Analyst predicts RI rubber will bounce back<\/p>\n
JAKARTA (JP): Indonesia will see a robust rubber business in
\n2000 as the country's production and exports of rubber will
\nincrease by respectively four percent and six percent, an analyst
\nsaid on Monday.<\/p>\n
Chairman of the Indonesian Rubber Foundation Harry Tanugraha
\nalso predicted that Indonesia would earn higher foreign exchange
\nearnings from its rubber industry this year as the price of
\nrubber was expected to increase to US$1 per kilogram.<\/p>\n
He said Indonesia and other rubber producing countries would
\ngenerally see a steady increase in the demand from major markets
\nsuch as the United States and Korea as the economic growth of
\nthose countries would stimulate the headway of rubber related
\nindustries there.<\/p>\n
"Indonesia itself, however, will likely switch its main market
\nfrom the U.S. to China and India in a bid to take advantage of
\nthe recent efforts of President Abdurrahman Wahid to rejuvenate
\nour diplomatic relations with these countries," he told The
\nJakarta Post.<\/p>\n
He said there would be a great market opportunity for rubber
\ntrading with China and India as the two, which had always
\nimported quite a large amount of rubber to offset their
\nrelatively limited domestic supplies, were expected to speed up
\ntheir economic recovery this year.<\/p>\n
Indonesia is the world's second largest rubber producer after
\nThailand, with total production reaching 1.65 million tons in
\n1999 as against 1998's output of 1.53 million tons.<\/p>\n
Harry said Indonesia's rubber output would increase this year
\nby almost 5 percent to reach 1.71 million tons, while exports
\nwould rise by up to 6 percent to between 1.65 million tons and
\n1.7 million tons.<\/p>\n
Indonesia, which has always sold most of its national rubber
\noutput overseas, exported 1.6 million tons from 1999's 1.65
\nmillion tons output, Harry said.<\/p>\n
He predicted the selling price of Indonesia's rubber to
\nimprove to an average of $1 per kilogram (kg) this year from 70
\ncents per kg in 1999, thanks to higher demand and the
\nimplementation of the free market mechanism.<\/p>\n
"The free market mechanism -- which has replaced the previous
\nprice control and intervention by the now defunct International
\nNatural Rubber Organization (INRO) -- will definitely bring a
\nmuch more favorable business climate as producers and consumers
\ncan now reach a reasonable price based on the real supply and
\ndemand mechanism," he said.<\/p>\n
Harry said the disbanding of INRO, which was accused of
\nhampering the world's rubber trade for 20 years from 1979 to
\n1999, was the best decision for rubber producers since the
\norganization had failed to secure a stable and good price.<\/p>\n
INRO stopped its operations in Oct. last year, following the
\nwithdrawal of producer members Malaysia, Thailand and Sri Lanka.<\/p>\n
The three countries were angered by INRO's inability to raise
\nprices and charged that the organization was more inclined to
\nprotect consumers than the rubber producing nations.<\/p>\n
INRO groups six rubber producing countries and 17 rubber
\nconsuming countries. The producing countries are Thailand,
\nMalaysia, the Ivory Coast, Nigeria and Sri Lanka and Indonesia.<\/p>\n
Rubber importers who hold membership are the United States,
\nJapan, China, Germany, France, Austria, Belgium, Luxembourg,
\nDenmark, Finland, Greece, Ireland, Italy, the Netherlands, Spain,
\nSweden and Britain.<\/p>\n
INRO had the mandate to buy rubber from the open market to
\nboost prices and sell from its buffer stocks when prices rose.<\/p>\n
Payments to INRO are based on the size of a country's output
\nand for consumers on the quantity of imports.<\/p>\n
The group's operations are based on the UN-brokered
\nInternational Natural Rubber Agreement, scheduled to expire in
\nFeb. 2001.<\/p>\n
A team of producer and consumer members is now working to
\ndecide the fate of the organization's 140,000 tons of buffer
\nstock.<\/p>\n
Harry said independent rubber traders and brokerage businesses
\nwere expected to grow tremendously under the free market scheme
\nto create a more dynamic trade.<\/p>\n
"The world rubber market will grow tremendously. We expect the
\nexisting rubber exchanges in Singapore and Japan to reactivate
\ntheir operations this year to make the world trade even more
\ndynamic," he said.<\/p>\n
"Unfortunately, Indonesia's futures bourse seems to ignore the
\nchance, excluding rubber from its lists and instead making itself
\nbusy with currency and stock trading, which are not actually
\ntheir fields of business," he said. (cst)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/analyst-predicts-ri-rubber-will-bounce-back-1447893297",
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