Rubber producing nations set up consortium to lift price

The Jakarta Post, Gianyar, Bali

The world's largest rubber producers -- Indonesia, Malaysia and Thailand -- signed on Thursday a memorandum of understanding (MoU) to set up a consortium called International Tripartite Rubber Companies Consortium (ITRCo), whose main duty is to help boost the current sagging prices of the commodity.

Minister of Trade and Industry Rini MS Soewandi signed the agreement together with Malaysia's Basic Industry Minister Liem Kem Yaik and Thailand's Minister of Agriculture and Cooperatives Shucheep Hansabad during a gathering on the resort island of Bali.

The signing ceremony was witnessed by top leaders of the three countries including President Megawati Soekarnoputri, Malaysia's Prime Minister Mahathir Mohammad, and Thailand's Prime Minister Thaksin Shinawatra.

Indonesia, Malaysia and Thailand are the world's top rubber producers, which jointly account for around 95 percent of the world's natural rubber production.

According to Rini, the establishment of the ITRCo was aimed at lifting rubber prices to the "optimum level."

The consortium would purchase the commodity from the market in case of oversupply so that the price would gradually increase.

But in case of high demand and short supply, the consortium would release its stock.

"The main goal is to increase the rubber price, so that this will benefit farmers," Rini said.

Rini said that the price of rubber had dropped during the past several months to the current level of around 45 U.S. cents per kilogram.

The normal price for farmers was about 70 cents to 80 cents per kilogram.

ITRCo aims to boost the price to around Rp 6,000 per kg (67 cents) in the Indonesian market, and to around 30 baht (71 cents) in the Thai market.

Chairman of the Indonesian Rubber Producers Association (Gapkindo) Asril Sutan Amir welcomed the move, saying that it would significantly affect the price in the international market.

"Buyers are anticipating the signing of the consortium," he said.

On Thursday morning, the price of natural rubber jumped to 81 cents per kilogram, from 78 cents three days previously.

The ITRCo was established following the forming of the International Tripartite Rubber Council (ITRC) last year in Bali.

Under the council framework, the three countries have pledged to cut rubber output by 4 percent and exports by 10 percent starting this year.

For 2002, Indonesia will lower its rubber exports to 1.23 million tons, while Thailand has set a limit at 1.93 million tons and Malaysia will cap its export volume at 227,000 tons.