Malaysia may reconsider plan to pull out of INRO

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)