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.