Rubber producers join forces to lift falling prices

JAKARTA (JP): The world's three largest rubber producers, Thailand, Indonesia and Malaysia, have agreed to join forces to combat falling rubber prices.

The agreement was made during a meeting between the countries' ministers of trade and industry here on Friday.

In a joint statement issued following the meeting, the ministers agreed on the need to take concrete measures to improve the sluggish rubber market.

No details of the cooperation plan were available, but the ministers expected a concrete action plan could be hammered out during a forthcoming meeting in Thailand in September.

"We (Indonesia, Thailand and Malaysia) control 80 percent of the world's rubber market, but we don't have any power to control the prices," Minister of Industry and Trade Luhut Panjaitan said.

Luhut said that international rubber prices had plunged to US$0.60 per kg from US$1.2 per kg in 1999.

"For the sake of our rubber farmers, we must find ways to raise rubber prices above $1," he said.

As a first step toward this end, Thailand and Malaysia signed a joint venture agreement during the meeting to purchase 140,000 metric tons of rubber held by the now defunct international natural rubber organization (INRO).

Indonesia lacked the funds to participate in the venture, Luhut said, but the country might join the joint venture at a later date.

The agreement was signed between Malaysian Minister of Primary Industry HE Dato' Seri Lim Keng Yaik and the Thailand Deputy Minister of Agriculture and Cooperatives Arkom Angchuan.

Lim has said earlier that producing countries should not allow INRO's buffer stock to overhang in the international market, as it would suppress prices.

Malaysia will contribute 80 million ringgit ($21 million) and Thailand 800 million baht ($22 million) to buy up to 140,000 tons of INRO's buffer stock.

Angchuan said that his country would like to see the buffer stock out of the market reach as soon as possible.

INRO expected earlier to dispose of the stock by June 2001,

Nineteen-year-old INRO ceased to exist late last year, following Malaysia and Thailand's decision to withdraw from the organization having concluded it had failed to stabilize rubber prices.

Both countries have since tried to persuade Indonesia to join them in a pact to support declining rubber prices and purchase the remaining buffer stock.

But Indonesian Rubber Association (Gapkindo) executive Suharto Honggokusumo said that the purchase of INRO's buffer stock would not have an immediate affect on international prices.

"Monthly world consumption alone is about 500,000 tons," Suharto said.

Furthermore, he said, Malaysia and Thailand would focus first on purchasing their own share of the buffer stocks, which totaled 16,000 tons and 30,000 tons respectively.

"However, their move to buy INRO's stock will have a psychological effect on the market, which will raise rubber prices," he said, adding that Japanese rubber traders in particular were sensitive to such news.

Director for multilateral cooperation at the Ministry of Industry and Trade Herry Soetanto said that an upcoming senior official level meeting would outline the actions to be taken to uplift rubber prices.

Asked whether the three producing countries would replace INRO with a new organization, he said that it was possible.

"We will look at all possibilities to find a way to improve rubber prices," Herry said. (bkm)