Malaysia will construct a RM5 billion "rubber city" for research and development in an effort to ensure the survival of the rubber industry, a senior minister said today.

Lim Keng Yaik, primary industries minister, said a masterplan had been submitted to the government for approval and work would begin in a few years once the developers were identified.

"The rubber city is vital for the survival of the country's rubber industry. Malaysia is now at the crossroads. We face stiff competition from synthetic rubber," he told some 200 delegates attending a conference on repositioning the rubber industry.

Lim said the rubber city would be build on 3,700 acres of rubber land in Sungai Buloh, just north of the capital Kuala Lumpur.

It would house research facilities, a technology park and small- and medium-sized industries that would assist in the diversification of rubber products.

"Right now, the downstream rubber industry is too narrowly based, with almost 80 percent of exports consisting of latex-dipped rubber goods. We must diversify," he said.

No entry barrier

Lim said that with no entry barrier, latex-dipped goods such as condoms and gloves were an easy market for others to compete in, compared to areas such as the automotive, transport and marine sectors.

"These sectors, which consist of a wider range of rubber products, need a higher technological know-how and expertise," he said.

Lim said if Malaysia was able to produce such items, it could cut the annual import bill of RM1.5 billion for the products.

Besides a research centre, the land would also be used to construct lakes as part of a flood mitigation programme and low cost homes, he said.

Malaysia is the world's third largest natural rubber producer after Thailand and Indonesia. - AFP