Sri Lanka to quit INRO due to financial burden
Sri Lanka to quit INRO due to financial burden
COLOMBO (Reuters): Sri Lanka wants to pull out of the International Natural Rubber Organization (INRO) because it can no longer afford membership, government and trade officials said on Wednesday.
Sri Lanka has submitted a letter indicating its intention to withdraw from the INRO to the UN trade and development agency UNCTAD, said Sunil de Silva, additional secretary at the ministry of plantations.
"We have no other alternative because of the economic problems of being a member of INRO," de Silva told Reuters.
Declining local production and prices made it difficult for the country to pay its membership fee and funds to maintain the group's buffer stock, he added.
The membership fee runs into $19,000 annually, de Silva said. In addition, Sri Lanka has to contribute funds towards maintaining INRO's buffer stocks.
But INRO's acting executive director Gerard Loyen said in Kuala Lumpur the organization was unaware of Sri Lanka's intention to quit the world rubber body.
"To date we have not received anything or heard anything to that effect," he said in response to the Sri Lankan statement. De Silva was not immediately available to respond to Loyen's statement.
The chairman of the Colombo Rubber Traders' Association (CRTA) said the financial burden of membership on Sri Lanka would increase as a result of Thailand and Malaysia leaving INRO.
"Sri Lanka's decision to withdraw is mainly because the financial burden will become somewhat unbearable," said William Tissa Ellawala, chairman of CRTA.
INRO's survival is already under threat from Malaysia and Thailand, which have said they will leave the organization.
The two countries, which together account for more than half of the world's rubber production, are upset over consumer members' reluctance to support higher prices.
Kuala Lumpur-based INRO is the world's oldest and last commodity pact with economic clauses. It aims to stabilize rubber prices by buying and selling rubber in the market at rates pre- determined by producers and consumers.
"Sri Lanka being such a small producer, I don't think it would have any affects other than to further weaken the INRO," Ellawala said, adding that local prices will not be influenced.
He said current local rubber prices have been propped up by domestic demand and heavy rains that had slashed supply.
De Silva said local rubber consumption had also risen to 48 percent of total production last year and with international prices declining the government was promoting value addition.
"If we can consume more rubber locally, we can have good prices for our latex," he added.
Sri Lanka's rubber production in January this year rose 26 percent to 9.2 million kg against 7.3 million kg in the same month in 1998. Total output in 1998 was 104.2 million kg, down 1.5 percent from the 105.8 million kg produced in 1997, the Central Bank said.
INRO comprises six rubber producers and 16 consumer countries. The producing members are Thailand, Indonesia, Malaysia, Ivory Coast, Nigeria and Sri Lanka.
Consumer members are the United States, Japan, China, Germany, France, Austria, Belgium plus Luxembourg, Denmark, Finland, Greece, Ireland, Italy, the Netherlands, Spain, Sweden and Britain.