Indonesian rubber output to slide 15%

Indonesian rubber output to slide 15%

JAKARTA (JP): The country's rubber output is expected to fall
by 15 percent to 1.3 million tons this year, from 1.5 million
tons last year due to a combination of unfavorable weather
conditions and the lower international price of the commodity,
according to an executive of the Indonesian Rubber Producers
Association (Gapkindo).

"The lower rubber output is a result of a prolonged drought,
which has hit some regions across Indonesia," Gapkindo chairman
Asril Sutan Amir told The Jakarta Post on Monday.

Indonesia is one of the three largest rubber-producing
countries, together with Thailand and Malaysia. The three
countries account for almost 80 percent of the world's natural
rubber production.

Thailand is expected to produce around 2.3 million tons of
rubber this year, while Malaysia's production should be around
600,000 tons.

Asril also attributed the fall in Indonesian rubber output to
farmers' moves to convert rubber plantations into palm oil
plantations due to falling rubber prices.

"Low rubber prices have discouraged them (the farmers) from
cultivating rubber trees," he said.

Southeast Asian rubber prices are hovering around their lowest
level in 30 years due to a market glut, and the global economic
slowdown has encouraged tire makers to cut output due to weak
demand for new cars and trucks.

Indonesia, Thailand, and Malaysia formed last year the so-
named Tripartite Rubber Cooperation (TRC) in a bid to help prop
up sagging prices.

TRC agreed earlier this month to reduce output by four percent
in 2002 and 2003 and cut exports by 10 percent, starting Jan. 1
2002.

The TRC also agreed to implement an export quota scheme
starting next year and might ask exporters to limit their forward
shipments.

Asril said that, with declining trends in the country's rubber
output, his association would find it easier to abide by the
agreement.

"We will find no significant technical difficulty in
implementing such production cutbacks and export reductions," he
said.

Around 90 percent of Indonesia's rubber production is targeted
for export, while the remaining 10 percent goes to local
manufacturers.

The country's rubber exports stood at 1.38 million tons,
valued at US$888.62 million last year, as against 1.49 million
tons valued at $849.10 million in the previous year.

Indonesia exports its rubber to the United States, Japan,
Singapore and European countries, with the U.S. absorbing more
than 40 percent of total exports. (dmr)