Malaysia may reconsider plan to pull out of INRO

JAKARTA (JP): The Malaysian government has promised to review its earlier decision to pull out of the International Natural Rubber Organization (INRO), an Indonesian minister said here on Tuesday.

Minister of Industry and Trade Rahardi Ramelan said on Tuesday that President B.J Habibie, during his visit to the neighboring country last week, had asked Malaysian Prime Minister Mahathir Mohamad to review the Malaysian Cabinet's decision to quit INRO.

"During his meeting with Prime Minister Mahathir, President B.J Habibie asked him to rethink the decision and return to the table to discuss ways to save INRO," he told reporters in a description of his visit with the President to Malaysia.

Mahathir gave a positive response and promised to consider the request from Indonesia in a bid to save the beleaguered organization, he said.

Speaking after opening an antimonopoly seminar, Rahardi said Mahathir understood that the Indonesian government was trying to help its rubber farmers by saving INRO.

"Most rubber plantations here are owned and developed by small farmers. The sagging rubber prices in the market will hurt farmers. In Malaysia, most rubber plantations are owned by big private plantation firms. Their farmers were not hurt by price fluctuations," he said.

Rahardi said Malaysia's withdrawal from INRO was approved by the country's Cabinet in October.

"That's why we did not discuss these matters in a ministerial meeting. But it could be discussed between heads of states," he said.

Mahathir said Malaysia would decide by the end of September, before the INRO Council meeting, whether it would quit the organization or not, Rahardi said.

Thailand, Indonesia and Malaysia are the world's top rubber producers, accounting for 80 percent of the world's rubber production. Malaysia has served notice of withdrawal from INRO, a group of 6 producer countries and 17 consumers, to be effective on Oct. 15, 1999.

Thailand, the world's largest producer of rubber, also announced in February it would quit INRO, which has long been accused of not doing enough to prop up sagging prices.

"But for Indonesia, the agency is still needed to facilitate the country's rubber exports," Rahardi said.

Rahardi said INRO has in effect been killed by the withdrawal of Malaysia and Thailand from its membership.

The withdrawal of the two major rubber producers would make the organization's buffer stock operations no longer functional, he said.

"We feel it will be better if Malaysia and Thailand can sit together with us to discuss how to revitalize INRO's buffer stock mechanism," he said.

Indonesia's rubber exports are predicted to increase by at least five percent to 1.61 million metric tons this year from 1.53 million tons in 1998, but the exports are expected to earn less foreign exchange due to lower demand and lower prices.

INRO's main aim is to stabilize world rubber prices by buying when prices drop sharply and selling when prices surge.

"From the funding side, Indonesia would not be able to afford to cover the agency's operations without the help of Malaysia and Thailand," Rahardi said.

Formerly, INRO's six rubber-producing countries were Thailand, Malaysia, the Ivory Coast, Nigeria, Sri Lanka and Indonesia.

The 17 consuming members are the United State, Japan, China, Germany, France, Austria, Belgium, Luxembourg, Denmark, Finland, Greece, Ireland, Italy, the Netherlands, Spain, Sweden and Britain.

The group's operations are based on the UN-brokered International Natural Rubber Agreement, now into its third cycle since 1980, which will expire in February 2001.

Meanwhile Thailand said it could stay in INRO if the organization did more to help producing countries.

Deputy Agriculture Minister Arkom Eng-chuan, who is in charge of rubber policy, said in an interview he had set up a team to study INRO's new proposals on rubber intervention which would be discussed during a meeting in Kuala Lumpur on September 27-30.

"I am pleased that INRO sent a senior official to see me yesterday. We discussed a lot of issues regarding rubber prices, our membership and INRO's view on overall situation," Arkom was quoted by Reuters as saying. INRO's deputy executive director Gerard Loyen met Arkom at the ministry of agriculture on Monday. (gis)