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 Mardec To Invest RM20 Mln To Turn Out Compounded Rubber

SEREMBAN, Nov 27 (Bernama) -- Mardec Bhd intends to invest RM20 million to produce compounded rubber at all of its six plants that turn out Standard Malaysian Rubber (SMR), it said Tuesday.

The move is to capitalise on the exemption from the cess of 13.92 sen a kg on compounded rubber produced for export, it said in a statement issued at the end of the 2007 Mardec Quality Convention here.

Of the cess, 9.32 sen goes to the Rubber Industry Smallholders Development Authority (Risda) to help finance replanting and 4 sen to the Rubber Fund Board to help fund research and development.

Most of Malaysia's compounded rubber is exported to China, Malaysia's main importer of Malaysian rubber, which last year bought 145,000 metric tonnes or 27 percent of its total demand.

Besides, China's fast-growing automobile industry is increasing its demand for compounded rubber to produce tyres.

At most of the rubber producing plants in Malaysia, compounded rubber accounts for 20-30 percent of their total output, and this is expected to increase, Mardec noted.

With the exemption of the cess, which nets about RM1 million a month, Mardec said it will be able to be more competitive in buying scrap rubber from smallholders.

According to a study by the Malaysian SMR Rubber Processors Association (MSRPA), there is 30 percent overcapacity in natural rubber production in the country as many firms have invested in facilities to produce compounded rubber to improve their competitiveness and take advantage of the cess exemption.

Meanwhile, scrap rubber suppliers hope Mardec will support their call to the government to stop indiscriminately issuing licences to deal in scrap rubber to stave off "overcrowding" in the subsector which is affecting the quality of scrap rubber.

They feel that if the situation is not remedied, the perception of the quality of SMR rubber will be affected