The three nations had come up with a scheme called the Agreed Export Tonnage Scheme (AETS) during their meeting at the International Tripartite Rubber Council (ITRC), on Feb 22, in Bangkok, Thailand.
Coordinating Minister for Economic Affairs Darmin Nasution elaborated that the implementation of AETS will be valid in the next three months.
All details regarding AETS will be discussed further during the Senior Official Meeting (SOM) ITRC on Mar 4 in Thailand.
"The three countries agreed to reduce rubber exports by 200 thousand to 300 thousand per year. Further details will be discussed by each respective government official on this coming Mar 4th," Nasution stated.
In terms of each country`s contribution of rubber production, Thailand was the highest, with 52 percent; Indonesia, 38 percent; and lastly Malaysia, 10 percent.
This rubber export reduction policy is important to restore the fundamental price of natural rubber, which is presently priced at US$1.45 for one kilogram. Meanwhile, for a farmer, the price is even lower, ranging from Rp7,000 to Rp7,500 per kilogram.
"The reason why this reduction is necessary is to show the market that we do not have a sufficient surplus," Darmin remarked.
He also added that the futures market at one of the world`s commodity exchanges in Shanghai had made an assumption of the supply of rubber being surplus. However, in reality, the world`s rubber market had only 167 thousand tons surplus out of the production of 13.5 million tons and consumption at some 13.4 million tons.
Apart from the reduction of rubber exports, two other strategies that the ITRC has come up with are the Demand Promotion Scheme (DPS) related to domestic consumption in each country and Supply Management Scheme (SMS) concerning the commitment to replant natural rubber.
Reporter: Azizah Fitriyani
Editor: Fardah Assegaf
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