ANRPC NEWS
A newsletter of the
ASSOCIATION OF NATURAL RUBBER PRODUCING COUNTRIES
7th Floor, Bangunan Getah Asli (Menara), 148, Jalan Ampang, 50450 Kuala Lumpur, Malaysia
Tel : 603-21611900. Fax : 603-21613014. E-mail: anrpc@streamyx.com
Website : www.anrpc.org
Volume 21 No. 2
FROM THE SECRETARY-GENERAL’S
DESK
There have been major and significant political
and economic developments in the recent past,
which can be generally referred to as economic
liberalisation and globalisation. Such changes had
critical implications on all spheres of economic
activities including the functioning of commodity
based intergovernmental organisations. Most of
the commodity based intergovernmental
producer-consumer forums collapsed or were
relegated to the status of monitoring agencies.
In the case of NR, the producer-consumer forum,
International Natural Rubber Organisation (INRO)
collapsed in late 1990s. The ANRPC, which is
a producers’ forum established in 1970,
continues its activities focusing on promoting the
development of the NR industry and bringing
about remunerative and stable prices for NR
through co-ordination in production and
marketing.
NR price continues to be a sensitive issue in
most of the producing countries because of the
overwhelming dominance of small producers and
the economic and social consequences involved.
From the turn of 2002 the rubber prices started
moving northwards and the prices are still in the
comfortable zone. The Association is very much
concerned of the welfare of the smallholders who
shoulder this industry. Hence deliberations on
measures and strategies to enhance the net
returns of the smallholders through cost
minimising and income augmenting cultural
practices take a centre stage in ANRPC
meetings. Measures to increase the absolute and
relative consumption of NR is also given due
importance.
This would be my last message, as I will be
completing my term in May 2007. During my
term the Executive Committee met five times in
Port Moresby, Papua New Guinea in October
2004; Kuala Lumpur, Malaysia in February 2005,
Chiang Mai, Thailand in April 2005; Penang,
Malaysia in February 2006 and Colombo, Sri
Lanka in December. The Executive Committee
Editors: Phillip T. Pondikou – Secretary-General, Arumugam – Deputy Secretary-General and Toms Joseph – Economist
1 ANRPC Newsletter
December 2006
meeting in Chiang Mai was followed by a Special
Session of the ANRPC Assembly at Ministerial
level which was opened by the then Prime
Minister of Thailand. The Assembly Sessions
also were held along with the Executive
Committee meetings (except in February 2005).
The Co-ordinating Committee on Production and
Marketing Strategies (CCPMS) was convened
twice in August 2005 in Bali, Indonesia and
Colombo, Sri Lanka in December 2006. The
Committee on NR Statistics (CNRS) met twice
in Kuala Lumpur in September 2005 and in
Colombo, Sri Lanka in December 2006. Further
the Working Groups and Expert Groups met on
several occasions to deliberate on and oversee
specific activities. The Ninth ANRPC Seminar on
Progress and Development of Rubber
Smallholders was held in Kochi, India in
November 2005.
A review of the Association was undertaken
by a specially constituted Expert Group with a
view to make the organisation leaner and more
responsive to the current needs of the member
governments as well as to improve its efficiency
and effectiveness under the current global
environment. The recommendations of the Expert
C O N T E N T S
z From The Secretary-General’s Desk 1
z ANRPC Meetings/Conferences 2006 2
z News from ANRPC Countries 2
z Rubber Industry News 8
z Economic News 10
z NR Market Review 15
z WTO Corner 25
z Other Regional Agreements 26
z Natural Rubber Industry in
28
Papua New Guinea
z Country Profile in Brief: Indonesia 31
z Exchange Rate 32
z Volume 21 No. 2
Group were adopted by the Executive Committee
in December 2006 and implemented. The CNRS
and CCPMS were renamed as Information and
Statistics Committee (ISC) and Industry Matters
Committee (IMC) to reflect the broader terms of
reference and functions defined.
In the emerging context, the Association has
an important role as a forum for exchange and
dissemination of information. Hence the
restriction on the circulation of the ANRPC
Quarterly NR Statistical Bulletin was lifted in
2004. The ANRPC Newsletter was improved by
expanding the content of the regular items and
adding new items such as WTO corner, other
regional agreements, NR market review and
special articles on relevant topics. Another
important development was the launching of the
ANRPC website in 2005. All the ANRPC
publications, except the confidential documents,
are available in the public domain of the site.
The ANRPC Secretariat had a hectic
schedule during the last three years. I would like
to place on record the efficient services rendered
by my colleagues, Mr. Arumugam, Deputy
Secretary-General and Mr Toms Joseph,
Economist at the Secretariat during my term. The
Association and the industry have been
immensely benefited by their service.
I also would like to place on record my deep
gratitude to the member governments and other
related organisations for their valuable
cooperation and continuous support extended to
the Association during my term. I wish the
Association a flourishing future and an
accomplishing term for the incoming Secretary-
General, Ms Suchada Varaphorn from Thailand.
ANRPC MEETINGS/CONFERENCES
2007
1. Fourth Meeting of the Working Group on NR
Protein Allergy is scheduled to be held on
May 3 rd and 4 th, at the Secretariat, Kuala
Lumpur, Malaysia.
2. Fifth Meeting of the Expert Group on
Promotion of NR as an Environment-friendly
Raw Material and a Renewable Resource, is
scheduled to be held at the Secretariat,
Kuala Lumpur, Malaysia.
3. First Meeting of Information and Statistics
Committee is scheduled to be held in
Malaysia.
4. First Meeting of Industry Matters Committee
is scheduled to be held in Malaysia.
2 ANRPC Newsletter
5. Thirty-third Meeting of the ANRPC Executive
Committee is scheduled to be held in
Malaysia.
6. Thirtieth Session of the ANRPC Assembly is
scheduled to be held in Malaysia.
NEWS FROM ANRPC COUNTRIES
India
Special Fund for Plantations
Having successfully launched a special purpose
fund for tea plantations, the Commerce Ministry
has proposed to float such funds for coffee,
pepper and rubber plantations in order to boost
production. The Ministry would provide Rs 1,500
crores for these three sectors. The respective
Commodity Boards are working on the structure
of the fund.
Source: Indian/International Rubber Journal,
July-August 2006
Ageing Rubber Trees Cause Concern
The Rubber Board Chairman, Sajen Peter said
the potential for increasing NR production had
been limited due to the continued exploitation of
the ageing rubber trees. He was presenting the
latest trends and outlook for NR at the 113 th
Annual Conference of the United Planters’
Association of Southern India (UPASI).
Unscientific and excessive harvesting by a
section of small growers is likely to take its toll
on the NR production potential in the coming
years. High price realisation has also made the
growers complacent about replanting of aged
trees, leading to lower yields.
Source: Rubber India, November 2006
Tripura’s Potential in Rubber Cultivation
According to the Union Minister of State for
Commerce, Jairam Ramesh, Tripura is the
country’s next frontier for the rubber industry.
Among the states Tripura is the second largest
NR producer after Kerala. The Rubber Board has
identified 100,000 hectares as the potential area
for rubber in Tripura, of which roughly 31 per
cent has come under cultivation.
Source: Press Release, Ministry of Commerce,
Government of India, 16th December 2006
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ISI a Must for Tyres
The government has passed a ruling making it
mandatory for all automobile tyres in the
replacement and original equipment markets to
bear the ISI mark. Several premium and
imported cars have tyres sourced from
international markets which do not bear an ISI
certification. Introduction of this norm would
mean that these cars will now have to source ISI
– marked tyres or run the risk of being taken off
the roads. The Society of Indian Automobile
Manufacturers (SIAM) is seeking a review of the
norm by the government.
Source: India Business, 9th August 2006
Apollo signs MoU with Tamil Nadu
The Apollo Tyres signed a Memorandum of
Understanding with the Tamil Nadu government
to acquire 135 acres of land in the Oragadam
Industrial Park for the construction of a radial
tyre facility. The company will be investing Rs
300 crores initially and the final investment will
be between Rs 450 to 520 crores. The radial
technology currently being developed by the
company using the internal R&D expertise would
be used.
The company currently has three tyre and
one tube plants. The Tamil Nadu unit will be
used exclusively for manufacturing high quality
truck, bus and light truck radial tyres along with
high and ultra-high performance passenger car
radial tyres for the domestic and export markets.
The company expects to complete the Tamil
Nadu project within a time span of 24 to 36
months.
