ITRC agrees to cut natural rubber exports

The Acting Director General of Foreign Trade at the Trade Ministry, Karyanto Suprih, explained in Jakarta on Thursday that member countries of the ITRC consisting of Indonesia, Thailand, and Malaysia have agreed to reduce their exports of natural rubber entering the Agreed Export Tonnage Scheme (AETS) with allocations of 324,005 tons for Thailand, 238,736 tons for Indonesia, and 52,259 tons for Malaysia.

According to Karyanto, the price of natural rubber, which is currently at US$1.09 per kilogram, will impact rubber farmers, and the implementation of the AETS is expected to support prices at a level that is fair for farmers.

He said, "Export reduction will cause the global stock of natural rubber to be absorbed by the market. The supply of natural rubber on the global market will decline further due to the decline in production of natural rubber in producing countries because of the low price of the commodity."

Karyanto explained to other natural rubber producing countries such as Vietnam that ITRC members will continue to communicate in order to build a strategic partnership.

He said, "We have made calculations regarding whether or not Vietnam will participate in the export reduction. If it does, it will be approximately 85 thousand tons."

He said that along with the export reduction, absorption of natural rubber domestically is expected to increase.

The government is striving to increase domestic absorption of natural rubber, among other things by implementing road construction projects and dock fenders at ports.

The Director of Exports of Agricultural and Forestry Products at the Trade Ministry, Nurlaila Nur Muhammad, said that the government is preparing the legal basis to encourage increased absorption of natural rubber in domestic construction projects.

She said, "Initially the instrument that would be used would be a presidential instruction (Inpres), but that would take a long time. So the suggestion from the Coordinating Minister of the Economy is that we will focus on road construction and the dock fender industry so that things can proceed quickly."

Nurlaila added that the regulation is still being completed and may take the form of a Joint Decree between the Minister of Public Works and Public Housing, the Minister of Transportation, and the Minister of Industry.

"Until now, there has not been any (absorption of natural rubber for government projects) because the presidential instruction has not come out, and its drafting is taking a long time. In the near future, it will be completed; the Minister of Trade will send a letter to the Coordinating Minister of the Economy," she said.

The efforts to reduce this supply are a follow-up to the meeting of the ITRC Ministerial Council on December 3, 2015, which was then continued at a meeting of senior officials in January 2016.

In Indonesia, the Indonesian Rubber Industry Association (Gapkindo) will become the implementer of the natural rubber export reduction in the framework of the AETS in the private sector.