The Analysis of the Effects of the Malaysian Plan to Become the World's Rubber Center on Thai Rubber lndustry

Abstract

This research project aimed to analyze the effects of the Malaysian plan to become the world's rubber center on the Thai rubber industry, In addition, it studies the supply-chain of the rubber industry in Thailand and Malaysia. Simultaneous Equation Models were applied and in-depth interviews with both Thai and Malaysian entrepreneurs. The results showed that Malaysia has tried to promote the rubber industry to play a more important role in its economy. The rubber industry has been set to be one of the 12 national key economic areas (NKEAs) so that Malaysia would become a high-income country. Moreover, Malaysia aims to be the world's rubber center by 2020 with the purpose of increasing domestic products and decreasing imports. Value added through the rubber products is also emphasized by focusing on the importance of producing downstream products, especially rubber gloves. They are set to gain 65 percent of the market share in the world market. At present, Malaysia has a better supply-chain in the rubber industry than Thailand. Malaysia continuously produces concentrated latex rubber and uses it as raw materials in upstream and downstream products. However, it cannot produce enough concentrated latex rubber so that it needs to import, especially from Thailand. Therefore, if Malaysia becomes the world's rubber center, the demand for Thai rubber from Malaysia will decrease. Moreover, Thailand may lose its market share in rubber product exports, especially in the export of rubber gloves.