Source: Press Release, Apollo Tyres Ltd.,
August 2006
JK in Formula Tyres
As part of its ongoing efforts to promote motor
sports in the country, J K Industries launched
‘formula tyres’ in August 2006. The first set of
JK formula tyres had been fitted to three different
types of formula cars for which engines were
supplied by Maruti Udyog, General Motors and
Hyundai Motors. The three formula machines are
called Formula-LGB-Swift, Formula-Rolon-
Chevrolet and Formula-LGB-Hyundai.
Source: Rubber India, September 2006
Yokohama Entering India
Yokohama Rubber Co. would establish a wholly
3 ANRPC Newsletter
owned subsidiary named Yokohama India in New
Delhi in January 2007. Yokohama India is to
serve as a tyre sales and marketing company.
In future the company may have a local
headquarters should the tyre maker opt to add
tyre manufacturing or marketing of automotive
hoses and sealants. Yokohama currently markets
passenger car tyres in the country through its
Singaporean tyre distributor.
Source: www.tirereview.com 5th October 2006
Anti-Dumping Duty on Tyres
The government imposed anti-dumping duty on
import of cross-ply truck and bus tyres and tubes
from China and Thailand. The domestic tyre
majors, Apollo and Ceat, had filed complaints
before the designated authority in the Ministry of
Commerce.
Source: www.indiabusinessweek.com 13 th
October 2006
Goodyear Plans New Range
Goodyear India, a subsidiary of the US tyre giant
Goodyear Tyre & Rubber Co, is planning to roll
out its new range of ‘Excellency’ tyres for the
premium car segment. It will initially import the
tyres from China. Depending upon the demand
in the domestic market it might consider
manufacturing the product at its Indian unit in
Aurangabad.
The premium tyres are being launched in
response to the soaring demand for luxury cars
in the country. The series will be available for
most luxury car models including the Hyundai
Sonata, Honda Accord, Honda Civic, Skoda
Octavia, Mercedes E, C and S Classes and Audi
A4, A6 and TT, among others, and will come in
10 variants.
Source: Indian/International Rubber Journal,
December 2006
HLL Diversifies
Hindustan Latex Ltd. (HLL), a leading
manufacturer of family planning and healthcare
products, is branching out to new business. This
is a part of the company’s plan to achieve a
turnover of Rs 10,000 million by 2010.
The diversification plans also include vibrating
condom and three-in-one-condom (dotted, ribbed
and foam-fitted). The company is also planning
to market its premier male condom brand
‘Moods’ in the US market. According to company
sources, a draft agreement had already been
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signed with WalMart for retailing the ‘Moods’
brand through the latter’s outlets.
Source: Rubber Asia, September-October 2006
Car Output to Double by 2010
By 2010, automobile companies in the country
will produce more than double the 3 million units
they currently produce and invest almost Rs
12,000 crores. While a large amount will be
exported, the bulk of the output will be sold in
the domestic market. Industry experts estimate
demand to grow at a double-digit rate for the
next 3-4 years.
Maruti’s plant, located in Gurgaon, is running
at full capacity and a second plant is expected
to start production by the end of 2006. A
separate facility, a proposed third plant for Maruti
is also under deliberation, based on the group’s
target of a million vehicles by 2010. The world’s
biggest automaker, General Motors, recently
decided to invest over Rs 1,250 crores in the
western state of Maharashtra to double its
domestic capacity. Meanwhile the tyre major Tata
Motors has embarked on an ambitious and
much-awaited project of making a small car
which costs about Rs 100,000. Another
collaboration between Tata Motors and Italian
major Fiat involves a joint production facility of
100,000 cars at Fiat’s unit in Ranjangaon.
Source: Indian/International Rubber Journal,
September-October 2006
Forced to Buy Heavier Trucks
Following the recent ruling by the Supreme Court
banning the overloading of trucks, operators are
being compelled to buy heavier trucks to carry
consignments. Over the past six months, sales
of huge tractor-trailers capable of hauling a gross
weight of 35 tonnes including the weight of the
trucks (called 35 tonners) have surged by 10
times. Sales of tractors-trailer trucks sold by the
three big manufacturers – Tata Motors, Ashok
Leyland and Volvo increased to 7168 units in the
last six months from 704 units in the
corresponding period in 2005. The hottest selling
models are the 40 tonners launched recently by
Tata Motors and Ashok Leyland.
Source: Indian/International Rubber Journal,
September-October 2006
IRMRA-UL MoU
A Memorandum of Understanding was signed
between Indian Rubber Manufacturers Research
4 ANRPC Newsletter
Association (IRMRA) and Underwriters Laboratory
(UL) of the US for the testing of rubber and
polymer products. This MoU with the leader in
product-safety testing and certification will be
another form of international recognition for
IRMRA.
Source: Indian/International Rubber Journal,
December 2006
Indonesia
Cheap Loans for Rubber Plantations
The government is in the process of drawing up
a plan to offer subsidised loans for rubber, oil
palm and cocoa plantations. The objective is to
encourage new investment and boost output. A
consortium of banks, led by Bank Rakyat
Indonesia (BRI), would provide loans at a fixed
interest rate of 10 per cent. The difference
between the fixed rate and the prevailing market
rate would be covered by a government subsidy.
The government might allocate up to Rp10 trillion
(US$1.08 billion) to subsidise increased lending
to the plantation sector.
Source: The Jakarta Post, 15th July 2006
Lower Rubber Output
Rubber output could be 50,000 tonnes lower than
the previously targeted 2.2 million tonnes in 2006
due to unfavourable weather conditions according
to the Indonesian Rubber Association
(GAPKINDO). Its Vice-Chairman Asril Sutan Amir
said the lower-than-expected production would
mainly be the result of a forecast of “El Nino”.
Heavy rains have already caused flooding in
several plantations in North Sumatra, he said.
The unfavourable weather condition, which may
continue until February 2007 coupled with
possible disruptions in the production cycle due
to the felling of rubber trees for timber could
further reduce output to 2.1 million tonnes in
2007.
Source: The Jakarta Post, 14th November 2006
Gajah Tunggal’s New Plants
The tyre major, PT Gajah Tunggal Tbk is
spending US$ 170 million to establish two new
manufacturing facilities and increase its output to
meet growing demand. The company plans to
set up a radial tyre plant and a motorcycle tyre
plant which are expected to be in operation by
2009. With the addition of production from the
two new factories, the company expects its radial
z Volume 21 No. 2
tyre output to increase to 45,000 units per day
from the current 30,000 units a day and
motorcycle tyre output to reach 105,000 units a
day from the current 37,000 units per day.
Source: Indian/International Rubber Journal,
September 2006
Tyre Exports to Reach $600m
According to the Indonesian Association of Tyre
Producers (APBI), tyre exports from the country
will reach about US$ 600 million in 2006, as
compared to US$ 520 million last year. In 2005
total tyre output had reached 57 million units, of
which 60 per cent had been exported. Falling
auto sales in the country led to a decline in tyre
demand domestically. However tyre exports
continued to rise in the past two years.
Source: Indian/International Rubber Journal,
September 2006
Malaysia
RISDA to Boost Rubber Replanting
The Rubber Industry Smallholders Development
Authority (RISDA) will use 80 per cent of the
RM1.4 billion set aside for it under the 9 th
Malaysian Plan (9MP) to replant rubber trees and
oil palm. The agency plans to replant 20,000 ha
of land a year. It funds smallholders with RM
7,000 per ha for replanting rubber trees. The
remaining 20 per cent allocation will be used to
fund training and other research and
development programmes. There are about
253,000 rubber smallholders on 800,000 ha of
land managed by RISDA. RISDA wants to boost
the income per capita of rubber smallholders to
more than RM 2,000 a month by 2010.
Source: New Straits Times, 10th August 2006
Calls on IRCo to Stabilize Price
Datuk Peter Chin Fah Kui, Plantation Industries
and Commodities Minister said that there was a
need to stabilise the price of NR. IRCo should
find out the reasons behind the rubber price
fluctuations and provide proper strategies and
recommendations to counter the situation.
Source: Rubber India, October 2006
Rain-Coat
The Rubber Industry Smallholders Development
Authority (RISDA) has come up with a RM4
5 ANRPC Newsletter
device that will prevent rain from diluting latex.
‘Rain-Bust’ consists of a plastic sheet, a wire and
a gutter band which can be removed after use.
The ‘raincoat’ has to be placed over the tapping
panel as protection against the rain.
Source: New Straits Times, 5th August 2006
Reclaimed Rubber
A Taiwanese company in Selangor transforms
10,000 tonnes of rubber discards into reclaimed
rubber annually. It reclaims rubber from rubber
tread, tyre inner tubes, industrial rubber waste
etc. The reclaimed rubber is cheaper than NR
and is used in manufacturing tyres, inner tubes,
conveyor belts, automotive and engineering
rubber parts etc.
