Indonesia, Malaysia, Thailand set up international rubber cartel

The Jakarta Post, Nusa Dua, Bali

Indonesia, Malaysia and Thailand, signed late on Monday an accord to form an international rubber cartel in a bid to prop up the price of the commodity in the world market.

The establishment of the cartel, called the International Rubber Consortium Limited (IRCo), was signed by Indonesia's Minister of Trade and Industry Rini Soewandi, Malaysia's Minister of Primary Industry Loim Keng Yaid, and Thailand's Agriculture Minister Sora-at Klinpratoom.

Ferry Yahya, director of agricultural exports at the Ministry of Trade and Industry Ferry Yahya said that the IRCo would be managed as a limited liability company by the three countries with Indonesia, Malaysia and Thailand investing an initial capital of US$1.5 million, $1 million and $2 million respectively.

"The company will be managed independently and can seek funds from the banking sector and other resources," said Ferry as quoted by Antara.

He explained that based on the shareholders' agreement signed on Monday, IRCo directors would consist of four representatives from Thailand, three representatives from Indonesia and two representatives from Malaysia.

The three countries will convene in Thailand to choose the management of the companies and to set up operational procedures.

IRCo will also be tasked with encouraging other rubber producing countries to join efforts to rationalize rubber production, so that its prices could be raised to a fair and remunerative level for the benefit of all producers.

Other prominent producers are Vietnam, India and Sri Lanka.

The forming of IRCo was initiated in 2001 when senior officials of the three countries met in Kuala Lumpur under the Tripartite Rubber Cooperation, in view of the fact that their producers had been unable to get adequate compensation for the product because market prices were determined by rubber companies, mostly tire makers, in the developed world.

In August last year, the three countries signed the memorandum of understanding for the establishment of the IRCo.

Thailand, Indonesia and Malaysia together produce 79 percent of the world's natural rubber.