Maybe it was exceptional timing, or perhaps just a coincidence that a new Chairman of MRC was to be appointed the same year the Council is to celebrate its 20th anniversary. While Malaysia pushes forward in its efforts to maintain dominance in the global rubber and rubber products market, the appointment of YM Raja Datuk Idris, in many ways, signifies a new beginning for the organisation. The industry is undergoing change, where economic headwinds and the disruptions of Industry 4.0 are felt stronger than ever, and all eyes are on MRC, to observe whether it will continue as it is, or move with the times.
YM Raja Datuk Idris intends to meet those expectations. This does not come as a surprise as anyone who has met him can testify that he is not one to shy away from a challenge. “This is not the end. If anything, this is the beginning of the next decades to come for the rubber and rubber products industry”, he notes. International Business Review speaks to the visionary himself, to learn about the direction he plans to steer the Council and the wider industry – the change that he envisions for the industry and what it takes for that change to become a reality.
Stretching Two Decades
Incorporated on 14 April 2000, MRC is an agency under the purview of the Ministry of Plantation Industries and Commodities (MPIC). The Council was formed with a very specific task to promote quality and sustainably produced rubber products to the world markets. Over the course of two decades, it has established five overseas offices – two in China and one each in the United States, India and Europe (the Netherlands), to help facilitate the entry of rubber product manufacturers to the global arena, as part of its mission to identify and enhance market opportunities and access for industry players.
The Council also provides support to Malaysian rubber manufacturers to enhance industry competitiveness, especially among small and medium enterprises (SMEs). This is done through a series of market promotion activities, capacity building and talent development initiatives. Most notably, MRC launched the Industry Linkage Fund in 2017 – a programme to fund collaborative research projects between the Malaysian rubber products industry with research institutions, as well as the Fund for Automation and Green Technology (FAGT) in 2019, which is an initiative to increase adoption of automation, solar, water and biomass technology in the industry.
Since the establishment of MRC, the industry has grown from strength to strength with export earnings of Malaysian rubber products increasing fourfold, from RM5.7 billion in 2000 to RM23.3 billion is 2019, making rubber and rubber products the top 10 exports for Malaysia. Furthermore, nothing is greater proof of the Council’s firm role as facilitator for the industry than the fact that Malaysian rubber products are currently exported to all 195 countries worldwide.
The successes of the Council is a product of exceptional leadership of Chairmen who have driven its vision through good and trying times. Now, the baton is passed to YM Raja Datuk Idris, whose world view is exactly the push the Council needs to brace a new decade, and he starts by asking the necessary questions. “Where do we position natural rubber in the next 20 years? How do we develop from where we have been, where we are today and where we want to go?” For YM Raja Datuk Idris, it is high time that MRC redefines its role into the future in order to move forward with the industry. Given the breadth of MRC’s history and its contributions to the development of the rubber and rubber products industry, he believes there is a lot of scope moving forward.
“When people decide that they do not need rubber gloves anymore, what happens?”
Rebuild, Restore
Malaysia excels in numerous sectors, and rubber production is definitely one of our crowning glories – the country is ranked seventh in the world for rubber production. In relation to rubber products, the highest performing sub-sector is that of latex goods, accounting for 81 percent of total exports in 2019. It is, of course, a well-known fact that Malaysia is the number one supplier of rubber gloves, producing approximately 65 percent of global output. However, according to the Council’s 2019 Annual Report, the value of Malaysian rubber products exports declined by RM300 million compared to 2018 numbers. Exports of raw rubber have also been affected – down by 54,000 tonnes in 2019.
This is the impact of global economic trends which has been unfavourable to trade performance. According to Department of Statistics Malaysia, overall exports experienced a decrease of 1.7 percent, to RM986.4 billion in 2019. YM Raja Datuk Idris acknowledges that the odds now might not entirely be in the industry’s favour. “The future holds a lot of challenges for us. People are moving away from commodities, people are moving away from raw products with a preference towards value added manufactured products. Therefore, we need to understand where we are positioned, as an industry, in terms of the global developments that are on going.”
