RI asks ASEAN to help rubber processors

RI asks ASEAN to help rubber processors

JAKARTA (JP): Indonesia has asked other members of the
Association of Southeast Asian Nations (ASEAN) to establish a
joint venture to help rubber processors, says a local rubber
producer.

Chairman of the Rubber Association of Indonesia (Gapkindo), O.
K. Cornel, said here Thursday that the proposed company, to be
called ASEAN Rubber Corporation, was expected to raise loans from
overseas banks and channel the funds to rubber processors and
exporters in Indonesia, Thailand and Malaysia.

"If the proposed company raises a loan with an interest rate
of 6 percent per annum it can pass it on to a rubber processor or
exporter with an annual interest rate of 8 percent, far lower
than the 18 percent charged by Indonesian banks," he told The
Jakarta Post.

The processors and exporters would be able to keep production
costs lower than world market prices, he said.

He said the current rubber price of US$1.02 a kilogram on the
world market was too low for Indonesian exporters because
production costs ranged from 75 U.S. cents a kilogram for big
state-owned plantation companies to about 90 cents for farmers.
Farmers contribute about 72 percent to Indonesia's total rubber
production of about 1.4 million tons a year.

He said that compared to the reference price band of 74 cents-
$1.10 set by the International Rubber Organization, $1.02 was
high, but "it is too low if we compare with our production
costs".

Cornel said Gapkindo proposed forming the ASEAN Rubber
Corporation at a meeting of ASEAN's Rubber Business Club in
Thailand last week, and rubber producers in Thailand were
interested.

ASEAN groups Brunei, Indonesia, Thailand, Singapore, Malaysia,
the Philippines and Vietnam.

"We are trying to attract Singaporean companies, particularly
banks, to join the proposed company so it will be easier to raise
loans," he said.

He said Gapkindo also suggested village cooperatives provide
low-interest loans for rubber farmers, particularly when they
were forced to reduce latex production. Reducing latex production
is needed to prop up prices when the market is in an over-supply
and prices are low.

Indonesian rubber farmers usually tap more latex to increase
their earnings when rubber prices are low and this causes prices
to fall further.

"Village cooperatives can raise their funds from the Jimbaran
Group's big companies," Cornel said. (13)