hoses, tubings, seals, and sheetings for the automotive, electrical
& electronics, machinery & equipment and construction industries, largely for the domestic market.

The rubber products industry will need to diversify further, emphasising on high value-added and high
technology rubber products, such as products for engineering, construction and marine applications.As outlined
in the IMP3, more R&D efforts need to be undertaken in product development and downstream activities.New
areas for promotion would include the extraction of biochemical products from latex using biotechnology.These
efforts will ensure the continuous improvement in the products quality to maintain competitiveness in the
export market.

The government continues to promote the development of Malaysia's resource-based industries to diversify the
country's sources of growth. In addition to fiscal incentives which are currently available for promoted products
and activities, the government has further fine-tuned the incentives to promote specific activities among which
is the rubber products industry. To further encourage investments in resource-based industries, local
companies in the rubber industry that reinvest to expand their projects are eligible for Pioneer Status or
Investment Tax Allowance.

The Rubber Industry in Malaysia

Malaysia is the third biggest producer of natural rubber (NR) in the world, and its well-established and superior quality is widely
used as a benchmark in the international market.

The Malaysian rubber industry produces a broad range of products from natural rubber as well as rubberwood products. Malaysia
remains the world's leading producer and exporter of natural rubber medical gloves, catheters and latex thread.
In 2004, the rubber products sector contributed RM 19.6 billion to the country's export earnings, comprising RM 5.2 billion of
natural rubber, RM 7.9 billion of manufactured goods and RM 6.5 billion of rubberwood products.

he Malaysian rubber products industry manufactures tyre and tyre-related products, latex products, and industrial and
general rubber products. There are more than 500 manufacturers in this industry. The key natural rubber consuming
industries, last year, comprised rubber gloves, rubber thread, and tyres and tubes industries. The total consumption of
these three industries comprises 88.6% of the entire domestic consumption of natural rubber. The swift growth of the
industry has made Malaysia the largest consumer of natural rubber latex in the world.

The latex products sub-sector is the largest sub-sector in the rubber products industry and includes more than 160
manufacturers producing medical, household and industrial gloves, latex threads, catheters, balloons, finger stalls and
foam products. This sub-sector contributed 72% to the total value of exports, mainly contributed by gloves, latex threads,
and catheters. The country continues to uphold its position as the world's leading producer and exporter of latex threads,
catheters, and natural rubber medical gloves, contribute more than 80% of the world market for catheters, 70% for latex
threads, and 60% for rubber gloves.

There are at present, about 126 companies in the tyres and tyre-related products sub-sector containing nine tyre
producers, while the remaining companies manufacture retreads, tyre treads for retreading, and valves. There are three
leading tyre producers manufacturing passenger car tyres, earthmover tyres, and commercial vehicle tyres.

The industrial and general rubber products sub-sector includes 194 companies manufacturing an extensive variety of
rubber products like beltings, hoses, mountings, tubing, seals, and sheeting for the electrical & electronics, automotive,
machinery & equipment and construction industries, mainly for the domestic market.

There is a need for the rubber products industry to expand further, stressing on high value-added and high technology
rubber products, like products for construction, engineering, and marine applications. More R&D work needs to be
embarked upon in product development and down-stream activities.

The government continues to endorse the development of Malaysia's resource-based industries to expand the nation's
sources of growth. Apart from fiscal incentives, which are available presently for promoted products and activities, the
government has further modified the incentives to promote precise activities, among which is the rubber products
industry. To further promote investments in resource-based industries, regional companies in the rubber industry that
reinvest to develop their projects are eligible for Pioneer Status or Investment Tax Allowance.