Source: Rubber India, October 2006
Englotechs Expands
Englotechs Holdings Bhd is investing RM30
million to expand production of a new range of
supported gloves at its plant in Kulim. This
investment in Padang Meha Industrial Estate
would add another seven production lines. The
new range included non-toxic polymer gloves,
cut-resistant gloves and hobby gloves. The non-
toxic polymer gloves, made from water-based
polyurethane chemicals, are used in electronic
and automotive industries.
The cut-resistant gloves, made from a special
type of yarn called dyneema, are used in
slaughter houses and glass industries. The hobby
gloves are used mainly in gardening. They give
a better grip, compared to the conventional
leather hobby gloves.
Source: The Star, 11th July 2006
IRCB into Nitrile Gloves
Integrated Rubber Corp Bhd (IRCB) plans to
diversify into the production of nitrile gloves at its
new plant in Taiping, Perak. The new plant
would have 12 production lines, of which, half
had been installed and the balance would be
ready by November 2006.
Source: The Star, 19th July 2006
Supermax Invests in Seal Polymer
The glove-making group, Supermax Corp Bhd,
spent close to RM60 million to boost its
associate Seal Polymer’s glove output since
taking a controlling stake in the company. Some
z Volume 21 No. 2
RM50 million was used to establish Seal
Polymer’s new 18 line factory in Taiping while up
to RM8 million was invested for upgrading the
company’s 25 line plant in Lahat. The expanded
glove-making group under Supermax can
collectively produce up to 23.3 billion pieces of
gloves annually from 2006.
Source: New Straits Times, 29th August 2006
Top Glove Targets Media-Flex
Top Glove, the world’s largest glovemaker, hopes
to turnaround Singapore stock exchange-listed
Medi-Flex by August 2007. Medi-Flex produces
1.6 billion pieces of medical and clean room
gloves per year. Clean room gloves are usually
priced 15-20 per cent higher than the normal
examination gloves. Top Glove told the stock
exchange that it was going to buy 60.06 per cent
in Medi-Flex for S$21 million by subscribing to
300.3 million shares at S$0.07 each.
Source: New Straits Times, 19 October 2006
th
Ban on Rubberwood Exports
The ban on sawn rubberwood exports was
tightened by including roughly-sawn finger-jointed
planks, effective August 11, 2006. The move was
in response to the concern from the furniture
manufacturers that there was still a shortage of
rubberwood in the country. Minister of Plantation
Industries and Commodities, Datuk Peter Chin,
said that one of the main reasons for
rubberwood supply inconsistency was the
continued export of sawn rubberwood, disguised
as roughly-sawn finger-jointed planks.
Source: New Straits Times, 12th July 2006
Singapore
SICOM – NYBOT Collaboration
The Singapore Commodity Exchange (SICOM)
and the New York Board of Trade (NYBOT)
have signed a Memorandum of Understanding
(MoU) envisaging collaboration on projects that
will be mutually beneficial, such as information
sharing, joint educational seminars and
symposiums and other products and services.
Such enhanced cooperation, according to
SICOM’s Chairman Lim Hod Teck, will leverage
on NYBOT’s expertise in commodities and
SICOM’s knowledge of the Asian market to meet
the growing needs of the Asian commodity
6 ANRPC Newsletter
market. SICOM’s Board of Directors and
NYBOT’s Board of Governors have both
approved the MoU.
Source: Rubber Asia, November-December
2006
Thailand
Latex Standards to be Revised
The Thailand Industrial Standards Institute (TISI)
is planning to revise the standards of NR latex
concentrate to maintain the country’s export lead
in the rubber market. Latex operators and state
agencies, such as the National Bureau of
Agricultural Commodity and Food Standards, had
agreed that the physical and chemical properties
of rubber were to be improved. The current
standard, titled TIS 980-2533, has been in force
since 1990.
Source: Bangkok Post, 8th July 2006
AFET to Trade Online
The Agricultural Futures Trading Commission has
granted the Agricultural Futures Exchange of
Thailand (AFET) permission to start online
trading service in a bid to raise AFET’s trading
volume. Internet trading will facilitate investors as
they can directly carry out transactions without
traders. However, customers must trade via
websites of brokers. When they send an order,
it will be passed through control and risk-
management systems of brokers to be verified
first. There are five agricultural products trading
on AFET which include RSS3, STR 20 and latex
along with rice and tapioca starch.
Source: www.nationmultimedia.com 29 th July
2006
Import Quota by China
China has imposed import quotas on Thai rubber
at the Chiang Saen Customs Office in the
northern province of Chiang Rai. Rubber is one
of the products listed under the Thai-Chinese
Free-Trade Agreement’s early-harvest
programme. Despite zero import tariffs, China is
able to impose any restrictions or quotas to
protect its farmers and industries.
Source: www.nationmultimedia.com 14 th
September 2006
z Volume 21 No. 2
Yokohama’s Two Phase Plan
Yokohama has a two-phase production plan in
Thailand. The first was the production of bus and
truck radial tyres at a plant with a capacity of
350,000 units per year. Phase two, which is a
new factory making tyres for sport-utility vehicles
and light trucks, has been completed and will
produce 1.4 million units per year. Both plants
are in the Amata Nakorn Industrial Estate in
Chon Buri province. Tyres from the new plant will
be available in the Thai market by the second
quarter of 2007.
Investment budgets for phases one and two
were US$48 million and US$100 million
respectively. The new plant will be the biggest
production facility for Yokohama in the world. Of
the total production, 20 per cent will be for the
local market. The remainder will be exported to
the US, Europe and other parts of Southeast
Asia.
Source: www.nationmultimedia.com 26th August
2006
PP Parawood Turns its Focus to Europe
PP Parawood is a major manufacturer of high-
quality wooden furniture. Currently, PP Parawood
exports about 90 per cent of its products to the
US and the rest to Europe. However, within two
to three years it hopes to be selling 50 per cent
of its products to the US with the remainder
equally divided between the EU and the local
market. One of the main problems being faced
by the company is the shortage of raw material.
The high prices of NR have deterred
smallholders from replanting, reducing the supply
of rubberwood.
Source: www.nationmultimedia.com 7 th
November 2006
Vietnam
Dak Lak to Expand
The Dak Lak Rubber Co plans to increase
acreage under cultivation in southern Laos to
6,000 ha pursuant to an economic co-operation
programme between the Central Highlands
province of Dak Lak and the Lao provinces of
Attapeu, Sarawan and Champasak. Since 2004,
the company has planted 3,167 ha of rubber
plantations.
Source: www.vietnamnews.vnagency.vn, 22 nd
September 2006
7 ANRPC Newsletter
GERUCO Reaches Agreement with Cambodia
Vietnam Rubber Corporation (GERUCO) reached
an agreement with Cambodian authorities to
cultivate rubber trees in three provinces in the
neighbouring country. The provinces are Kratie,
Kompongthom and Modolkiri. GERUCO has
completed surveys and chosen 100,000 hectares
for planting the trees. GERUCO has been
cultivating rubber in Laos for the last two years.
Source: www.thanhnienews.com 20 th October
2006
Phu Rieng in Cambodia
Phu Rieng Rubber Co. from the southern Binh
Phuoc province has conducted a geographical
survey and started reclaiming wasteland to plant
20,000 hectares of rubber in Kratie province of
Cambodia.
Source: www.thanhniennews.com 1st November
2006
Highland Province Targets 50,000 ha
Dak Lak province is carrying out a project to
grow 30,000 ha of rubber trees, aiming to
expand its total rubber cultivation to over 50,000
ha by 2010. To reach the target, the Provincial
People’s Committee signed a memorandum of
understanding with the GERUCO under which
the latter will grow 15,000 ha of rubber trees and
the remaining areas will be planted by the Dak
Lak Rubber Co. and local farmers. Dak Lak has
around 700,000 ha of land suitable for growing
coffee, rubber and other crops.
Source; www.thanhniennews.com 26th December
2006
GERUCO Restructured
The state-run Vietnam Rubber Corporation has
been restructured into a holding company known
as Vietnam Rubber Group (VRG) to spur the
rubber industry’s development and sharpen
competitiveness as the country moves towards
WTO membership. The parent company will
include Dong Nai Rubber Corporation, Rubber
Industry Corp, and Viet-Laos Rubber Corp.
