Rubber producers join forces to lift falling prices

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)