28 Jun 2016
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In a meeting with President Joko Widodo at the Merdeka Palace, Friday (24/6/2016), Gapkindo presented a number of challenges currently faced by the national rubber industry that have caused the price of rubber to fall continuously and swiftly.
Gapkindo Chairperson Moenardji Soedargo stated that the decision by the International Tripartite Rubber Council (ITRC) as of March 1, 2015 to halt the export of natural rubber was able to stimulate the price from US$1/kg at the start of the year to US$1.5/kg in May.
However, throughout this month, the price of rubber has undergone a correction to the level of US$1.3/kg. As a point of reference, this price is still far below the peak of rubber sales in 2011 which reached US$5.5/kg.
"The actions we have taken are short term, and we expect the government to provide long-term sustainability, one of which is with a presidential instruction to utilize this rubber, and the momentum now feels more intense," he stated after an audience with the President at the Presidential Palace complex, Friday (24/6/2016).
Moenardji stated that entrepreneurs were prepared to enter the rubber processing sector if there was legal basis to provide guarantees to these entrepreneurs.
"The President asked if entrepreneurs would invest in that sector if these actions were taken. We replied that if the President issues a presidential instruction and similar orders, then entrepreneurs would definitely prepare to enter this sector," he explained.
The commitment to increase domestic use of natural rubber is actually one of the points that was decided by ITRC member countries: Indonesia, Malaysia and Thailand, at the end of 2015. However, to date, there is no legal basis to accommodate this decision.
Following this, discourse regarding the use of natural rubber for purposes other than tire manufacturing has continued to circulate. In the future, new investments will be developed to create new demand for a number of infrastructure projects, ranging from mixing rubber with asphalt to make roads (asphalt rubber), to dock buffers for port facilities, and the manufacture of water gates.
According to Moenardji, these actions would boost the price of rubber in the long term, or complement the short-term scheme that has been decided upon by the ITRC, namely by reducing exports.
In the meeting, Gapkindo also suggested that the government's plan to mandate the sale of Standard Indonesian Rubber (SIR) through the Indonesian Rubber Exchange be done voluntarily, not mandatorily, in order to boost rubber prices to competitive levels.
Furthermore, Gapkindo also suggested that the government carry out comprehensive rehabilitation or replanting in rubber plantations in order to provide increased production capacity for rubber farmers, whose incomes have been severely eroded.
Daniel Tirta Kristiadi, Operational Director of PT Kirana Megatara, stated that with extensive replanting, it is estimated that rubber farmers, who have been severely impacted by the drop in price, could see their income rise by 50% compared to the current situation.
He stated that of the total national rubber production of 3.2 million tons last year, the 6 million rubber farmers produced approximately 2.5-3 million tons of this rubber directly.
“This low level of productivity means that the supply of raw materials in Indonesia is still very low compared to the capacity of the factories absorbing these materials; this is an issue that the government will need to pay attention to moving forward,” he explained.
http://www.bumn.go.id/ptpn5/berita/17715/Harga.Karet.Jatuh,.Gapkindo.Desak.Inpres
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