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.