Malaysia says regional rubber fund almost ready

Malaysia says regional rubber fund almost ready

Reuters, Kuala Lumpur

Malaysia, the world's third largest rubber grower, is close to launching a $255-million fund with other top producers Thailand and Indonesia to defend prices in the market, a cabinet minister was quoted as saying on Monday.

The International Tripartite Rubber Organization (ITRO) fund, set up by the three after the collapse of the International Natural Rubber Organization (INRO) in 1999, could help prices by May, Malaysian Primary Industries Minister Lim Keng Yaik said.

The Bangkok-based ITRO was initially supposed to start operations in February.

Under an agreement signed in Bali, Indonesia, in December last year the three countries are to cut rubber output by four percent in 2002 and 2003 and exports by 10 percent from January 2002. They also agreed on a fund to mop up huge rubber stocks that come on the market and destabilize prices.

"We are going into the final process of putting into procedure the implementation of the Bali agreement, together with the setting up of a $255-million consortium to trade rubber and for stockpile purposes," Lim was quoted as saying by Malaysia's official Bernama news agency.

"With this in hand, we should see rubber prices going up to a much more encouraging level in the coming month this year."

Malaysia's benchmark RSS1 rubber was quoted at 72 U.S. cents a kg on Monday compared with 64 cents a month ago.

Thailand and Malaysia, which together with Indonesia produce 80 percent of the world's natural rubber, withdrew from INRO after accusing the world rubber body, in operation for two decades, for not doing enough to support prices.