RI plans cut in rubber output by 70,000 metric tons<\/p>\n
JAKARTA (JP): The government said on Tuesday that it planned
\nto cut rubber production by 70,000 metric tons starting next year
\nas part of a joint effort with Thailand and Malaysia to boost
\nworld rubber prices.<\/p>\n
Minister for Industry and Trade Luhut B. Pandjaitan said the
\nmeasure was expected to boost natural rubber prices to the same
\nlevel as synthetic rubber.<\/p>\n
\"We have to cut our national rubber supply, which at the
\nmoment stands at about 1.6 million tons,\" he said.<\/p>\n
Indonesia, Malaysia and Thailand recently formed the
\nTripartite Rubber Cooperation (TRC) to manage rubber trading and
\nstock levels. The three countries make up about 80 percent of
\nworld rubber production.<\/p>\n
Under the cooperation, the three countries have agreed to
\nslash their rubber production by 4 percent each year.<\/p>\n
\"This is not a cartel. We just want natural rubber prices to
\nmove in tandem with that of synthetic rubber,\" Luhut said.<\/p>\n
He said natural rubber prices stood at about 50 U.S. cents per
\nkilogram, compared to 90 cents for synthetic rubber.<\/p>\n
Luhut said a senior official meeting was slated for early
\nSeptember to finalize the details of the rubber output reduction
\nscheme.<\/p>\n
\"Then on Sept. 8, there will be a tripartite ministerial
\nmeeting in Kuala Lumpur to endorse the agreement,\" he said.<\/p>\n
However, the joint effort has been met with cynicism from
\nrubber traders who dismiss the scheme as unrealistic.<\/p>\n
They said controlling rubber output is difficult as production
\nis mostly controlled by private plantations.<\/p>\n
Questions also linger over the funding of the scheme, with the
\nIndonesian government likely to skip Malaysia and Thailand's
\ncommitment to support the scheme with state funds.<\/p>\n
Luhut confirmed that the Indonesian government had no plans to
\nuse state budget funds to finance the scheme.<\/p>\n
\"Where will we get the money? However, we will encourage the
\nprivate sector to fund it,\" Luhut said.<\/p>\n
Responding to comments that the deal had failed to help rubber
\nprices, Luhut admitted that it would take some time.<\/p>\n
CPO<\/p>\n
He compared the process with the impact Indonesia and
\nMalaysia's joint marketing efforts had on boosting crude palm oil
\n(CPO) prices.<\/p>\n
He said that since he and his Malaysian counterpart, Lim Keng
\nYaik, visited China and India earlier this year, CPO prices had
\nimproved by about US$30 per ton.<\/p>\n
\"This is a significant rise, and it is highly likely that this
\nupward trend will continue,\" he said.<\/p>\n
He said China recently raised its import quota for CPO by
\n300,000 to 400,000 tons after urging from Indonesia and Malaysia.<\/p>\n
\"We hope to gain a 40 percent to 45 percent share from the
\nadditional quota,\" he said.<\/p>\n
Thus far, he said, Indonesia enjoyed only a 30 percent share
\nof the 1.1 million tons of CPO which China allotted for Indonesia
\nand Malaysia.<\/p>\n
\"How can this be so? Because there is not enough promotion and
\nwe have no representatives in China,\" Luhut explained.<\/p>\n
He said the government and the Indonesian Palm Oil Producers'
\nAssociation (Gapki) had agreed to set up a representative office
\nin China.<\/p>\n
Association members, he said, had pledged to donate $1 from
\neach ton of CPO they sold to help establish an office there.<\/p>\n
Indonesia's CPO output is estimated to hit 7.5 million tons
\nthis year, up from 6.5 million tons the year before. The country
\nexports about half of its CPO production.<\/p>\n
Indonesia and Malaysia together control about 90 percent of
\nthe world's CPO production while India and China are the biggest
\nmarkets for that commodity.<\/p>\n
Earlier this year, the two countries agreed on a joint
\nmarketing effort to lobby China in raising its CPO import quota.<\/p>\n
They have also asked India to lower its import tariffs on CPO.
\n(bkm)<\/p>",
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