KUALA LUMPUR (May 8): Plantation Industries and Commodities Minister Datuk Seri Douglas Uggah Embas said today Malaysia will implement the use of rubber for the construction of roads within one year, which will take up 10% of the country's annual supply of natural rubber.
"The rubber will be mixed [in] with asphalt. Thailand is already doing it," he told reporters after a ministerial-level meeting of the Association of Natural Rubber Producing Countries (ANPRC).
He also said definite decisions on strategies and actions to curb low natural rubber prices will be reached after October this year, when proposals during the annual general meeting (AGM) of the assembly will be presented for deliberation.
The meeting between 11 member countries today proposed the establishment of a common trading platform for natural rubber that would link the existing systems in the ANPRC member countries to provide a more reflective price for natural rubber based on supply and demand fundamentals.
Prices of natural rubber have been declining since 2011-2012, when the Malaysia SMR 20 reached over RM17 per kg, due to a supply glut coupled with weak demand from top consumer China. It was down 3.5 sen at RM5.345 per kg yesterday. At noon today, it has eased further to RM5.34 sen per kg.
The protracted price slump has driven large Asian rubber producers, including world No. 1 Sri Trang Agro-Industry Plc, to consider ditching the system of price pegging near a benchmark set by the Singapore SICOM exchange and hike prices sharply.
Thai and Indonesian rubber associations have also supported the proposal.
Asked about the proposal to unpeg rubber prices from SICOM, Uggah Embas said the matter was not on ANPRC's agenda for discussion today.
"I think the focus now is how to address the low rubber prices. The focus now is bringing all the natural rubber producing companies to sit down, sharing their pain and work towards finding solutions," he said.
Uggah Embas added that Vietnam has agreed to join the International Tripartite Rubber Council, of which Malaysia, Indonesia and Thailand are now members.
He said with the addition of Vietnam, the council will be represented by countries that collectively contribute some 75% to the global natural rubber supply. Thailand is the world's largest producer of natural rubber, followed by Indonesia, Vietnam and Malaysia.