CMEA Darmin Nasution said Indonesia Limits Rubber Export and Aimed to Increases Domestic Use - Photo by CMEA Office

JAKARTA (TheInsiderStories) – Indonesian government seeks the best solution amid the downward trend in natural rubber prices. With the two member countries of the International Tripartite Rubber Council (ITRC), the government is currently implementing three main policies to ensure price stability, increase productivity and rubber replanting, said senior minister on Monday (02/25).

Coordinating Minister for Economic Affairs Darmin Nasution stated, global trade sentiment between Unites States (US) and China also the negative movement of rubber prices has suppressed the prices in the largest rubber producing countries such as Thailand, Indonesia, Malaysia and Vietnam.

“The price of rubber lately continues to fall and is not in accordance with supply, demand and prices in the farmers market. When rubber is exported, there is a negative sentiment in the Shanghai market because our rubber production is depressed because they use other types of rubber,” he cleared.

Nasution explained that there were three pillars of policies has been released at the meeting of the ministers council in Thailand on Feb. 21-22. The three policies are regulated through the Agreed Export Tonnage Scheme scheme for the short term, maximizing domestic rubber use through promotion and collaboration with other ministries and institutions in medium term, and rubber replanting through the long-term Supply Management Scheme.

“There is a short-term agreement that the three countries have agreed to curb exports of 200.000 to 300.000 tons for the next 3 months while looking at the development of international export prices. And the three countries are still waiting for the next meeting (March 4) to determine the right price. This policy is futures,” he added.

Nasution added, to increase the stabilization of domestic rubber productivity, he had consolidated with various ministries, institutions and associations to utilize rubber products in infrastructure projects, railroad dampers, road dividers, bridge bearings and tire retreads.

“In a meeting with the ministers, we discussed about the possibility of using natural rubber products in the country to be greater. This year the Ministry of Public Works is finalizing the standards of asphalt mixed with rubber, both at the central, provincial or district level, so that there is an increase in productivity and within three months the price will be better,” he noted.

In addition, the government through the Ministry of Agriculture has made a national rubber replanting project with a target of reaching 50 thousand hectares per year, starting in 2014. The process uses a 60-40 scheme, in which 60 percent of plantations/land will be planted, the remaining ( 40 percent) will be planted with cocoa, horticulture, coffee, and so on.

Nasution said, the three countries also discussed the future direction of the Regional Rubber Market and the establishment of an arbitration body to support it. Then also discussed the establishment of the ASEAN Rubber Council as a platform for developing the natural rubber industry in ASEAN.

As known, Thailand, Indonesia and Malaysia through the framework of the ITRC control around 66 percent of global rubber production in 2018 which reaches 13.89 million tons.

The Association of the Natural Rubber Producing Countries projected the production of each of the ITRC member countries last year at 4.82 million tons (Thailand), 3.77 million tons (Indonesia) and 600 thousand tons (Malaysia), and Vietnam (planned to join) is projected to reach 1.1 million tons. Totally, it’s around 10.29 million tons or 74 percent of all global rubber production.

While, this year the International Rubber Research Group  also estimates that global rubber demand will increase by around 2.5 percent to more than 30 million tons. Where demand for natural rubber will increase to 14.2 million tons, and demand for synthetic rubber will increase to 15.8 million tons.

Written by Daniel Deha, Email: daniel@theinsiderstories.com