Three major rubber producers plan rubber support scheme
Three major rubber producers plan rubber support scheme
JAKARTA (JP): The world's largest rubber producers, Thailand,
Indonesia and Malaysia, are set to agree on a rubber support
scheme when they gather for a ministerial meeting this month, a
senior government official said on Thursday.
Director general for international cooperation at the Ministry
of Trade and Industry Hatanto Reksodipoetro said that a
ministerial meeting would be held in Phuket, Thailand, to adopt
the rubber support scheme.
"Indonesia is proposing to hold the meeting in Phuket on
January 26," Hatanto told reporters at his office.
The meeting, he said, would be attended by the Indonesian
Minister for Trade and Industry, Luhut B. Pandjaitan, and the
agriculture ministers of Malaysia and Thailand.
He said that under the scheme, the three countries would form
a pricing committee whose task would be to set a minimum selling
price for rubber.
The plan requires Indonesia to retain its rubber stocks should
prices fall below the agreed level, something the government had
at first been reluctant to do, he said.
According to him, Thailand and Malaysia have long urged
Indonesia to join them in forming the rubber pact, but the
government refused their offers, concerned that it might lead to
a retention agreement.
"We have consistently been against the formation of a
retention agreement, because the government just doesn't have the
funding for it," he said.
The government changed its mind after the Indonesian Rubber
Association agreed to absorb retention costs, he explained.
Efforts to bring the three largest rubber producers together
began when Thailand and Malaysia decided to withdraw from the
International Natural Rubber Organization (INRO).
Thailand, Indonesia and Malaysia produce approximately 80
percent of the world's natural rubber output, with combined
production of around 4.5 million tons per year.
Malaysia and Thailand charged INRO with failing to lift rubber
prices, which have plunged to their lowest levels in 30 years.
Their decision to leave INRO prompted the abolition of the
organization, which grouped rubber producers with consumers.
Hatanto said that, while Indonesia would involve its private
sector for the rubber retention costs, Thailand and Malaysia had
the means to finance the scheme from their own coffers.
"It will be a committee of three countries, involving
the government and the private sector (from Indonesia)," he
explained.
Hatanto declined to estimate the minimum price level, although
officials have said that it might be up to one U.S dollar per
kilogram for rubber purchased from scheme members.
The committee, he continued, would also evaluate market
conditions that could potentially affect prices, which may lead
to member countries being required to retain their surplus
rubber.
A senior official meeting in Batam last December resulted in
the rubber support scheme, to help lift natural rubber prices
after the abolishment of INRO.
However, Hatanto admitted the rubber support scheme was
difficult to implement.
According to him, each country could violate the agreement and
sell their rubber at prices below the agreed level, while others
retain their stocks.
"Commitment is one thing, implementation another," he said.
Hatanto said that Indonesia would call for tight supervision
of the agreement, although no monitoring scheme has yet been
outlined.(bkm)