Indonesian Government Agrees to ITRC's Three Policies

SCI99

2019-03-01

Indonesian Government Agrees to ITRC's Three Rubber Price Promotion Policies

The Indonesian government announced three new policies aimed at boosting NR prices. Coordinating Economy Minister, Darmin Nasution, said the new policy would limit NR exports, expand the use of domestic rubber in construction and replant rubber plantations.

"With these three policies, we believe we can prevent NR prices from dropping again," Darmin said on Monday at a Jakarta press briefing. The current price of NR exports was around $1.45 (Rp 20,300)/kg, while the NR farm gate price fluctuated within the range of Rp7,000 to Rp7,500 ($0.5)/kg. These prices are not matched with the current supply and demand conditions.

The three policies were issued after the International Rubber Tripartite Committee (ITRC) meeting in Bangkok, Thailand on February 22. IRTC was founded in 2004 by three of the world’s largest rubber producers: Thailand, Indonesia and Malaysia.

For the sixth time, these countries agreed to implement the Agreed Export Tonnage Program (AETS), which requires them to reduce NR exports by 200 to 300kt in the next three months.

Besides AETS, the three countries also agreed to boost the local use of NR through the demand promotion programs.

According to the program, the Indonesian government will expand the use of domestic rubber in infrastructure projects such as roads, railway shock absorbers, road dividers and bridge bearings.

In order to maintain the stable NR supply and demand, ITRC countries will also implement a supply management plan and plant rubber plantations with new rubber trees.

Darmin said that the Ministry of Agriculture replanted only 6,000 hectares of the country's 3.6 million hectares of rubber plantations, adding that the government will also speed up the replanting program.

“Since we built rubber plantations 100 years ago, we have never implemented a systematic replanting plan. We will replant up to 50,000 hectares of land in the future,” he said.

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