Additional RM1 bln needed annually if IPG activation price raised to RM3.50 - Jeck Seng

KUALA LUMPUR: An estimated RM1 billion in additional allocation will be required annually if the activation pricing level (PHP) for scrap rubber under the Rubber Production Incentive (IPG) is raised to RM3.50 per kilogramme (kg).

Deputy Plantation Industries and Commodities Minister Datuk Seri Dr Wee Jeck Seng said the estimate was based on the rubber smallholders' production of 500,000 tonnes a year and an average farm price of below RM2.50 per kg.

"The IPG allocation is forecast to be even higher if the world's natural rubber price were to experience a sharp downtrend, going far below the IPG activation level.

"Therefore, the government really needs to fine-tune the proposal to increase IPG's PHP to ensure it won't be a bigger financial burden to the government while protecting the smallholders' welfare and the national rubber industry," he said during the Dewan Rakyat's question-and-answer session today.

Wee was responding to a query from Ahmad Tarmizi Sulaiman (PAS-Sik) who wanted to know measures taken to boost the rubber industry and rubber tappers' income as well as the appropriateness of raising the IPG's floor price from RM2.50 per kg to RM3.00 per kg.

IPG is an incentive provided by the government since September 2015 to ease the economic burden of rubber smallholders affected by declining rubber prices.

The IPG's implementation is also aimed at encouraging smallholders to continue to tap rubber to to ensure the domestic rubber supply meets the requirements of the country's rubber processing and downstream sector.

Wee said that in 2020, the country's rubber production stood at 514,702 tonnes, with smallholders accounting for 458,281 tonnes or 89 per cent.

-- BERNAMA