Private sector to raise funds for rubber plan

Private sector to raise funds for rubber plan

The Indonesian private sector will raise the initial US$18.75 million in capital needed to finance the country's rubber stockpiling plan, Minister of Trade and Industry Rini Soewandi said Tuesday.

Rini told Dow Jones Newswires that although the Indonesian government remains committed to a plan by a joint rubber consortium comprising Indonesia, Malaysia and Thailand to buy and stockpile rubber in a bid to boost export prices, the government doesn't have the funds needed to do so.

"In Indonesia, it's the private sector who will be active in the rubber consortium," she said, noting that she mentioned the same thing to Thailand's Deputy Prime Minister Pitak Intrawitayanunt on the sidelines of last week's ASEAN Economic Ministers Meeting in Bangkok.

In contrast, the other members of the consortium have stated that it is the government which will provide the money needed for stockpiling, Soewandi said.

Ministers of the world's top rubber producers - Indonesia, Thailand and Malaysia - March 1 established a $225 million joint rubber consortium whose main objective is to buy rubber from the world market to raise prices.

The Thailand-based consortium is expected to start its operations sometime this month, and the three member countries have to raise an initial capital outlay of $56.25 million.

Since the capital of the consortium will be held by the three countries in proportion to their market share, Thailand, as the biggest rubber exporter, will have to contribute $25 million; Indonesia, the second biggest rubber exporter, will contribute $18.75 million; and Malaysia has to give $12.5 million. -- Dow Jones