Source: www.thanhniennews.com 3rd November
2006
Motor cycle Exports
The Ministry of Industry is planning to boost the
country’s motorcycle industry over the next
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decade, hoping to earn US$ 300 million annually
from exports by 2010. By 2015, it hopes the
industry will expand further, with annual exports
of motorcycles and parts amounting to US$ 500
million. With a strong domestic market, the
country is expected to become one of the major
centres for the motorbike industry in Asian
countries in the coming years.
In 2005, motorcyle output rose by 11.7 per
cent to 1.8 million units, and seven foreign firms
including Honda, Yamaha, Suzuki and VMEP
accounted for 65 per cent of the total production.
By 2010, the industry is expected to have an
annual capacity of about 2.5 million units.
Source: www.vietnamnews.vnagency.vn 20 th
September 2006
Record High Exports
Rubber exports would fetch a total of US$1.2
billion in 2006, a 78 per cent increase over the
previous year and the nation’s third leading agro-
forestry exports, after rice and timber, according
to the Vietnam Rubber Association. The volume
of rubber exports, nearly 660,000 tonnes,
presents a 31 per cent increase over last year’s.
GERUCO accounted for 60 per cent of the
rubber exported.
Source: www.vietnamnews.vnagency.vn, 23 rd
December 2006
Rubber Cultivation Expands
Attracted by the high NR prices several
provinces had been expanding rubber cultivation.
Many provinces have devoted more acreage to
rubber; Binh Phuoc Province added 8,300 ha,
Tay Ninh 5,600 ha and Binh Duong, 3,000 ha.
The rubber sector has set a goal to increase
output by more than 60,000 tonnes annually,
according to the Vietnam Rubber Association.
Source: www.vietnamnews.vnagency.vn, 23 rd
December 2006
RUBBER INDUSTRY NEWS
China’s Investment in Rubber Plantations
China, the world’s largest consumer of rubber,
intends to develop rubber plantations in Malaysia
and Myanmar. Chinese companies had set up
rubber plantations in Laos two years ago and the
trees would be ready for tapping in about four
years. The Chinese government had also
8 ANRPC Newsletter
approached the Thai government to lease land
to plant rubber trees.
Source: New Straits Times, 28th July 2006
Philippines to Expand Rubber Cultivation
The Philippines government set apart P55 million
for the development of new rubber plantations in
the country. South Cotabato Chief Agriculturist,
Reynaldo Legaste, said the investment is part of
the government’s commitment to expand rubber
plantations in 11 priority provinces. The priority
provinces are Antique, Benguet, Bukidnon,
Isabela, Maguindanao, Negros Occidental,
Occidental Mindoro, Palawan, Sarangani,
Zamboanga and Sibugay. A National Rubber
Development Program (NRDP) was launched in
Kidapawan City in late August 2005 to build up
the country’s position as one of the top players
in the world NR industry. According to the
Department of Agriculture’s Bureau of Agricultural
Research, at least 81,925 hectares are currently
planted with rubber in the country.
Source: Rubber India, December 2006
Rubber Prices in 2007
The brewing El Nino weather pattern and social
unrest in Southern Thailand may curtail rubber
supplies in 2007 in South-East Asia and boost
prices, according to Kazuya Tetsu, Managing
Director of Marubeni International Commodities
(S) Pte Ltd. US weather officials predict that El
Nino, the abnormal warming of waters in the
equatorial Pacific Ocean that can cause drought
in Australia, Indonesia and other parts of
Southeast Asia would peak in the next few
months.
Supplies from Thailand, the world’s leading
rubber producer and exporter, were disrupted
because of separatist violence in the South.
Tetsu said demand from the US next year was
expected to remain strong, despite talk of
slowing growth. In addition, Chinese appetite for
the commodity was expected to remain buoyant
ahead of the Olympics in 2008. Rubber
production in India was also likely to grow at a
sharp rate in 2007 to match its fast-growing
economy, but most of the additional production
would be consumed in the domestic markets.
Source: New Straits Times, 21st December 2006
Glove Price Increase
Chairman of the ASEAN Rubber Glove
Manufacturers’ Association (ARGMA), Henry
z Volume 21 No. 2
Tong, said to cope with the high rubber prices,
members were encouraged to educate importers
and end-users by providing latex price charts and
other supporting documents explaining the
increase in glove prices. As latex constitutes
more than 60 per cent of the total production
cost, it is inevitable for the glove manufacturers
to pass the cost increase to customers. Glove
manufacturers are still optimistic of the latex
glove industry in spite of higher cost of raw
materials due to the fact that NR latex gloves
are technically still superior to synthetic rubber
gloves. Demand for NR latex gloves are still
strong especially with the ongoing concern on
bird flu and other life-threatening diseases as
well as increasing awareness of hygiene for
protection and safety. ARGMA comprises gloves
manufacturers’ associations of Malaysia, Thailand
and Indonesia.
Source: BERNAMA, 11th July 2006
Glove Sector
Global demand for NR gloves remains strong but
the high prices of latex squeeze industry players’
profit margins. The global demand for rubber
gloves has been growing at 10 per cent annually.
Of the annual world production of 120 billion
rubber gloves, Malaysia contributes about 60 per
cent, Thailand 30 per cent and Indonesia 10 per
cent.
Source: The Star, 13th September 2006
Global Automobiles Production
According to the International Organisation of
Motor Vehicle Manufacturers, global production of
vehicles grew in the first half of 2006 by 6 per
cent (almost 2 million vehicles), compared to the
same period in 2005, reaching a total output of
35.4 million vehicles. For the year as a whole,
production could rise by more than 5 per cent
to 70 million vehicles. The markets grew at
widely varying rates in the first half of 2006.
Automobile production in NAFTA countries rose
by about 2 per cent and the EU recorded an
increase of 1.5 per cent. The number of
vehicles manufactured in South America grew by
18 per cent and in the non-EU countries of
Eastern Europe by 5.4 per cent. Production of
automobiles rose by more than 4 per cent in
Japan and by 5.5 per cent in South Korea. In
other Asian countries, production skyrocketed by
18.5 per cent, with most of the increase
registered in China and India.
The world’s leading manufacturer of
automobiles is the US (with an output of 6.1
9 ANRPC Newsletter
million vehicles in the first half of the year),
followed by Japan (5.7 million vehicles), China
(3.6 million), Germany (3 million) and South
Korea (just under 2 million vehicles).
Source: Press Release, OICA, Paris, 6th October
2006
OTR Shortage to Continue
The shortage of off-the-road (OTR) tyres is
predicted to last for another two years. The
problem is not exactly shortage of raw materials
to make OTR tyres but rather the capacity
constraints of major manufacturers. In this
background, Bridgestone is investing around 17
billion yen in OTR production and Michelin, US$
85 million.
Source: Rubber Asia, September-October 2006
Asia to Dominate Carbon Black Production
The carbon black industry is going through a
time of intense change as the future growth will
be in Asia, rather than in the established
countries of the west. Of the total 9,300 kt of
carbon black produced in 2006, around 70 per
cent goes into tyres with a further 23 per cent
going into belts, hoses and other rubber goods.
The remaining 7 per cent is used in inks and as
pigments in plastics and other products. The
main driver of the carbon black business is the
tyre industry, and the tyre industry is in the
process of moving capacity to low cost countries.
Hence the carbon black industry is trying to
reduce capacity in the old world and expand into
new regions. Global demand likely to grow to
11,300 kt in the five years to 2011. The
increased growth will be driven by increased
demand for tyres and vehicles in Asia.
Source: European Rubber Journal, November-
December 2006
EU Landfill Directive
The European Union’s directive banning
landfilling with shredded used tyres came into
effect on 16 July 2006. All used tyres will have
to be recovered, reused or recycled. This follows
an earlier ban on landfilling of whole tyres in
2003.
Source: Rubber Asia, November-December
2006
z Volume 21 No. 2
Rubber Sidewalks
More than sixty cities around the US, including
New York and Washington DC, have installed
rubber sidewalks made from recycled tyres.
Since 2001, thousands of old tyres have been
transformed into crumbs, added with chemical
binders and baked into sidewalk sections that
weigh less than 11 pounds a square foot, or a
quarter of the weight of concrete. Sidewalks of
rubber coexist with tree roots more easily than
concrete sidewalks. The latter buckles as roots
grow under it; rubber merely bends. As a result,
trees are spared from root damage. They also
help recycle the vast supply of old tyres.
Washington DC spent about US$ 60,000 to
install 4,000 square feet of rubber sidewalks on
several leafy blocks in the city’s Northeast
section in early 2006.
