Indonesia to propose review of rubber supply management deal

balesINDONESIA’s rubber industry gears up for review of the supply management mechanism it has implemented following its decision, together with Thailand and Malaysia, to halt overseas supply of rubber.

The supply cut was part of a strategy waxed by three ITRC members, Thailand, Indonesia and Malaysia, to boost prices through an agreed export tonnage scheme (AETS) and supply management scheme (SMS) after rubber prices dropped to a record low of around US$2.7/kilogramme.

The world’s second-biggest rubber producer, will be spearheading the review proposal, to spruce up the seemingly poorly supervised mechanism, according to Indonesian Rubber Association (Gapkindo) Chairman Daud Husni Bastari, adding that it was unclear whether the stakeholders were able to carry it out according to their commitments.

The review proposal will be conducted during a meeting of the International Tripartite Rubber Council (ITRC) in Thailand. Decision for further moves on shoring up rubber prices will also be discussed.

The supply arrangement is based on a demand forecast and is projected to effectively curb supply in the long term.

According to data from Gapkindo, Indonesia reduced its rubber supply in the last quarter of last year to as much as 111,000 tonnes, nearly close to its commitment of 117,000 tonnes for six months, ending in March this year. The country’s export of 2.44 million tonnes of natural rubber is down by 4.15% from a year earlier.

Thailand and Malaysia have earlier committed to bring down rubber supply to 143,000 tonnes and 40,000 tonnes, respectively.

Gapkindo will also propose for an extension of the rubber supply arrangement of Indonesia with other Southeast Asian producing nations, such as Vietnam, Laos and Myanmar.