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Thailand, Indonesia, Malaysia, agree to lift domestic rubber consumption, cut exports

JAKARTA (Rambu Energy) – Three largest rubber producers Thailand, Indonesia and Malaysia, which are members of the International Tripartite Rubber Council (ITRC), have agreed to increase natural rubber consumption in domestic market of the respective member countries. The decision would consequently reduce exports and ultimately push up the world rubber price.

Malaysia’s Plantations and Commodities Minister Datuk Amar Douglas Uggan told reporters in Kuala Lumpur that the three countries have agreed to lift the natural rubber consumption in domestic market by up to 10 percent, the state news agency Antara reported.

He made the comment after holding a ministerial level meeting of the International Tripartite Rubber Council in Kuala Lumpur, Malaysia.

Indonesia’s Trade Minister Rachmat Gobel and Thailand’s Minister for Agriculture and Cooperative Petipong Pungbun Na Ayudhya also attended the meeting.

Datuk Amar Douglas Uggah, the host and chairman of the ITRC meeting, said there are many ways that can be done to increase domestic rubber consumption, in addition to producing tires.

He cited the successful drive of Thailand in developing rubber downstream industry, the product of which have been used for building materials and road constructions.

Indonesia, Thailand and Malaysia contribute 67 percent of the world’s rubber annual production. The three countries also contributed 79 percent of the world’s rubber exports.

The other Association of South East Asian Countries (ASEAN), Laos, Myanmar, Cambodia and Vietnam contributed 10 percent of the world’s rubber production.

The rubber price in November stood at US$1.5 per kilogram, dropped from a peak of US$4 per kilogram few years ago.

“We have agreed not to limit the production and control the planting. We hope the rubber price will slowly increase,” said Trade Minister Rachmat Gobel.

Indonesia’s rubber exports in 2013 dropped to US$6.9 billion in 2011, from US$11.7 billion in 2011.

Deputy Chairman of the Association of Indonesia’s Rubber Producers (Gapkindo) Moenardji Soedargo said that the plan to increase domestic rubber consumption by 10 percent is attainable, given that there are new investments in rubber industry in Indonesia.

Indonesia produces 3.2 million metric tons of rubber per annum and around 500,000 tons are consumed by domestic industries, Antara cited Gapkindo data.

Meanwhile, Business Standard reported that Thailand, Indonesia and Malaysia have agreed to set up a regional rubber exchange to bolster the commodity’s trading activities and to support prices.

Datuk Amar Douglas Uggah Embas said the three countries would jointly carry out a study on its viability, assisted by a global agriculture consultancy LMC International.

“The regional rubber exchange will provide a platform for better price discovery and effective hedging functions, bringing benefits to producers, consumers and market players. In this context, the countries agree to undertake follow-up measures and work towards realizing the exchange within 18 months,” he said. (*)

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