31^st October 2008

In response to the sharp decline in natural rubber prices, ITRC and IRCo held a special meeting on 29^th October 2008 in Bangkok.

After lengthy deliberation on the current situation, the meeting agreed on the following:-

1.   The fall of natural rubber (NR) prices is due to the global financial calamity rather than rubber related factors, while the fundamental factors of NR supply and demand are still strong. 

2.   The response to the current market situation is long-term measures that will affect supply. As is well known, the ITRC member countries have, since 2002, identified 3 measures to address market abnormalities. The short-term measures are the Agreed Export Tonnage Scheme (AETS) and Strategic Market Operation (SMO). The long-term measure is the Supply Management Scheme (SMS). ITRC and IRCo confirm the readiness to implement all appropriate measures to defend the remunerative prices of NR.

3.   The following concerted measures will be immediately implemented by Thailand, Indonesia and Malaysia:

Accelerated Replanting

The 3 countries will increase their current annual replanting from 112,000 hectares to 169,000 hectares in 2009, an increase of 51 percent. Fully implemented, this will mean that 215,000 tonnes of NR will be removed from the market in 2009.

Decelerate New Planting

In the light of anticipated change of global economic scenario, Thailand and Indonesia will review their new planting targets, Thailand is diversifying to other crops in the South, while Indonesia will control the issuance of new licenses of rubber plantations.

Reduce Tapping Intensity

Should the situation warrant, measures will be taken by the three governments to encourage the smallholders to reduce their tapping intensity. Relevant measures will be undertaken to educate smallholders to discourage them from using stimulation.

Coordinated Marketing Activities

The meeting endorsed the concerted measures taken by the exporters under the umbrella of the ASEAN Rubber Business Council (ARBC) which comprises the rubber trade association from 6 NR exporting countries (Thailand, Indonesia, Malaysia, Singapore, Vietnam, and Cambodia) to restore market confidence and uphold contract sanctity. These measures among others include

a. Blacklisting of defaulters and not to deal with them

b. Encourage members to settle disputes amicably or by arbitration

c. Not to agree to price discount or cancellation of contracts

4.   Member Governments have assured that full support and commitment will be given for the implementation of the measures outlined in paragraph 3. 

5.   To closely monitor developments in the NR market.  Close and frequent contacts are being maintained amongst member countries to ensure that the impact of the measures that are being undertaken and to initiate further coordinated measures should the need arise.