Sources: www.boingboing.net 26th July 2006 and
www.usatoday.com 19th September 2006
ECONOMIC NEWS
ADO Update 2006: Developing Asia and the
Pacific
According to the ADO Update the year 2006 was
another good one for developing Asia and the
Pacific. The regional economy was expected to
grow by 7.7 per cent, an upward revision of 0.5
percentage points from the ADO 2006 forecast
in April. Growth is also expected to be robust in
2007, though some easing is likely as demand
from industrial countries slows. The ADO Update
projects growth for 2007 of 7.1 per cent, up
marginally from the ADO 2006 forecast of 7.0
per cent.
Fast growth at a regional level is supported
by strong performances by the PRC and India,
since together these two economies account for
over 50 per cent of regional GDP. The remaining
economies of developing Asia are expected to
grow by more modest averages: 5.5 per cent in
2006 and 5.1 per cent in 2007. The outlook for
Southeast Asia has weakened marginally as
downward revisions for Malaysia and Thailand
outweigh upgrades for the Philippines and
Singapore. The forecast for growth in 2007 is
based on generally favorable external conditions,
but it factors in tighter global liquidity and softer
growth in the industrial countries. The forecast
also anticipates oil prices staying high. The
impact on commerce of the recent heightened
security alert on international air travel is
expected to be short-lived.
10
In the first half of 2006, East Asia grew at a
fast tempo and a growth of 8.2 per cent is
expected for the year, up from the estimate of
7.7 per cent made in ADO 2006. The upward
revision reflects a faster expansion in the PRC
on greater than expected strength of fixed
investment and exports. The PRC’s growth for
2006 is projected at 10.4 per cent.
South Asia continues to make strong
headway. Growth of 7.5 per cent is estimated for
2006, slightly higher than April’s 7.3 per cent
forecast. Annual income growth in the sub-region
has averaged 7.7 per cent since 2002, outpacing
Southeast Asia by about 2 percentage points and
almost matching that of East Asia. Recent data
provide a basis for modestly upgrading forecasts
for India, Bangladesh and Pakistan as well as for
other smaller economies. South Asian growth is
expected to consolidate at 7.5 per cent in 2007,
an unchanged aggregate from 2006.
In Southeast Asia, growth in Thailand and
Malaysia could be prone to weakness next year.
Thailand’s growth forecast for 2006 has been
reset at 4.0 per cent from 5.5 per cent while
Malaysia’s is adjusted to 5.0 per cent from 5.8
per cent. In Thailand, since political uncertainty
is clouding the near term, investors are likely to
defer projects until the direction ahead is clearer.
Public sector investment programs may also take
a back seat until the new government resolves
vexed political issues. If heightened security
concerns were to impact on travel and tourism,
this would be another negative element for the
country. Vietnam’s entry into WTO should help
support growth at 8.0 per cent. South East Asia’s
projected growth for 2007 has been revised
downwards at 5.3 per cent.
The sub-regional averages for Central Asia
and the Pacific are heavily influenced by the
outlook for oil prices, and the baseline forecast
assumes a higher level in 2007 than was
predicted in ADO 2006. For Central Asia, the
Update revises growth for 2007 up to 10.3 per
cent from 9.8 per cent in ADO 2006, in reflection
of an improved outlook for the two major oil
producers Azerbaijan and Kazakhstan. In the
Pacific, most economies are totally reliant on fuel
imports, but Papua New Guinea, with about two
fifths of the sub-region’s GDP, and Timor-Leste
are net oil exporters. Upward revisions to their
growth projections have lifted the aggregate
Pacific outlook.
Looking ahead, developing Asia’s growth in
2007 is now expected to be 7.1 per cent, up a
notch from the 7.0 per cent forecast in ADO
2006 in April. This minor revision balances a less
optimistic outlook for Southeast Asia with a
positive reassessment of East Asia’s prospects.
ANRPC Newsletter z Volume 21 No. 2
 GDP Growth in Developing Asia and the Pacific downside risks, and rising concerns that the
2005-2007 (%) housing market could unravel and trigger weaker
demand, US fundamentals remain generally
2006 2007 positive.
2005
Region ADO ADO The Japanese economy continues a
(Actual)
2006 Update 2006 Update moderate expansion based on broadening
Developing Asia 7.6 7.2 7.7 7.0 7.1 domestic demand. Second-quarter GDP growth
Central Asia 10.9 10.3 11.3 9.8 10.3 came in at 0.8 per cent, after 2.7 per cent in the
East Asia 7.9 7.7 8.2 7.1 7.5 first. Although second-quarter performance was
South Asia 8.1 7.3 7.5 7.5 7.5 rather flat, this was largely due to a reduction in
Southeast Asia 5.5 5.5 5.4 5.7 5.3 public spending. Private domestic demand
The Pacific 2.3 2.9 3.3 3.0 3.4 continues to firm up on the back of buoyant
business investment and robust consumer
spending. Business investment rose by 11.1 per
GDP Growth in ANRPC Member Countries cent in the first half of 2006 from the previous
2005-2007 (%) year. Increases in wage income and stronger
labor market improvements have boosted
2006 2007 consumer confidence. While exports grew
2005
Country ADO ADO robustly through the first half of 2006, the
(Actual)
2006 Update 2006 Update contribution of net exports to GDP growth turned
India 8.5 7.6 7.8 7.8 7.8 negative in the second quarter, reflecting a surge
Indonesia 5.0 5.4 5.4 6.0 6.0 in imports. Japan is set to enjoy a healthy
Malaysia 5.5 5.5 5.2 5.8 5.0 economic expansion with GDP expected to grow
Papua New at 2.8 per cent and 2.4 per cent in 2006 and
2.9 3.2 3.5 3.0 4.0
Guinea 2007 respectively.
Singapore 2.9 6.1 6.6 4.6 4.6 The euro zone economy grew by 3.6 per
Sri Lanka 6.0 5.3 6.1 5.2 5.8 cent in the second quarter of 2006, up from 3.2
Thailand 7.0 4.7 4.2 5.5 4.0 per cent in the first. Indeed, almost all major
Vietnam 7.3 7.8 7.8 8.0 8.0 euro zone economies except Italy were stronger
in the second quarter than the first, indicating a
Source: Asian Development Outlook, April 2006 generally harmonious recovery across the zone.
and Asian Development Outlook Update, The second-quarter acceleration reflected
September 2006, Asian Development Bank strengthening domestic demand, including a
recovery in capital formation. Industrial production
has accelerated in major euro zone economies
ADO Update 2006: Industrial Countries since the beginning of 2006. Robust business
The pace of US economic activity is slowing. activity has exerted a positive influence on the
Real GDP grew by 2.9 per cent in the second labor market, and unemployment rates have
quarter, after registering 5.6 per cent growth in trended down. GDP growth in the euro zone
the first quarter. The relatively sharp deceleration economy is forecasted at 2.3 per cent in 2006.
in the second quarter primarily reflected in about A combination of moderating exports and
equal measure a weakening in consumer tightening fiscal policy is expected to bring down
spending and in fixed investment expenditure, growth to 1.8 per cent in 2007.
mainly in equipment and software. Monetary
tightening over the past 2 years is apparently
taking its toll on housing markets. A cooling in GDP Growth in Industrial Countries 2005-2007 (%)
house price inflation appears to be damping
consumer activity and confidence, cutting strong 2006 2007
2005
consumer spending that has been supported by ADO Update ADO Update
(Actual)
the wealth effect of rapidly rising property prices. 2006 2006
Inflation has clearly edged up, with sustained Industrial countries 2.5 2.9 2.9 2.6 2.4
high oil and commodity prices feeding into both United States 3.2 3.3 3.3 3.1 2.8
consumer prices and production costs. The US Euro zone 1.3 2.1 2.3 2.0 1.8
trade and fiscal deficits also continue to cause Japan 2.6 2.9 2.8 2.4 2.4
concern. The baseline projection for US real
GDP growth is 3.3 per cent for 2006, slowing to Source: Asian Development Outlook, April 2006
2.8 per cent in 2007. Despite the strengthening and Asian Development Outlook Update,
September 2006, Asian Development Bank

11 ANRPC Newsletter z Volume 21 No. 2

World Economic Outlook: IMF
Growth was particularly strong in the United
States in the first quarter of 2006, although it
slowed in the second quarter, because of a
cooling housing market and rising fuel costs. The
expansion gathered momentum in the euro area
and the Japanese economy continued to expand.
Growth in China has accelerated even further,
emerging Asia and Europe have continued to
grow rapidly, and the pace of activity has picked
up in Latin America. Middle Eastern oil exporters
and low income countries in Africa have also
maintained impressive growth rates. Sustained
high rates of global growth have absorbed spare
capacity and led to some emerging signs of
inflationary pressures. Against this background,
central banks in the major advanced economies
have taken steps to tighten monetary conditions.
