Malaysia reconsiders support for INRA III

Malaysia reconsiders support for INRA III

KUALA LUMPUR (AFP): Malaysia yesterday said it was now
studying the usefulness of ratifying the new UN-brokered global
rubber pact hammered out in Geneva, only weeks after blaming
excessive production for the recent drop in prices.

"Malaysia is studying the agreement very closely and we will
indicate our intention at the proper time," Primary Industries
Minister Lim Keng Yaik told a news conference.

Malaysia's outburst over prices surprised the rubber industry
which had considered as automatic the ratification of the third
International Natural Rubber Agreement (INRA III) drawn up by the
world's leading natural rubber producers and consumers in
February.

The accord was drawn up by the International Natural Rubber
Organization (INRO)'s six producer- and 21 consumer-members after
more than two years of protracted negotiations.

INRO, which groups six producers led by Thailand, Indonesia
and Malaysia and 21 consuming nations led by the United States,
Japan and the European Union, administers INRA through operation
of a buffer stock mechanism to stabilize prices.

Member countries until December 28 to sign the four-year pact
for it to provisionally succeed the 1987 INRA II next year. The
first INRA came into effect in 1979.

The governments have been given until January 21, 1997, to
deposit instruments of ratification or to notify provisional
application of the agreement.

Ratification

At least 75 percent of members from both sides should ratify
to enable the pact to be enforced, and Malaysia's vote is crucial
being the world's third largest producer after Thailand and
Indonesia.

"We want to see whether it is worthwhile (to ratify)," said
Lim, adding that Malaysia's decision would depend on the
cooperation between producers and the attitude of consumers.

Lim said producers should not contribute further to depressed
prices by undercutting each other.

"We should have more consultations on production
rationalization to be conscious of the need for a balance between
production and consumption," he added.

Lim reiterated the need for key producers -- Thailand,
Indonesia, Malaysia -- who are members of the Association of
Natural Rubber Producing Countries (ANRPC) -- to rationalize
output to sustain prices at "remunerative levels."

The ANRPC groups the three, who account for 80 percent of
global rubber exports, with India, Papua New Guinea and Sri
Lanka.

Rubber prices peaked at 4.60 ringgit (US$1.84) a kilogram (2.2
pounds) early this year, after languishing at the 2.00-to-2.50
ringgit level for six years, only to drop one ringgit in the past
two months due to excessive production, Lim said.

"I am prepared to attend a ministerial meeting if necessary to
stress the importance of supply rationalization and a more
effective marketing strategy to protect producers," Lim said. The
ANRPC ministers last met in Papua New Guinea in 1991.