Indonesia wants Thailand to scrap rubber subsidy
Indonesia wants Thailand to scrap rubber subsidy
JAKARTA (JP): The Indonesian government will be requesting
that the Thai government lift its subsidy for rubber farmers in
their meeting scheduled for August, a minister said on Wednesday.
"We have to take political steps to face them (Thai
government) because in Bangkok, rubber is treated as a political
commodity," Minister of Industry and Trade Luhut Binsar Panjaitan
said, adding that the meeting will take place from Aug 15 through
Aug 16.
Thailand is the world's largest rubber producer and exporter,
followed by Indonesia and Malaysia. Together the three countries
produce about 80 percent of the world's rubber.
The Thai government's intervention scheme was initiated 10
years ago to protect farmers and is scheduled to last until the
end of next year.
Luhut did not say why the Indonesian government will make the
request but analysts say Thailand's rubber subsidy policy has
enabled Thai rubber producers to sell their produce more cheaply
than other countries' producers and it has further pressured the
already low price of the commodity.
Over supply of rubber has undermined the world's rubber prices
to about 49 U.S. cents to the dollar, Luhut said.
"We have to increase the prices gradually to at least 90
cents," he added, noting that at that price, the price of natural
rubber will equal that of synthetic rubber.
Earlier, Thailand's Deputy Prime Minister Pitak
Intraqwitayanunt said the country would only stop the
intervention scheme ahead of schedule if Indonesia and Malaysia
agreed to cooperate with Thailand in developing natural rubber
products.
The meeting next month would precede the Tripartite Rubber
Cooperation (TRC) meeting in September in which the three member
countries -- Thailand, Indonesia and Malaysia -- will formalize
an agreement to reduce rubber production by 4 percent each year.
The government has agreed to slash rubber production by 70,000
metric tons beginning next year to help shore up prices.(tnt)