Since late 2005, the US dollar has depreciated
against the euro and to a lesser degree the yen,
partly reversing its appreciation during the
previous 12 months. The US current account
deficit has continued to widen and the surpluses
in parts of emerging Asia and oil exporting
countries have increased further. Rising inflation
concerns and tightening by major central banks
had a marked impact on financial markets. Oil
and other commodity prices continued at
elevated levels in the first eight months of 2006,
with petroleum and metal prices reaching new
highs.
Notwithstanding tightening financial conditions,
the baseline forecast for world output growth has
been marked up to 5.1 per cent in 2006 and 4.9
per cent in 2007. This would be the strongest
four-year period of global expansion since the
early 1970s. This favourable outlook depends on
the view that inflationary pressures will be
successfully contained with modest further
interest rate increases by the major central
banks, the growth of domestic demand will be
better balanced across the advanced economies,
emerging and developing countries will largely
avoid capacity bottlenecks, and global financial
market conditions will be more stable. The US
economy would grow by 3.4 per cent in 2006,
before slowing to 2.9 per cent in 2007. A cooling
housing market would continue to dampen
private consumption and residential investment,
but corporate investment should be supported by
high capacity use and strong profitability. Growth
in the euro area would rise to 2.4 per cent in
12
2006 – its highest rate in six years – before
moderating to 2 per cent in 2007. Stronger
corporate balance sheets have paved the way for
higher investment, rising employment and a
better balanced expansion. The Japanese
economy would grow by 2.7 per cent in 2006,
based on solid domestic demand, before easing
to 2.1 per cent in 2007. Growth in emerging
markets and developing countries would remain
very strong at 7.3 per cent in 2006, and slow
only marginally to 7.2 per cent in 2007. China
would sustain growth around 10 per cent – an
upward revision relative to the April 2006 World
Economic Outlook – while India and Russia
would also continue to grow rapidly. Latin
American countries would continue to lag,
although growth prospects have been marked up
in this region.
Turning now to the downside, markets have
been concerned that a continued build up of
inflation pressures in advanced economies could
require a more aggressive monetary policy
response to cool the growth momentum,
particularly in the United States. A related risk to
the outlook comes from the continued potential
for supply-side shocks in the oil market, which
could give a further upward impetus to
international oil prices, thus exacerbating
inflationary pressures while cooling household
demand. In the baseline forecast, the
international oil rice is expected to average
US$75 a barrel in 2007.
There are also supply-side risks from non-
fuel commodity prices. In total, non-fuel
commodities represent almost twice as large a
share of world trade as fuels and can have an
important impact on the global economic
environment, both for consumers and the
exporters. A key risk on the demand side is that
the continued cooling of advanced-economy
housing markets will weaken household balance
sheets and undercut aggregate demand. At this
point, concerns center on the United States,
although other markets, such as those in Ireland,
Spain and United Kingdom, also still seem
overvalued by most conventional measures.
Other demand-side risks relate to the extent to
which expansions in Europe and Japan will be
sustained by increasing strength of household
demand, reducing reliance on exports and
exposure to a slowdown of demand in the United
States.
ANRPC Newsletter z Volume 21 No. 2
 World Output Growth 2004-2007 (%) of growth across OECD regions. Indeed, recent
developments point to an unwinding of cyclical
2004 2005 2006 2007 differences, with activity having slowed in the
World 5.3 4.9 5.1 4.9 United States and Japan and gathering speed in
Advanced Economies 3.2 2.6 3.1 2.7 Europe. Looking ahead, and given what is
United States 3.9 3.2 3.4 2.7 seemingly a mild degree of initial excess demand
Euro area 2.1 1.3 2.4 2.0 in the United States and Japan, the slowdown in
Germany 1.2 0.9 2.0 1.3 these countries should remain well-contained. In
France 2.0 1.2 2.4 2.3 the euro area, recent business and consumer
Italy 1.1 - 1.5 1.3 confidence suggest that a solid upswing may be
Spain 3.1 3.4 3.4 3.0 underway. In addition, growth should remain
Japan 2.3 2.6 2.7 2.1 buoyant in China, India, Russia and other
United Kingdom 3.3 1.9 2.7 2.7 emerging economies. All in all, Japan and the
Canada 3.3 2.9 3.1 3.0 euro area would grow slightly above trend over
Korea 4.7 4.0 5.0 4.3 the next two years while US growth would return
Russia 7.2 6.4 6.5 6.5 progressively to potential in the course of 2007,
Developing Asia 8.8 9.0 8.7 8.6 following the recent steep deceleration in activity.
China 10.1 10.2 10.0 10.0 The degree of overheating in the US still looks
India 8.0 8.5 8.3 7.3 modest despite some tensions in US labour
Indonesia 5.1 5.6 5.2 6.0 markets which should recede progressively. In
Malaysia 7.2 5.2 5.5 5.2 fact, the recent increase in core inflation owed
Thailand 6.2 4.5 4.5 5.0 a lot to past hikes in oil and gasoline prices,
Brazil 4.9 2.3 3.6 4.0 which have now partly been reversed. Because
Mexico 4.2 3.0 4.0 3.5 of its high energy intensity, the American
economy has been subjected to a stronger
Source: World Economic Outlook, IMF, external inflationary shock than the OECD
September, 2006 average. Assuming in oil prices stabilizing around
their current levels, a mild economic slowdown
may be enough to progressively restore price
OECD Economic Outlook stability in the United States.
Until recently, the OECD area was enjoying a In Japan, the return to price stability is
prolonged period of non-inflationary growth proving longer and less assured than expected.
despite rising oil and commodity prices. Looking at GDP deflators and consumer price
Underlying these favourable trends, persistent inflation excluding food and energy, deflation is
wage moderation provided for both price stability not over yet. Although strong profits and export
and strongly rising profits as well as vigorous job markets will continue to underpin Japan’s growth,
creation in the main OECD regions. it also relies on at least moderate support from
This smooth performance has been household spending.
somewhat disturbed recently. In the United In the euro area, activity has finally taken off,
States, signs of inflationary pressures and labour following a series of aborted recoveries. The
market tensions have recently built up while recent fall in oil prices has driven headline
investment in housing has fallen sharply, inflation back below the 2 per cent threshold.
following a long boom in residential construction. Although in recent years housing markets have
In the OECD area as a whole, however, there played an important role in supporting economic
are still few signs of general overheating. activity, prices may now have reached
Aggregate demand and supply broadly match, in unsustainable highs in certain countries (notably
contrast with the previous cyclical peak at the the United States, Denmark, France and Spain),
turn of the century when demand pressures were at least according to OECD Secretariat
much stronger. While in the United States and estimates. When price corrections set in, housing
Japan aggregate demand may be somewhat markets may thus reduce the speed of economic
above trend, in the euro area substantial slack expansion even though the economy at large is
remains. not strongly overheating and macroeconomic
Rather than a major slowdown, what the policies are only mildly restrictive.
world economy may be facing is a rebalancing

13 ANRPC Newsletter z Volume 21 No. 2

 GDP Growth in OECD Countries, 2006-2008 (%) thirds of GDP, a vibrant domestic market
provided the backbone for economic expansion.
2006 2007 2008 Japan has emerged from its decade-long
United States 3.3 2.4 2.7 economic slump, with GDP estimated to grow at
Canada 2.8 2.7 3.1 2.8 per cent in 2006, up from 2.6 per cent in
Japan 1.8 2.0 2.0 2005. The robust growth of the United States
Euro area 2.6 2.2 2.3 and the continued recovery in the economies of
Germany 2.6 1.8 2.1 the Euro Zone contributed to the good
France 2.1 2.2 2.3 performance of the developing Asia and Pacific
Italy 1.8 1.4 1.6 region.
United Kingdom 2.6 2.6 2.8 For developing Asia-Pacific economies, the
Total OECD 3.2 2.5 2.7 economic growth outlook in 2007 is one of
continued dynamism. Economic growth is
Source: OECD Economic Outlook, Volume 80, projected at 6.9 per cent in 2007, marginally
November 2006 lower than in 2006. The global economic
environment is expected to remain favourable,
particularly the ongoing domestic demand
US Indices Improve recovery in Japan.
