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Southeast Asia

IRCo may cause rubber shortage in Indonesia

JAKARTA - Indonesian tire producers said the country could face a shortage of rubber supplies following the establishment of the International Rubber Consortium (IRCo) Ltd.

The local industrialists' concern was expressed by Aziz Pane, chairman of the Association of Indonesian Tire Producers (APBI), who said he welcomed the establishment of IRCo Ltd in Indonesia, Malaysia and Thailand but warned that the Indonesian government had apparently forgotten about tire industries' need for natural rubber.

Pane said he was concerned about a possible rise in the prices of local natural rubber because exporters preferred sending it outside Indonesia so that domestic stocks would decrease. In this connection, he urged the government to control rubber trading so that Indonesia's domestic demand would not be neglected.

The annual production capacity of Indonesia's tire industries is 31 million tires. However, of the figure, Pane said Indonesia could only produce 19-21 million tires, partly due to a shortage of raw material.

Tires smuggled from China and marketed in Indonesia at relatively low prices were also responsible for the national tire industry's inability to use its full production capacity, he said.

However, eventually Indonesia could benefit from IRCo because it would make Indonesia the world's largest rubber producer.

This year, Thailand remains the biggest producer with 2.5 million tons a year; Indonesia produces 1.5 million tons, and Malaysia one million tons, Pane said.

"By the year 2006, Indonesia is expected to replace Thailand as the world's biggest rubber producer," Pane added.

IRCo Ltd was set up through the signing of relevant documents by ministers of the three Southeast Asian countries on Monday evening on the sidelines of the ninth ASEAN summit in Bali.

(Asia Pulse/ANTARA)

Oct 10, 2003

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