RI told to target China rubber market
RI told to target China rubber market
Zakki P. Hakim, The Jakarta Post/Jakarta
Indonesia should expand its exports more to East Asia where
demand for natural rubber is growing far faster than the
country's traditional market of North America and Europe, analyst
and industry players say.
East Asia's demand for natural rubber grows by 5 percent
annually and 10 percent in China alone, whereas demand in
Indonesia's main market, the United States, expands by a mere 2
percent each year, commodity analyst Harry Tanugraha said.
East Asia's demand for natural rubber has been rapidly growing
because many automotive producers have been shifting their
production bases from North America and Europe to countries like
China, Japan and South Korea, he said.
The automotive industry absorb 76 percent of the world's
rubber production for tires.
Harry said that the national natural rubber producers must pay
attention to matters like freight cost, the economic condition of
export destination countries and most importantly the development
of tire technology in order to compete with producers from other
countries.
It takes 21 to 30 days to ship the commodity to North America
or Europe, while delivering to East Asian countries like China
would only take seven days, he said.
"If Indonesia fails to focus on those issues it could face the
consequence of losing to Malaysia, Thailand and Vietnam in
holding the East Asia market, especially China," he said in a
statement received by The Jakarta Post.
He added that China expected to produce 10 million vehicles
and 98 million tires 15 years from now.
Separately, the Association of Indonesian Rubber Producers
(Gapkindo) executive director Soeharto Honggokusumo confirmed
Harry's opinion, saying in 2005 up to 50 percent of the global
rubber demand would come from Asia Pacific countries.
"We are moving to those markets," he told the Post.
Soeharto said that local exporters would seek to maintain
their traditional market while expanding to the East Asia market.
He said that Indonesia's natural rubber exports to China had
expanded rapidly to an estimated 160,000 tons this year from last
year's 106,000 tons. In 2002, the exports stood at only 46,000
tons.
He went on that the association would meet with Minister of
Trade Mari E. Pangestu on Tuesday on the future of the country's
rubber industry, especially the prospect of further penetrating
the Chinese market.
Indonesia is the second largest natural rubber producer in the
world after Thailand.
Indonesia produced 1.79 million tons in 2003, 91 percent of
which was exported. Of the total exports, 55 percent was sent to
North America, 17 percent to Europe, 20 percent to East Asia and
the rest to other countries.
The association has estimated that national production would
stand at 1.91 million tons this year with an average price of
120.64 U.S. cents per kilogram compared to last year's 100.41
cents.
In 2004, natural rubber enjoyed a near 21 percent price
increase from last year's average price, as some consumers turned
from synthetic rubber because the price of its main ingredient --
crude oil -- increased significantly this year.