The US Conference Board’s Consumer A moderate decline is expected in global
Confidence Index had posted a sharp decline in electronics demand in 2007 as well as a slightly
August 2006 to 99.6 (1985=100) after recording less accommodative macroeconomic policy
a moderate increase in July to 107.0. Thereafter stance, reflected in a high level of domestic
the Index increased to 105.9 in September interest rates and a limited role of fiscal policy
before edging down to 105.4 in October 2006. in many Asian economies. These developments
The Index, which was virtually unchanged in are expected to marginally mitigate the positive
November, improved in December reaching impacts of global economic conditions on Asia-
109.0. The Present Situation Index increased to Pacific economies in 2007.
129.9 in December from 125.4 in November. The The growth momentum in the Asia-Pacific
Expectations Index improved to 95.1 in region in 2007 is expected to come from strong
December from 91.9 in November. growth in China and India and a rebound in
Despite the latest improvement in the Index, economic growth in the South-East Asian
there is little to suggest that the pace of economies. In China, GDP growth is expected to
economic activity in the final quarter of 2006 is be about 9.9 per cent in 2007, slightly less than
anything but moderately better than its the 10.2 per cent growth of 2006. India is
uninspiring performance in early 2006. Given the expected to grow at 8.1 per cent in 2007,
see-saw pattern in recent months, it is too soon virtually unchanged from 2006. Due to weakening
to tell if this boost in confidence is a genuine demand for imports among the advanced
signal that better times are ahead. economies, GDP growth in East and North-East
Asia (except China) is projected to soften in
Source: www.conferenceboard.org, December 2007. In North and Central Asia, growth is
2006 projected to ease slightly, to 6.5 per cent.
A modest rebound in GDP growth in the
South-East Asian economies is expected in 2007
Asia-Pacific Region Outlook as the factors constraining domestic demand
recede. In Indonesia, investment is expected to
The rising economic powerhouses of China and be boosted by lower interest rates and new pro-
India are driving the Asia-Pacific region’s business regulations that are coming into effect.
economic performance. Added stimulus has Strong electronics exports and higher
come from the continuing revival of the Japanese development spending related to the Ninth
economy. These three countries together Malaysia Plan (2006-2010) would help to boost
contribute 62 per cent of the GDP of the region investments in Malaysia.
and 44 per cent of imports, creating considerable
opportunities for their trading partners. Source: Key Economic Developments and
China’s growth is accelerating, despite Prospects in the Asia Pacific Region 2007,
policies to moderate its pace. Growth in the UNESCAP, November 2006
second quarter of 2006 stood at an annualized
11.3 per cent, the fastest since the mid-1990s.
The Indian economy, driven by industrial World Trade Report 2006
production and a booming service sector, is
expected to grow at 8.2 per cent in 2006. With The deceleration of global trade expansion
total consumption accounting for around two observed since mid 2004 was arrested and

14 ANRPC Newsletter z Volume 21 No. 2

reversed in the second quarter of 2005. The
yearly real growth of world merchandise exports
averaged 6 per cent in 2005 after a strong
growth of 9.5 per cent in the preceding year.
Regions and countries exporting fuels and other
mining products, which benefited strongly from
relative price increase expanded their imports
sharply. According to provisional data, the
Commonwealth of Independent States (CIS),
South and Central America, Africa and the
Middle East expanded their imports at least two
times faster than world trade.
Large variations of relative prices had a
major impact on nominal trade developments in
2005. The prices of fuels and metals rose by
about one-third in 2005, while the prices of many
agricultural products and manufactures increased
only moderately or stagnated. Prices for global
merchandise trade increased on average
markedly less than in the preceding year, largely
due to the deceleration of prices for
manufactured goods, which account for about
three-quarters of merchandise trade.
World merchandise exports rose 13 per cent
and exceeded for the first time the US$10 trillion
mark. Oil market developments were the principal
factor leading to the sharp rise in the exports of
Africa, the CIS and the Middle East. In 2005,
Africa and the Middle East recorded their largest
share in world merchandise exports since the
mid-1980s. Europe, the largest trader among the
major geographic regions, recorded by far the
weakest export and import growth in 2005. North
America’s nominal trade growth decelerated
moderately and rose roughly in line with global
trade. Merchandise trade growth of the Asian
region exceeded on average that of global trade,
but large variations in export performance could
be observed between China and the other
leading traders in Asia.
Source: World Trade Report 2006, WTO
Secretariat, July 2006
World Investment Report 2006
Inflows of foreign direct investment (FDI) were
substantial in 2005. They rose by 29 per cent –
to reach US$ 916 billion – having already
increased by 27 per cent in 2004. Nevertheless,
world inflows remained far below the 2000 peak
of US$ 1.4 trillion. Similar to trends in the late
1990s, the recent upsurge in FDI reflects a
greater level of cross-border mergers and
acquisitions (M&As), especially among developed
countries. It also reflects higher growth rates in
some developed countries as well as strong
economic performance in many developing and
1 The views expressed are entirely the ANRPC Secretariat’s.
15
transition economies.
Inflows to developed countries in 2005
amounted to US$ 542 billion, an increase of 37
per cent over 2004, while to developing countries
they rose to the highest level ever recorded,
US$ 334 billion. In percentage terms, the share
of developed countries increased somewhat, to
59 per cent of global inward FDI. The share of
developing countries was 36 per cent and that
of South-east Europe and the Commonwealth of
Independent States (CIS) was about 4 per cent.
Services gained the most from the surge of FDI,
particularly finance, telecommunications and real
estate. There was a sharp decline in the share
of manufacturing in FDI and a steep rise of FDI
into the primary sector, primarily the petroleum
industry. According to estimates by UNCTAD, the
universe of TNCs now spans some 77,000
parent companies with over 770,000 foreign
affiliates.
The TNC universe continues to be dominated
by firms from the Triad – the EU, Japan and the
United States – home to 85 of the world’s top
100 TNCs in 2004. The automobile industry
dominates the list, followed by pharmaceuticals
and telecommunications.
In 2004 there were five companies from
developing economies in the list of the top 100
TNCs, all with headquarters in Asia and three of
them were State-owned. These five companies
– Hutchinson Whamoa (Hong Kong), Petronas
(Malaysia), Singtel (Singapore) Samsung
Electronics (the Republic of Korea) and CITIC
Group (China) – topped the list of the largest
100 TNCs from developing countries. Altogether,
77 of the top 100 TNCs in developing countries
had their headquarters in Asia; the remaining
were equally distributed between Africa and Latin
America.
Source: World Investment Report 2006,
UNCTAD, October 2006
NR MARKET REVIEW1
NR PRICES TO BE STEADY DESPITE A
PROJECTED MILD SLOWDOWN IN THE
WORLD ECONOMY
The global economic recovery from 2002 helped
the NR market to recover from the prolonged
slump began in mid-1997, triggered by the Asian
financial crisis. The positive trend in NR prices
continued thereafter though there had been
short-term fluctuations caused mainly by
seasonal, speculative and currency factors. The
ANRPC Newsletter z Volume 21 No. 2
main factors contributing to the rise in NR prices
included robust growth of the world economy,
continued strong presence of China in the
market, climatic factors, bullish futures and high
oil prices. The world economy which expanded
by a nominal 1.2 per cent in 2001 grew by 1.9
and 3.2 per cent in 2002 and 2003 respectively.
In 2004, it had registered the highest growth rate
since 1976 at 5.3 per cent.
NR prices in H1 of 2005 had been marginally
lower compared to the same period in the
previous year in most of the markets but by the
middle of the year they rose above 2004 levels.
The third and fourth quarters of 2005 recorded
steady improvement in prices and the year ended
on a higher note. Global GDP expanded in 2005
by 4.9 per cent, despite the mild slow down in
the euro zone. Even with the high oil prices and
natural disasters, industrial activity in H2 of 2005
was relatively stronger compared to H1. The US
and Chinese economies grew by 3.2 and 10.4
per cent respectively in 2005. The long
anticipated economic recovery of Japan took hold
in 2005 with a GDP growth of 2.7 per cent.
India recorded an impressive GDP growth of 8.5
per cent in 2005 (World Economic Outlook,
International Monetary Fund, September 2006 &
Asian Development Outlook Update, Asian
Development Bank, September 2006).
Supply-side factors also supported NR prices
in 2005. The drought in Thailand which persisted
until May 2005 and the intermittent rains in the
last quarter of the year led to a 6.2 per cent
decline in Thai NR production compared to the
previous year. The typhoon Damrey which
slammed into Hainan Island in September 2005
had damaged rubber plantations, trimming
Chinese production. Oil prices also appeared to
have influenced the NR price movements in
2005. The average price of WTI oil in H2 of
2005 was higher at US $ 61.60 per barrel,
compared to that of H1 at US $ 51.30.
