Malaysian threat clouds INRO meet

Malaysian threat clouds INRO meet

KUALA LUMPUR (Reuters): The International Natural Rubber
Organization (INRO) on Thursday began a crucial meeting of its
policy-making council, with Malaysia's threat to resign from the
group dominating worries, officials said.

Delegates at the two-day council meeting were also pondering
whether to amend INRO's intervention policy and establish new
levels for its entry into the market to please producers such as
Thailand and Malaysia, said the officials.

"There are various issues that are worrying and no doubt these
will be discussed, particularly the issue of Malaysia wanting to
leave (INRO)," an official at the talks said after the meeting
broke for lunch on Thursday.

INRO's deputy executive director Gerard Loyen told Reuters the
meeting was progressing well and constructively.

"The delegates have broken up into smaller groups, or
caucuses, to discuss specifics but there's nothing unusual about
this, considering the number of issues that have come up this
time," Loyen said.

He said a press communique will be issued at the close of the
meeting in the Malaysian capital on Friday. "But we can't promise
yet whether there will be a news conference."

INRO, headquartered in Kuala Lumpur, is the world's sole
surviving producer-consumer commodity grouping with the power to
steer prices.

But it has been strongly criticized by producers who charge it
has ignored their plight.

Thailand, the world's largest rubber producer, and Malaysia,
the third largest, have complained that INRO's market
intervention levels to buy stockpile rubber are too low and
should be raised.

Under its current agreement, INRO can intervene to buy at its
own discretion if the five-day moving average of the daily market
indicator price dips below 183 Malaysia/Singapore cents a kg. But
it must buy once the price hits 172 cents.

Malaysia has vowed to leave INRO despite the rubber body
intervening in the market in recent months to support prices.
Thailand has said it will decide on the status of its membership
after the current council meeting.

"I think the Thais would want a new intervention price at this
meeting," said the INRO official. "They will need to take
something back to their country to appease their government."

Another delegate at the meeting said it was uncertain how INRO
would function even if only Malaysia quit.

"What will we do for the headquarters, which is now in Kuala
Lumpur?," asked the delegate. "Who is going to contribute to
Malaysia's voting share, which is now 23 percent in the council."

He said Malaysia had to give a year's notice to quit INRO "and
we're wondering if they have considered all the ramifications of
making such a move".

INRO groups six rubber producing countries and 17 consuming
countries.

Producing countries include Thailand, Indonesia, Malaysia,
Ivory Coast, Nigeria and Sri Lanka. Consuming members are the
U.S., Japan, China, Germany, France, Austria, Belgium,
Luxembourg, Denmark, Finland, Greece, Ireland, Italy, the
Netherlands, Spain, Sweden and Britain.