INRO's price proposal dead on arrival<\/p>\n
KUALA LUMPUR (Reuters): The International Natural Rubber
\nOrganization's (INRO) proposal to raise intervention price levels
\nis unlikely to change the decision of key producers Thailand and
\nMalaysia to quit the rubber pact.<\/p>\n
Industry sources said the proposal came too late to win back
\nthe world's largest and third largest rubber producers.<\/p>\n
Upset by low prices, Malaysia and Thailand have said they will
\nINRO by October 1999 and March 2000 respectively and start their
\nown rubber intervention schemes.<\/p>\n
INRO mooted several suggestions at its two-day council meeting
\nlast week in an attempt to bring the two producing countries,
\nwhich together account for more than 50 percent of the world's
\nproduction, back into the fold.<\/p>\n
One proposal was to denominate the reference price in a single
\ncurrency -- the relatively strong Singapore dollar. That move
\nwould raise the reference price by nine percent.<\/p>\n
Currently, the INRO reference price is a hybrid of the
\nMalaysian ringgit and the Singapore dollar.<\/p>\n
The plan, spearheaded by consumer states, would allow the body
\nto intervene more quickly in the world market.<\/p>\n
INRO, worried that the departures would spell a premature end
\nto the group, still holds out hopes for the 19-year-old pact.<\/p>\n
\"We are still hoping that this proposal will bring back those
\ncountries that have withdrawn,\" INRO council chairman Walter
\nBastiaanse said at the end of the meeting on Friday.<\/p>\n
Delegates failed to agree on the plan, saying they had no
\nmandate from their governments. INRO will meet again in September
\nin Kuala Lumpur to decide on the measure.<\/p>\n
Industry executives said even if the proposal to denominate
\nthe reference price in Singapore dollars were approved, Thailand
\nand Malaysia were unlikely to change their minds.<\/p>\n
\"Malaysia and Thailand have both taken a tough stand, and I
\ndon't think they will change their mind,\" said a trader in Kuala
\nLumpur.<\/p>\n
\"The decision by the Thai and Malaysian governments to
\nwithdraw were cabinet decisions taken at a very high level. It's
\na political decision,\" an INRO official said.<\/p>\n
Thailand said last week it would not review its withdrawal
\ndecision even if the reference prices were changed. Officials at
\nMalaysia's Primary Industries Ministry were not available for
\ncomment.<\/p>\n
The trader said with Thailand and Malaysia likely to stand by
\ntheir decision to quit the pact, it was only a matter of time
\nbefore INRO is dissolved. \"With producers not paying up, INRO
\nwill not be effective at all,\" the trader said.<\/p>\n
INRO said last month that none of its producing members had
\ncontributed towards its appeal for 200 million ringgit (US$53
\nmillion) for a new round of rubber intervention, preventing it
\nfrom stepping into the market due to a lack of funds.<\/p>\n
Both Malaysia and Thailand have said that they will not
\ncontribute, while Indonesia, the world's second largest producer,
\nsaid it was in the process of paying its dues.<\/p>\n
INRO groups six rubber producing and 16 consuming countries.
\nThe producers are Thailand, Indonesia, Malaysia, Ivory Coast,
\nNigeria and Sri Lanka.<\/p>\n
Consuming members are the United States, Japan, China,
\nGermany, France, Austria, Belgium, Luxembourg, Denmark, Finland,
\nGreece, Ireland, Italy, the Netherlands, Spain, Sweden and
\nBritain. Belgium and Luxembourg are considered one.<\/p>",
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"sponsor": "Okusi Associates",
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