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Thailand, Indonesia and Malaysia will set up a regional rubber exchange to bolster the commodity’s trading activities and to support prices. The International Tripartite Rubber Council (ITRC) meeting, held on Thursday in Kuala Lumpur, decided to make the exchange operational in 18 months.
Datuk Amar Douglas Uggah Embas, Malaysia’s plantation industries and commodities minister, said the three countries would jointly carry out a study on its viability. Global agriculture consultancy LMC International will carry out the study.
Thailand, Indonesia and Malaysia are the world’s first, second and sixth largest natural rubber producers, respectively,
“The regional rubber exchange will provide a platform for better price discovery and effective hedging functions, bringing benefits to producers, consumers and market players. In this context, the countries agree to undertake follow-up measures and work towards realising the exchange within 18 months,” the Malaysian minister said after the ministerial committee meeting.
With the rubber exchange, ITRC will be able to exercise better control over the commodity and rival Tokyo Commodity Exchange and the Singapore Exchange.
The exchange is likely to be named Asian Rubber Exchange and located in Kuala Lumpur, Bangkok or Jakarta.
The move comes at a time when natural rubber prices have fallen to their five-year low.
The three countries account for 67 per cent of global natural rubber production of a little more than four million tonnes and 79 per cent of global natural rubber export, as well as a total of 4.6 million rubber smallholders.
Uggah said ITRC had also beefed up ties with other natural rubber-producing countries in the region such as Cambodia, Laos, Vietnam and Myanmar.
Malaysia was the world’s top natural rubber producer in the 1980s but has since dropped to sixth place, with annual production of 800,000 tonnes.
