Three countries to sign rubber pact at ASEAN Summit
The Jakarta Post, Nusa Dua, Bali
Trade ministers from Indonesia, Thailand and Malaysia will sign a "shareholders agreement" that will mark the launching of a rubber consortium aimed at stabilizing the price of the commodity in the international market, according to a senior government official.
"The shareholders agreement will be signed in Bali," Director General of International Cooperation at the Ministry of Industry and Trade Pos M. Hutabarat told The Jakarta Post on Friday.
He said that Minister of Industry and Trade Rini MS Soewandi would represent Indonesia.
He added that the signing of the agreement would be witnessed by respective leaders of the aforementioned countries, who are flying to the resort island of Bali to participate in the Association of Southeast Asian Nations (ASEAN) Summit next week.
The signing ceremony will take place on Monday.
The three countries -- the world's top three rubber producers -- have been trying since 2001 to set up the consortium, called the International Tripartite Rubber Companies Consortium, in a bid to help boost sagging prices of the commodity, which at the time had plunged to a 30-year low.
It was only in August 2002 that the ministers of these countries signed a memorandum of understanding in Bali for the setting up of the consortium.
Under the plan, the three countries will cut rubber output and exports to help stabilize the price of the commodity. Thailand is the largest rubber producer and exporter with output of between two million and 2.4 million tons per year, around 90 percent of which is exported. The second largest is Indonesia with an annual output of between 1.4 million and 1.5 million tons, while Malaysia's production is around 600,000 tons.
The three countries will also have to contribute funds to the consortium.
According to an earlier report, Thailand will contribute around US$25 million, Indonesia $18.75 million and Malaysia $12.50 million. Problems in raising the funds needed was one of the problems causing delays in the setting up of the rubber consortium.
"It (the funding problem) has now been settled," Pos said.
Analysts, however, say that rubber prices in the international market have started to recover, thanks to rising demand, particularly from China.
According to one estimate, world rubber consumption will grow 7 percent this year, from 17.63 million tons in 2002. In 2004, rubber consumption is expected to grow 5.5 percent.
China is forecast to import around 900,000 tons of natural rubber this year, compared with around 400,000 tons last year.