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[September, 1912. 



COST OF RUBBER PRODUCTION IN MALAYA 



The majority of investors in rubber plantation companies have long 

 since lealised that the most rapid growth and the largest yields are to be 

 associated with estates in the Malay Peninsula ; in fact, it would be no 

 exaggeration to say that an average yield of 250 lbs. per acre per annum 

 can be expected from six-year-old trees in Malaya, as againstoneof 150 lbs. 

 per acre in Ceylon. These satisfactory results were not known to the 

 pioneers, but it is a peculiar coincidence that the Malay Peninsula appears 

 to have been selected by Government authorities as an area which would 

 stand a somewhat heavy rate of taxation. It has been suggested by 

 many leaders of the plantation industry that the reason why costs of 

 production are so much higher in Malaya than elsewhere is that the 

 taxes in the form of rent payable to the Government each year, drainage 

 assessments, and the ad valorem duty of 21 per cent, are excessively high, 

 and represent several pence per lb. on the cost of rubber. Some little 

 correspondence has been published in the press with regard to this, 

 Government officials maintaining that it is by no means criminal to tax a 

 successful industry, and to use the revenue derived by such means fur the 

 development of poorer states. 



Management and Labour, 



While we admit that all this taxation has quite a marked effect on 

 the cost of production, we cannot agree with the suggestion sometimes 

 thrown out that taxation in Malaya is the main offender. In the first 

 place, we know only to our regret that the costs of coolie labour in 

 Malaya are far in excess of those in Ceylon ; in point of fact the dollar in 

 Malaya appears to be only equal to the rupee of Ceylon in its purchasing 

 capacity. Again, we know that a salary of £500 or £700 in Malaya for 

 young managers is very frequent, wheraas in Ceylon such a salary would 

 be considered quite good, and would only be given to men with consider- 

 able experience. Ceylon will always on account of these difficulties be 

 able to stand the strain of smaller annual returns. Coolie costs, costs of 

 European management, and even also of London management, are far 

 greater to-day in connection with rubber than they have ever been with 

 tea companies in other countries. We therefore think that these features 

 must in fairness be allowed for when criticism is being offered on the 

 subject of taxation by Government, and its effect on the cost of producing 

 rubber. 



Cost of Production. 



During the last few weeks the accounts of several important and 

 highly-reputable rubber companies have been published, and we cannot 

 but admit that the actual cost of producing rubber on these properties 

 has been far higher than we or anyone else anticipated. Take for 

 instance the Straits Rubber Co., Ltd. The cost of production, free on 

 board at Penang, including commission to the staff and depreciation, was 

 Is. 7"83d. per lb ; adding to this London expenses, freight, insurance, land- 

 ing and sale charges, the total cost amounts to just over 2s. per lb. Now 

 such a cost would perhaps not have occasioned surprise if it had been 

 associated with an estate just coming into bearing, or with a very small 

 crop. As a matter of fact, the crop harvested for 1911 at a cost of 2s. per 

 ib., was no less than 985,279 lbs, The areas being tapped were planted 