However, the rubber products manufacturers gained an unexpected boost in 2020 with the onset of the COVID-19 pandemic. The impact for other industries have been devastating, with markets spiralling downwards to levels unseen since the 2008 financial crisis. The industry, however cannot remain complacent. The industry has grown exponentially in the past decades, and YM Raja Datuk Idris does not think the Malaysian rubber products industry needs to ride on a pandemic or a disaster to make its fortunes.
Redefining the Supply Chain
Given the excess of challenges that await the industry, YM Raja Datuk Idris believes that it is time for a re-evaluation of the whole rubber and rubber products supply chain: how MRC can add or create value, and in what capacity this transformation can be achieved. However, before getting to the nitty-gritty of his plans, he made clear of where MRC stands within the rubber products industry. “Bearing in mind, we are just the facilitator. We do not own the rubber products. We do not manufacture these products”, he clarifies and reiterates that, as per its Charter, MRC is tasked to promote quality rubber products. However, he questions “If there is no development in the rubber product itself then what are we promoting?”
This is especially important given the sluggish midstream segment the country has been experiencing over the past few years. Production within the midstream includes semi-finished goods such as Technically Specified Rubbers (TSR) and compound rubber. YM Raja Datuk Idris explains just how vital strong midstream processes are for the industry in simple terms, “Downstream businesses can do without a strong midstream as these businesses can always import the input they require for production.”
The upstream on the other hand, cannot survive without a strong midstream and as a result will be forced to remain as sellers of commodities. This has far-reaching impacts in the long run as Malaysian rubber producers will lose out to imported raw materials, to which he says will be a pity as Malaysia is one of top producers of natural rubber. YM Raja Datuk Idris highlights that the numbers are drastic and that equally drastic measures need to be taken in order to redevelop the sector and that this cannot be achieved overnight. In fact, he thinks it will take at least three to five years as it involves mobilising the industry and the amount of investments it will require.
Reimagining Rubber
Secondly, YM Raja Datuk Idris believes that there is a lot of untapped potential for new product developments involving rubber. This involves a bit of thinking outside the box as our minds are programmed to interpret rubber, plastic and fibre as very specific set of products when in fact, rubber could be many things. He shares that during a meeting with the CEO of MRC, he was staring at a plug socket at the corner of his office, leading him to wonder “Why are all plugs made up of plastic, when rubber is the best insulator for electricity?” Although the conversation ended there, his musings led to a simple Google search, and to his surprise, he learned that there are in fact, many rubber plug manufacturers based in the UK. Furthermore, these rubber plugs are produced mostly for industrial use.
When prompted about the likelihood of a dining table to be made up of rubber, YM Raja Datuk Idris was quick to welcome that possibility. In fact, new product development is on top of his wishlist. This requires a significant amount of invention and innovation. While universities excel in research and development (R&D) with their scientists, academicians and mathematicians, the commercialisation of the R&D is just as important. This is where MRC can assist in promoting the commercialisation of the R&D undertaken by academia to potential investors and collaborators.
In terms of the time it will take, he believes that this will take 24 to 36 months. This is mainly due to the sheer amount of research that needs to be done prior to commercialisation. However, he remains optimistic with sufficient collaborations with inventors and innovators, new product development is definitely within reach.
Working Smart
To achieve all these aspirations, MRC need not look far and wide because the mechanisms are already in place. “We have the Industry Linkage Fund, so let’s use that to further enhance the value of this industry. And this is where MRC can play a very important role,” he notes. Since its commencement in September 2017, the Fund has received 46 applications with a total of six research projects approved within a period of two years. Furthermore, in August 2019, an Industry-University Interaction Session was held, gathering 121 participants involving 23 universities, 18 rubber product companies and three research institutions. This successfully generated over 44 meeting between research institutions and industry players.
