International Tripartite Rubber Council (ITRC)

13 December 2008, Bogor, Indonesia

In view of the current natural rubber prices, the 14th International Tripartite Rubber Council (ITRC) Meeting agreed that additional coordinated measures, besides those announced on 29th October 2008, will be undertaken immediately by Thailand, Indonesia and Malaysia.

This is to ensure that natural rubber prices remain remunerative to over 3 million smallholder households and also fair for consumers relative to synthetic rubber price.

The measures are:

1.   Implementation of Agreed Export Tonnage Scheme (AETS)

AETS will be implemented as of 1^st January 2009. Under this scheme, Thailand, Indonesia and Malaysia will reduce their natural rubber exports. As a result, the market will be relieved of a total of 915,000 tonnes of natural rubber in 2009, out of which 700,000 tonnes under AETS and 215,000 tonnes due to accelerated replanting under the Supply Management Scheme (SMS).

For the first quarter of 2009, the exports of natural rubber from the 3 countries will be reduced by 270,000 tonnes (38.57% of 700,000 tonnes). The balance of the AETS target will be implemented in subsequent quarters in 2009.

2.   Export Price

Currently, natural rubber is priced at a big discount to synthetic rubber. Hence, the Rubber Association of Indonesia (GAPKINDO) has already urged its members not to sell below US$1.35/kg. Both the Thai Rubber Association (TRA) and Federation of Rubber Trade Associations of Malaysia (FRTAM) are adopting similar measure.

3.   Non-Fulfillment of Contracts

The recent drastic decline of natural rubber prices was aggravated by non-fulfillment of contracts, which goes against the basic principle of contract sanctity.

Whilst the traders in the exporting countries had in late October 2008 tried to address this issue within the ambit of the ASEAN Rubber Business Council, albeit without much success, the Governments of Thailand, Indonesia and Malaysia view this issue very seriously.

If these unhealthy trade practices are allowed to continue unchecked, it will dampen the sentiment in the natural rubber market and undermine the century-old international rubber trade practices of relying on "words as their bonds".

In this respect, the ITRC agreed that three Governments approach the contractual parties' respective governments to seek their cooperation to curb these unhealthy practices.

Buyers and sellers involved are also urged to resolve any non-fulfilled outstanding contracts urgently so that the international rubber trade can continue to operate orderly for long-term mutual benefit.

4.   Ministerial Meeting

A Ministerial Meeting will be held in January 2009 in Kuala Lumpur to adopt the following measures amongst others:

i.         Revision of Reference Price

ii.        Strategic Market Operations

iii.      Assistance to smallholders

iv.      Non fulfillment of contracts