Robber traders a ‘dying breed’

Press, 9 August 1988, Page 7

Robber traders a ‘dying breed’

By

HO WAH FOON

NZPA-Reiiter Kuala Lumpur World rubber prices are at their highest level for eight years but Malaysia’s once- powerful Chinese tycoons are deriving little benefit as much of the business is now in Government hands. “A lot of our business has been displaced by State agencies. We Chinese rubber traders are a dying breed,” said Khoo Siong Chee, the secretarygeneral of Malaysia’s Rubber Traders Association.

"No young people want to enter this business now,” Khoo said at an exclusive Kuala Lumpur club where tycoons meet.

“This is an old folks’ club. It is more exciting to play mah-jong (a traditional Chinese gambling game) than to talk about rubber now,” he said. Khoo, aged 71, is one of over 40 senior Chinese traders who ■ prospered from buying rubber from smallholders and selling it locally and to foreign countries. Ethnic Chinese make' up about one-third of Malaysia’s 16.5 million

people and have traditionally dominated the country’s commerce. Khoo said he decided to stop trading several years ago when it became hard to compete with the Stateowned Malaysian Rubber Development Corporation (MARDEC) and other related official agencies. MARDEC, set up in 1971, aims to raise the income of Malaysia’s 500,000 rubber smallholders by buying, processing and marketing their produce. Close to 70 per cent of the South-east Asian nation’s rubber output comes from planters with holdings of less than 40 hectares, according to the Primary Industries Ministry. Malaysia produced 1.58 million tonnes of rubber in 1987 and is the world’s largest exporter of the commodity. Khoo said the Chinese share of Malaysia’s rubber trading had dwindled to around one-third from over 60 per cent before 1971. Another third is controlled by State agencies and the remainder by big plantation companies, he said. “There is no way the

private sector can compete with a State agency forever. The Chinese share of the rubber business will diminish further,” said Lee Seng Peng, the president of the traders’ .association. Membership of the association has dropped to around 40 from over 100 when he first set it up in 1946, he said. But Lee, aged 86, could be one of the few tycoons to survive State competition. Lee is chairman of Lian Hin Sdn Bhd, a subsidiary of Lee Rubber (Selangor) Sdn Bhd, Malaysia’s largest rubber company with interests in plantations and trading. He told reporters that Lee Rubber had over 25 per cent of Malaysia’s total rubber trading business. MARDEC officials declined to comment but an official from a related agency acknowledged that State organisations had increased their share of the country’s rubber trade. “State agencies have taken over a lot of less efficient trading businesses, particularly from the Chinese. Those who remain are the efficient ones who can still com-

pete,” the official said. A MARDEC brochure says that small holders, who used to sell rubber to local dealers and processors, got unsatisfactory returns before 1971. The final products of processing were usually low grade, the brochure says. A current boom in latex — used to meet rising demand for condoms and surgical gloves stemming from the world A.I.D.S. epidemic — is likely to wipe out the remaining low-capitalised Chinese rubber processors, according to Ngan Chin Wen, secretary-general of the Associated Chinese Chamber of Commerce and Industry of Malaysia. Ngan said many small holders prefer to sell their produce in the form of unprocessed latex to MARDEC, which processes it into concentrated latex for export. Many Chinese mills, which can only process dry rubber, are now finding it difficult to get adequate supplies. Latex fetches over SUS 4 ($5.9) a kg compared with around SUSI.2 ($1.7) earlier this year, according to traders.