Therefore, for YM Raja Datuk Idris, it is just a matter of optimising the existing resources that MRC already have in hand. Having had an illustrious career across various public, private and multinational companies, he is a firm believer in changing for the better. He recalls his time with a German MNC whose business strategy is founded upon three I’s: ideas, innovation and invention. For that to be practiced in the rubber products industry, the creation of smart partnerships is vital. Smart partnerships is a rather overused term, he admits. However, it is necessary especially when a fourth ‘I’ – investment – is crucial to complete the cycle of converting ideas, innovation and invention into commercial values.
The benefits will be enormous. Rather than going at it in silo, a lot more can be gained if the industry opens its doors to collaborations and ideas, which can be inputs for the next I’s of innovation and invention. For YM Raja Datuk Idris, this does not require a total upheaval of the industry – there is no need for the industry to reinvent the wheel. “We must work with people who have done something in which they are successful at. Why should we be afraid to learn from them, or even to copy them?” he said. Given the pace in which the megatrends are disrupting the business-as-usual, time is definitely of the essence. “Why do we want to sit down now and reinvent the wheel all over again and spend the next five or ten years to figure out how they did it, when we can go to them and ask them ‘how do you do it?’”
Continue To Do Better
The Council holds great pride in its role in talent development and capacity building which has been integral to empowering the rubber SMEs, as entrusted by MPIC. In 2019 alone, the Council held 12 seminars, workshops and briefings, reaching 500 participants from 130 rubber product companies. These dialogues focused on enhancing skills and talent, as well as giving updates about the latest developments within the global industry. Over the years, MRC has actively participated in a number of missions, working visits and programmes locally and overseas, to source for new opportunities of different rubber products such as rubber gloves, automotive parts and technical rubber products. The Council took part in nine of these activities with 22 Malaysian rubber product companies which altogether brought in sales lead worth US$7.5 million in 2019 alone.
From a fledging advisory council, it has grown to become a partner with the capacity to guide and provide direction to ensure that the industry only moves forward. It achieves this by having a solid ear to the ground to ensure that the industry moves with the times. One example of this is the FAGT. Since its launch, the programme has achieved great results with 14 projects approved from 34 applications received.
The fund is more than just an initiative, it is a push in the right direction for proactive action to be taken towards more sustainable methods of production. MRC has also established a Social Compliance Committee, in line with the increased importance of adhering to health and safety standards, especially for international trade.
Trust is key for MRC. It has been entrusted to promote rubber products and so it needs to be the valuable partner for the industry. Furthermore, the Council needs Malaysian rubber products to be a key product in the local and world markets. As YM Raja Datuk Idris puts it, “It is difficult to gain back a customer once you have lost them.” Therefore, it is pertinent that MRC’s efforts to share knowledge continues, as part of quality control to ensure that the industry does not decline. He makes it clear that while MRC needs to continue doing what it has been doing for the past 20 years and do it better, it also needs to do more. “We do not want to stagnate. Change is the only constant,” he remarks.
Redefining Its Role
Ultimately, it is about enhancing marketability of Malaysian rubber products and to hopefully facilitate greater technological transfer that will equip the industry with the right tools to meet an increasingly dynamic and competitive global demand. This goes above and beyond the downstream – working with scientists on the upstream and midstream to increase the yield, productivity, quality and shelf-life of the products. The industry is undeniably undergoing significant changes and the transition towards high value industry is one that will not come easy. As such, MREPC will be expected to play an effective role to support the industry players during this transitory period.
To achieve this, YM Raja Datuk Idris wants the Council to look beyond the end product, and beyond the traditional promotional and marketing activities it has and will continue to do diligently in service of the industry. “We should not start when companies set up rubber manufacturing factories here and have a product ready to be exported, we can start even before they arrive,” he explains. This entails a reevaluation of its own role within the industry. Instead of only looking at the export side, MRC needs to look at the full value chain and see where it can contribute – touching base to the other end of the spectrum, from downstream to the mid and upstream. This will be achieved through utilising the full extent of the power vested in the Charter.
