Indonesia mulls pullout from INRO<\/p>\n
JAKARTA (JP): Minister of Trade and Industry Rahardi Ramelan
\nsaid on Tuesday that Indonesia soon might announce its withdrawal
\nfrom the International Natural Rubber Organization (INRO),
\nfollowing an earlier announcement by Thailand of its decision to
\nleave the organization.<\/p>\n
The minister said that the world rubber organization would no
\nlonger be effective because of the absence of Thailand and
\nMalaysia, who also withdrew from INRO.<\/p>\n
\"With the world's number one rubber producer now having left
\nINRO, do you think INRO can survive? If Thailand really quits
\nINRO, Indonesia will have no choice but to follow suit,\" he said,
\nadding that he would ask for formal confirmation of Thailand's
\nwithdrawal from the organization before making a final decision.<\/p>\n
The bearish rubber market in 1998 and the steep fall in rubber
\nprices caused great harm to the organization. Rubber prices have
\nslipped to a 30-year low of around US$.60 a kilogram since the
\nAsian financial crisis began in the middle of 1997.<\/p>\n
Malaysia, a founding member of INRO, announced its withdrawal
\nfrom the organization last year and Thailand, the world's largest
\nrubber producer, shocked the market last week by announcing that
\nit would pull out of INRO this year. Bangkok is unhappy with
\nINRO's failure to shore up sagging rubber prices.<\/p>\n
Thailand also decided not to contribute 401 million baht
\n($10.84 million) to the organization's buffer account for a new
\nround of price interventions.<\/p>\n
Thailand, Indonesia and Malaysia are the world's top rubber
\nproducers. Thailand and Malaysia account for 60 percent of the
\nworld's rubber output.<\/p>\n
Rahardi said that in order to withdraw from INRO, Thailand
\nfirst must inform United Nations Secretary-General Kofi Annan of
\nits intentions and would then lose its membership a year after
\nnotifying Annan.<\/p>\n
He also said that with the withdrawal of Malaysia and
\nThailand, the remaining members of the organization --
\nIndonesia, Nigeria, the Ivory Coast and Sri Lanka -- would find
\nit difficult to shoulder the financial contributions to the
\norganization.<\/p>\n
\"Indonesia is not willing to provide more money for INRO's
\nbuffer accounts,\" he said.<\/p>\n
Rahardi said that Indonesia would release its rubber stockpile
\non the market if Thailand formalized its withdrawal.<\/p>\n
\"However, we will release our stockpile gradually to prevent a
\nfall in prices,\" he added.<\/p>\n
He said that by leaving INRO, locally produced rubber could be
\ntraded on the country's first futures commodity exchange, which
\nwill be operational later this year or early next year. The
\nexchange will initially trade coffee and palm oil.<\/p>\n
Rubber is currently excluded from the list of commodities
\nwhich can be traded on Indonesia's futures exchange because it
\nwould violate INRO's global rubber pact, he said.<\/p>\n
Indonesia's rubber exports are predicted to increase by at
\nleast 5 percent to 1.61 million metric tons this year, up from
\n1.53 million tons in 1998. However, the exports are expected to
\nearn less foreign exchange because of lower prices.<\/p>\n
The executive director of the Indonesian Rubber Producers
\nAssociation, A.F.S. Budiman, said that INRO's collapse would lead
\nto a liquidation of rubber stocks owned by each member country.<\/p>\n
\"This could further drag down rubber prices,\" he said.<\/p>\n
In a related development, Thailand adopted a strategic plan
\nfor 1999-2003 on Tuesday to make its rubber industry more
\ncompetitive following the country's departure from INRO, an
\nagriculture ministry official said.<\/p>\n
Despite the present bearish rubber market, Thailand was still
\noptimistic about the future of the rubber industry and forecast
\nworld rubber demand would exceed supply again in 2002, the
\nofficial told Reuters.<\/p>\n
The plan covers measures to boost efficiency, manage supplies,
\nincrease additional sources of income for planters and increase
\ndomestic use of rubber, the official said.<\/p>\n
According to the plan, a copy of which was obtained by
\nReuters, Thai rubber output is forecast to grow three percent in
\n1999 to 2.15 million metric tons, to 2.23 million in 2000, 2.32
\nmillion in 2001, 2.43 million in 2002 and to 2.55 million tons in
\n2003.<\/p>\n
Thai rubber exports should reach 1.94 million tons in 1999,
\n2.01 million in 2000, 2.10 million in 2001, 2.19 million in 2002
\nand 2.30 million tons in 2003.<\/p>\n
A world rubber deficit is seen setting in from 2002 when
\ndemand, at 7.45 million tons, will exceed supply of 7.43 million,
\nthe report forecast.<\/p>\n
Besides the six rubber producing members INRO also groups 17
\nconsumer members: the United States, Japan, China, Germany,
\nFrance, Austria, Belgium, Luxembourg, Denmark, Finland, Greece,
\nIreland, Italy, the Netherlands, Spain, Sweden and Britain.<\/p>\n
The group's operations are based on the UN-brokered
\nInternational Natural Rubber Agreement, which will expire in
\nFebruary, 2001. (gis)<\/p>",
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