Rubber Industry—Malaysia
Rubber (Hevea brasiliensis species) as a commercial crop had contributed immensely to the Malaysian economy since the late 1890s and remained the predominant export crop until the early 1980s. Peninsular Malaysia is particularly ideal for rubber owing to the soil, terrain, and climatic conditions.
While rubber prices steadily appreciated in the 1890s, coffee prices had tumbled due to Brazilian overproduction. Disease almost crippled the coffee industry of peninsular Malaysia and coffee planters were in need of substitutes to cut losses. Rubber came upon the scene and within a decade became the chief export crop.
Breakthrough discoveries and inventions were important early boosts to the industry. But the phenomenal upswing in world rubber prices during the first decade of the twentieth century spurred by the automobile industry of the United States was the greatest motivation for the rapid growth and spectacular expansion of the rubber industry of peninsular Malaysia. A rubber "fever" spread throughout peninsular Malaysia where estates and smallholdings covered the western coast from Perak to Johor, southern Kedah and central Pahang, and the western coast of Sabah. In Sarawak Chinese smallholdings predominate in the Lower Rejang. Within a decade (1897–1907), the area under rubber in peninsular Malaysia jumped from 140 hectares to over 51,000 hectares.
European agency houses (commercial firms) of Singapore and Penang were instrumental in convincing British capital to finance large-scale plantation enterprise by floating public companies in Britain. A cheap and plentiful supply of labor came from South India. By 1930 the European-dominated plantation sector accounted for 60 percent and the remainder by Malay and Chinese smallholdings.
By 1919 peninsular Malaysia accounted for half of the total world rubber supply. Overproduction created a slump in prices in the 1920s. Prices drastically plummeted during the world depression (1929–1931). Restriction schemes were implemented to control production in order to maintain high prices, but the schemes favored the large estates and discriminated against smallholdings in terms of under assessment and inability to benefit from replanting.
The Japanese occupation (1941–1945) witnessed the cutting down of millions of rubber trees for food crop production that was the priority of the Japanese military authorities. After World War II the Malaysian rubber industry faced competition from synthetic rubber that was developed in the United States during the war years. Nonetheless the postwar years witnessed a dramatic rise in rubber prices due to stockpiling by the United States and the Korean War (1950–1953).
Following independence in 1957, the Malaysian rubber industry focused on three objectives: maintaining Malaysia's leading position as the largest producer and exporter of natural rubber, restructuring the industry to allow greater local participation in estate ownership and production, and ensuring fairer treatment of the smallholding sector. Numerous government agencies were set up to realize these objectives, for example Rubber Research Institute of Malaysia (RRIM), and Rubber Industry Smallholders' Development Authority (RISDA).
Further Reading
Allen, G. C., and Audrey G. Donnithorne. (1954) Western Enterprise in Indonesia and Malaya: A Study in Economic Development. London: Allen & Unwin.
Amarjit, Kaur. (1998) Economic Change in East Malaysia: Sabah and Sarawak since 1850. Basingstoke, U.K., and London: Macmillan; New York: St. Martin's Press.
Drabble, J. H. (1973) Rubber in Malaya 1876–1922. The Genesis of the Industry. Kuala Lumpur, Malaysia: Oxford University Press.
Jackson, James C. (1968) Planters and Speculators: Chinese and European Agricultural Enterprise in Malaya, 1786–1921. Kuala Lumpur, Malaysia: University of Malaya Press.
Lim, Teck Ghee. (1977) Peasants and their Agricultural Economy in Colonial Malaya 1874–1941. Kuala Lumpur, Malaysia: Oxford University Press.
Ooi, Keat Gin. (1997) Of Free Trade and Native Interests: The Brookes and the Economic Development of Sarawak, 1841–1941. Kuala Lumpur, Malaysia: Oxford University Press.
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