“Promotion can mean two things. One, to promote goods and services and second, the promotion of the industry as whole,” he highlights. As such, YM Raja Datuk Idris believes that MRC can also do much more in helping promote the Malaysian rubber industry as a partner, especially when the Charter does not bar MRC from assuming that responsibility.
This means that MRC will play a larger role in attracting investments, both local and foreign, into the rubber and rubber products industry. He reveals that the Council is currently in talks to attract FDIs into the industry, and discussions are ongoing with State Governments about the possibility of a rubber manufacturing plant being set up in individual states, all of which will hopefully provide support to the ongoing efforts of the Malaysian Investment Development Authority (MIDA).
He further expresses his confidence that this is something that can be achieved within the next 12 months. Having spent many years in different corporations, transforming mindsets is just part and parcel of his professional journey. He is aware that this shift can be unnerving for both the Council and the industry. However, he believes that this is something that needs to be done, and something that can be done. For YM Raja Datuk Idris, it is quite simply a responsibility rather than a departure from the role MREPC was originally entrusted with, because ultimately, “We have a Charter to promote rubber and rubber products,” he stresses.
“This is not for the Council, or for the industry. It is for the national interest. So long as the rubber industry survives, so will the nation.”
Communication is Key
Despite the groundbreaking changes he wishes to bring about, YM Raja Datuk Idris is perfectly practical in his approach. Maintaining good relationship with stakeholders is vital for the Council to remain relevant in the new decade. After all, MRC is only one cog in the wheel that is driving the industry forward. As part of its role as marketer for the industry, MRC will continue to work together with government agencies and ministries such as the MPIC, the Malaysian Rubber Board, MIDA, Ministry of Finance, Ministry of Human Resource, Immigration, Ministry of Home Affairs and the list goes on.
When you consider the industry players alone, there are more than 300 rubber product manufacturers in Malaysia and dialogues with them is significantly important for MRC. “They must tell us what are their aspirations and expectations from us, where we are failing and what we could have done better,” YM Raja Datuk Idris points out. He highlights that the key is to be forthright in these conversations. “We can only learn from hindsight, foresight is something no one has”, he laments.
YM Raja Datuk Idris realises that a long term strategy needs to be put in place. After all, changing minds, culture and mobilising the industry is not an easy task. Therefore, he reiterates the importance of collaborations and partnerships. And for that to happen, there are a lot of parties that needs to come on board and a whole range of activities at every point of the value chain needs to be done. “On our own, we cannot get everything done. There is no way one company can do everything on its own, there is no way MRC as a Council can do everything on our own,” he emphasises.
The National Interest
The crux of his vision for MRC lies in the stern belief of the promise and potential of rubber. “Plastic was all the rage at one point,” he says. “However, now people are saying they want to be rid of plastic because they decided that plastic is not good after all.” This increased awareness of the adverse impact of plastics on the environment has led to increased demand for natural and organic products. “We need to believe that rubber is a product that will remain. We have been here as MREPC for 20 years,
we must believe that our role and new mandate as MRC will still be here 20 years from now,” YM Raja Datuk Idris concludes. When asked whether he thinks Malaysia could ever rebuild its position as the number one rubber producer, YM Raja Datuk Idris remains optimistic, yet humbly realistic. “I do not think it is impossible to rebuild our position,” he states. However, it cannot be achieved overnight. “It needs a lot of planning, strategising and interactions with industry players – it cannot happen by chance”, he warns. He states that in order for rubber to be important as a nation builder once more, a lot of value addition and creation needs to be injected into the industry. “This is not for the Council, or for the industry. It is for the national interest. So long as the rubber industry survives, so will the nation.”
