Early days of rubber sector in Tawau
Published on: Sunday, May 17, 2020
By: Nicholas Chung
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A photo taken in Tawau in the 1930s showing the strong Japanese presence at that time.
THE rubber industry was to become an important influence on the Tawau community from the early years of the 20th century. It survived World War I, the Japanese Occupation and the Korean War. 

Rubber was a plantation crop from a wry beginning; smallholder planting only began much later. 

Demand for rubber shot up just before the end of the 19th century with the development and popularity of the bicycle, the automobile and electricity, all of which require rubber as a major component for coating, Insulation, tyres and other uses. 

The Chartered Company sought to encourage the planting of rubber on a large scale throughout the state. On Dec 1, 1905 it announced two incentives for rubber planters: a four-shilling dividend for six years guaranteed by the government and, secondly, the introduction of a tax-freeze regime for 50 years.

The first mention of rubber in the Tawau area was in a report dated January 1907. A government seedling nursery was set up by the then East Coast Resident, E.W. Morrell, on an old tobacco estate about a mile and a half west of the town. 

In 1910, the government went a step further by preparing to plant out a rubber estate. Morrell supervised the clearing of 500 acres of forest, of which 100 acres were planted with 17,000 rubber trees by the end of the year, employing a workforce of 135 people. 

By the end of 1911, 58,000 trees had been planted altogether on a total area of 440 acres. However, this activity was a government initiative in pot because the local community had neither the confidence nor the means at this stage to invest heavily in a single plantation crop over so large an area. 

Into this scenario stepped the Japanese, who were welcomed with open arms by the Chartered Company. Japanese interests represented by the Mitsubishi conglomerate wrote to the government of North Borneo in September 1915, expressing their intention to acquire a rubber plantation in the Tawau area. 

The government responded by preparing a set of conditions of sale of the Tawau Estate, an area which included the government rubber estate. 

The proposed conditions had a few items of particular interest. The Chinese and local natives were to be used at least for the first year of operations in the felling process, after which the Japanese were allowed in; and the Japanese company was to advance money to the Chinese and native labourers for growing vegetables and rice. 

It is also of interest to note that the government saw one of the advantages of the new settlement to be that, as the native population was very small, the settlement would not involve any trouble as regards to native rights. 

At that time there was little indigenous base in the Tawau community. This very fact encouraged economic development because traditional land rights were not a barrier to development, as in many other places. An agreement was signed in January 1916. The sale price was SS$179.890.91, a hefty sum in those days. Despite the modest nature of this early start to the rubber industry, it served to diversify the economy of Tawau and so had a stabilising influence. The government recognised the significance of this industry in particular by upgrading their administration in Tawau and giving as their reason ‘the rapid development of estates in Tawau’.

In 1916, the government was optimistic enough to be able to say that the Japanese rubber estate was the nucleus of one of the largest agricultural enterprises in the State. 

The rubber industry in Tawau was far more dependent economically on the town than the Silimpopon mining venture ever was. Unlike the mine, the estates had to use the Tawau port for shipping out their produce and importing their supplies. Because of the estate’s close proximity, the migrant workers on the fringe of Tawau town were soon to play a marked role in the development of Tawau. 

Between 1918 and 1924, the Japanese launched an extensive cultivation and large-scale development of their plantations. They rapidly brought under cultivation estates in the Tiger-Table, Imam, Merotai and other divisions so that by 1923, a total area of 12,513 acres had been planted with rubber, of which 1,244 acres were being tapped. 

About that time, the company was formally being referred to as “Tawau Kuhara Estate” (TKE for short). Despite encountering problems associated with maintaining a high rate of growth, financial constraints and, more seriously, a labour shortage, the rubber industry made a successful appearance as, by 1924, most of the trees had reached maturity and the target production figure of 500,000lbs appears to have been largely achieved. 

The company branched into Manila hemp planting and later also experimented with oil palm, but rubber was to remain the dominant crop and this continued through the war years of 1942-45. By that time the Kuhara Estate had become of great importance to Tawau. 

It provided employment opportunities within the town and bolstered economic life. According to a 1921 census, 40.92pc of the population of the Tawau District were on the estates, and the largest estate by far was Kuhara. All access to the estate was through the town, and it was obvious that the town’s economic prosperity depended on the estate. 

Some parts of Kuhara Estate were within walking distance of the town. Indeed, Kuhara employees sometimes immodestly held the view that Tawau needed the estate more than the estate needed Tawau! 

Perhaps, viewed as a tribute to the pivotal role of the estate and the unchallenged dominance it once held in the economic life of Tawau; the major trunk road linking the town with the estate was named Kuhara Road. 

After the Japanese surrender following their defeat in the war, all Japanese property was taken over by the British Custodian of Enemy Property Authority. Kuhara Estate was sold to the Colonial Development Corporation whose subsidiary, Borneo Abaca Limited, managed and later renamed it BAL Estates Sdn Bhd in 1974 and BAL Plantations Sdn Bhd in 1982. Under the British, the company’s operations were quickly consolidated, and financial control and the administrative set-up streamlined. 

Neglected cropland and damaged infrastructure were regenerated and production was restored to that of the pre-war days, all within a few years. From the early 1950s, the company successfully diversified into Manila hemp and the large-scale planting of cocoa and oil palm followed soon afterwards. From then on, BAL moved from strength to strength and consistently recorded satisfactory results and a high rate of profitability. 

In the process, the company deservedly acquired a reputation as the brightest jewel in the CDC crown. Such remarkable performance was no doubt due to the sterling work put in by the very dedicated workforce under the direction of successive teams of professional managers and planters, particularly during the long stewardship of my good friend William (Bill) Tully.

Tully first arrived in North Borneo in January 1954. He was partly responsible for the establishment of the first commercial planting of oil palm in 1959 and subsequently the commissioning of the first CPO mill in Sabah in the mid-1960s. 

Tully, who was promoted to general manager in January 1976, was credited with the introduction of measures to maximise cocoa seed production and the development of new clones to meet demand for planting material at the time of heightened cocoa planting activities in the 1970s. 

In June 1982, in recognition of his distinguished service record, BAL Plantations, by then a conglomerate with a holding of 40.001) acres, promoted him to managing director. 

He held the post for 11 years until his retirement in July 1993, making him the longest serving and penultimate managing director of BAL. He remained a director of BAL Plantations Sdn Bhd until December 1995 after an uninterrupted association of 42 years with the company. The property was sold to a Malaysian company, Golden Hope Holdings Sdn Bhd in May 1996. 

Tully’s contribution to the plantation industry in Sabah was recognised by the state in 1982 with the award of ADK, and ASDK in 1988. The United Kingdom recognised his service with the conferment of an OBE in 1984. 

His own peers elected him to a life membership of the Incorporated Society of Planters in December 1993. To cap his tremendous achievements in his chosen career, and no doubt the crowning mark of recognition, was the bestowal of a Fellowship of the ISP in June 2004. 

Now a permanent resident of Malaysia, he has chosen to make his home in Tawau, just a few miles away from the plantation where he has lived and worked for almost all of his adult life, and to which he contributed so much energy and effort. 

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