Indonesian tire producers propose 15% export tax on Rubber

Indonesian tire producers propose 15% export tax on Rubber

OsterDow Jones, Singapore

Indonesian tire producers are proposing the government impose
a 15 percent export tax on Indonesian rubber to prevent a
possible domestic shortage, an industry official told
OsterDowJones on Tuesday.

"We're concerned that the (global) supply of natural rubber"
will fall in the next few years, said Aziz Pane, chairman of the
Indonesian Association of Tire Producers, or APBI.

Indonesia is among the world's biggest producers and exporters
of natural rubber. It produces roughly 1.6 million tons of rubber
every year, and ships about 80 percent of this to the export
market.

Aziz said Indonesia exporters might ship more rubber in the
next few years, given that other major rubber exporters like
Thailand and Malaysia are cutting down on their production,
converting rubber estates into oil palm plantations and/or sites
for other types of agribusiness.

This might hurt Indonesian tire makers who mainly rely on
local rubber output, Aziz said.

"We need a guarantee that there'll be enough rubber for local
tire producers until 2010," he said.

APBI is yet to submit an official proposal on the export tax
to the Indonesian government. Aziz said APBI will first discuss
the proposal with Indonesian rubber exporters. APBI and the
Rubber Association of Indonesia, or Gapkindo, will meet to
discuss this matter next week, he said.

Separately, Gapkindo Executive Director Suharto Honggokusomo
said there is no need for the government to impose an export tax
as there is enough rubber for local tire makers and the export
market.

The Indonesian tire manufacturing sector is a growing
industry, thanks to expanding sales of cars and motorcycles in
the local market and tire exports.