Malaysian minister criticizes Indonesia and Thailand on rubber pact
Malaysian minister criticizes Indonesia and Thailand on rubber pact
Dow Jones, Kuala Lumpur
A Malaysian government official has criticized Indonesia and
Thailand for saying they won't stick to a plan to reduce rubber
production and exports, concluding that this will drag down
rubber prices.
"I would like to caution the ministers from these two
countries that the (international) tripartite rubber agreement
hinges very strongly on the understanding of a production cutback
as well as an export cutback. The prices (won't go up) if you
increase production and you increase exports," Malaysian Primary
Industries Minister Lim Keng Yaik said in a press briefing.
Lim was referring to a pact signed in December 2000, when
ministers from the world's top rubber producers - Malaysia,
Thailand and Indonesia - agreed to cut rubber output and exports
starting in 2002.
The cutbacks were aimed at shoring up rubber prices, which
were then at a 30-year low, with the benchmark Thai ribbed smoked
sheet rubber 3 grade at 45-50 U.S. cents a kilogram.
A long dryspell in 2002, coupled with news about the planned
cutbacks in production and exports, helped prices to gradually
recover.
Wednesday, the benchmark Thai RSS3 grade was offered at
US$1/kg.
Lim's comments follow separate statements from Thai and
Indonesian officials last week.
Thai Prime Minister Thaksin Shinawatra said the government
aims to increase local natural rubber output by 350,000 to
400,000 metric tons over the next five years to meet growing
demand from India and China.
Indonesian Trade Minister Rini MS. Soewandi said Indonesia has
no plans to cut exports and rubber production this year amid
growing export demand and stable rubber prices.
Lim said these moves will push rubber prices lower.
"(Indonesia and Thailand) have forgotten the tripartite
agreement and they have unilaterally made a declaration that they
are going to increase production. It's the surest way of bringing
down prices," Lim said.
Lim didn't say whether Malaysia will reduce its rubber exports
and production this year.
But, "if these people want to produce cheap rubber, then
(Malaysia) might buy this cheap rubber and forget about producing
rubber ourselves," he said.