Major Factors Influencing NR Market in 2006
Most of the factors which influenced the trends
in NR prices in the recent years continued to
impact in 2006 as well. The single major factor
which influences the price of industrial raw
materials including NR is the state of the world
economy. It was projected that the world
economy would record a growth of 5.1 per cent
in 2006. The world GDP growth in 2005 being
4.9 per cent, the projection for 2006 indicated
continuance of the tempo of global economic
growth (World Economic Outlook, IMF,
September 2006). China maintained its steady
growth in 2006 with a GDP expansion of 10.7
per cent which was marginally higher than that
of 2005 at 10.4 per cent. (News Release,
16
National Bureau of Statistics of China, January
2007). The GDP of the US increased by 3.3
per cent in 2006 according to preliminary
estimates. (News Release, US Bureau of
Economic Analysis, January 2007). Japan’s real
GDP expanded moderately by 1.9 per cent in
2006 (Government Economic Outlook, Bank of
Japan, January 2007). The growth of the world
economy in 2006 generated sustained demand
for raw materials including NR. However, there
had been apprehensions stemming from a mild
slowdown in some parts of the world from the
second quarter of the year.
The tight supply concerns usual to the onset
of the wintering season were present in
February. Another factor was the unusual rains
in May and June in South East Asian countries,
especially in the southern provinces of Thailand.
The unusual showers at a time when supply was
expected to improve after the wintering season
caused frantic buying and raised NR prices from
mid-May to mid-July. As Thailand is the major
producer of RSS, the production squeeze
appeared to have positively influenced the price
premium of RSS 3 over STR 20 during the
period. From July beginning, NR market arrivals
increased as weather conditions improved. Again
towards the end of the year there were supply
disruptions due to heavy downpours and rains in
South-East Asia. Insurgency in the southern
rubber growing provinces of Thailand continued
to be a supply deterrent factor.
The rubber futures market was bullish at the
turn of the year and the price (six month forward
price in TOCOM) on the last trading day of
January was 257 Yen per kg compared to Yen
200 per kg on the first trading day of December
2005. Thereafter, the NR futures market did not
make much headway though there had been
minor ups and downs and the price on the last
trading day of April was Yen 255 per kg. There
were fresh leads from early May amidst supply
constraints and intensive speculation. The price
recorded on the last trading day of May was Yen
304 per kg and the monthly average was Yen
285 per kg. The monthly average price
increased further to Yen 304 per kg in June.
Prices declined in July as NR supply improved
and the price was Yen 277 per kg on the last
trading day. The decline continued and the price
was Yen 216 per kg on the last trading day of
September. Though prices improved moderately
in the initial weeks of October, there was a
decline towards the end of the month reaching
Yen 216 per kg on the last trading day. And
the prices further declined in November reaching
Yen 202 per kg on the last trading day.
However, prices recovered in December on
account of NR supply shrinkage due to adverse
weather conditions.
Currency factors generally have favoured NR
ANRPC Newsletter z Volume 21 No. 2
prices in the near past. The US monetary
authority had been allowing the US dollar to
depreciate as a means to ease the burden of its
growing current account deficit. This led to an
appreciation of several other currencies including
NR producers’ currencies. Indonesian Rupiah,
Malaysian Ringgit and Thai Baht have been
appreciating from the beginning of the year. The
exchange value of the three currencies against
the US dollar which stood at Rp 9724, Baht
40.77 and RM 3.78 on the first day of the
current year rose to Rp 8767, Baht 37.50 and
RM 3.63 respectively by the turn of May.
Thereafter, Rupiah lost its value marginally
(reaching Rp 9292 by June end) with no much
change in the other two currencies. But the
depreciation of the Rupiah did not have a notable
impact on the NR market as it occurred in a
phase of supply constraints due to the
unexpected showers. From July onwards the
major producer currencies have been more or
less stable and improved towards the end of the
year with rates at Rp 8964, Baht 36.14 and RM
3.53 to the US dollar on the last trading day of
the year.
In H1 of the current year the average WTI
oil price was US $ 66.84 per barrel. The oil
price, which had been flat during the first three
months of the year, rose in April because of
reported reduced inventories, unrest in Nigeria,
Middle East developments etc. From May to
August, the oil price averaged above US $ 70
per barrel. Thereafter, oil prices retreated and
the average price of WTI oil in December was
US$ 61.96 per barrel (www. eia.gov, January
2007 & Bloomberg News, April 20, 2006).
The rise in the price of oil could exert
pressure on SR prices and may influence the
SR:NR consumption ratio. In 2005 the share of
NR in China’s rubber imports had increased to
56.4 per cent from 53.9 per cent in 2004.
However, during January-October 2006 the share
of NR in China’s rubber imports declined to 52.8
per cent. Until August 2006 price of NR had
been notably higher than that of SR.
17
NR Market – 2006
Generally, NR prices remain flat during the early
weeks of a year because of the lack of fresh
market leads in the holiday season. However,
in 2006 NR prices have been soaring to new
highs in the initial weeks. From mid-February,
NR prices remained nearly flat for a few weeks
till April end, followed by a steady rise which
continued until mid-July. Thereafter, NR prices
have been declining because of improved supply
and other factors. There was a short-lived
northward movement in NR prices in October.
NR prices improved towards the end of the year
mainly because of the adverse climatic conditions
in the major producing regions.
TSR 20 Prices
In Q1 of 2006, average prices of SIR 20, SMR
20 and STR 20 were 15.7, 14.1 and 12.3
percent higher respectively over the previous
quarter. Prices continued to increase in Q2 of
2006 with average prices of SIR 20, SMR 20
and STR 20 increasing by 13.7, 12.8 and 12.1
per cent over Q1 of 2006 respectively. Average
SIR 20, SMR 20 and STR 20 prices in Q3
declined marginally over Q2 by 0.3, 2.0 and 4.3
per cent respectively. In the last quarter of the
year average SIR 20, SMR 20 and STR 20
prices declined noticeably; by 19.4, 20.4 and 21.6
per cent respectively over Q3.
Table 1. Average TSR 20 prices in 2005 & 2006
2006
TSR 2005 Q1 Q2 Q3 Q4
SIR 20
(US cents/kg) 139.37 187.43 213.17 212.63 171.35
SMR
20(Sen/kg) 523.07 690.01 781.76 762.19 606.51
STR
20(Baht/kg) 56.53 74.80 84.11 80.47 63.05
Source: ANRPC Secretariat
The SIR 20 prices, which recovered in
December 2005 after a marginal decline in the
previous month, began improving further from the
turn of the current year. The prices continued
to increase until mid-February and the month
recorded an average price of US cents 193 per
kg compared to US cents 164 per kg in
December 2005; up by some 17.7 per cent.
From mid-February prices remained more or less
flat for a few weeks and then improved from the
beginning of May with the weekly average price
reaching US cents 243.71 per kg. Thereafter
prices started retreating gradually and the weekly
ANRPC Newsletter z Volume 21 No. 2
average SIR 20 price reached US cents 177 per
kg in the last week of September. The month of
October showed a short lived recovery in prices
followed by further declines in November. There
was some improvement in the prices towards the
end of the year when it increased to US cents
182 per kg in the last week of the year from US
cents 154 per kg in the last week of November.
The SMR 20 prices also had started
improving from the beginning of December 2005
after a mild slow down in the previous month.
Prices continued to increase until around mid-
February. The monthly average SMR 20 price in
February was higher at Sen 712 per kg
compared to Sen 612 per kg in December, an
increase of 16.3 per cent. This was followed by
a few weeks of more or less flat prices. Prices
began to improve further from the turn of May
and the first week of July recorded an average
price of Sen 875 per kg. Thereafter, SMR 20
prices started falling and the weekly average
reached Sen 641.40 per kg by the last week of
September. Prices showed a mild recovery in
the first three weeks of October but again started
falling towards the end of the month. The
decline in the price continued until the end of
November and the trend reversed with the price
increasing from Sen 547 per kg in the last week
of November to Sen 622 per kg in the last week
of December.
18
The prices of STR 20 also started improving
from early December 2005 but at a more gradual
pace compared to SIR 20 and SMR 20 prices.
The STR 20 prices had declined less in the
previous month compared to the prices of the
other two grades. In January 2006 also the
increase in STR 20 prices was gradual
compared to SIR 20 and SMR 20 prices. But in
February STR 20 prices recorded higher increase
compared to the other grades. The average price
of STR 20 in February was Baht 77.8 per kg
compared to December’s Baht 68.1 per kg an
increase of 14.2 per cent. Thereafter, prices
remained nearly flat for a few weeks and began
to improve around mid-May, lagging behind SIR
20 and SMR 20. The first week of July
registered an average price of Baht 94.3 per kg
for STR 20. Thereafter, prices began to decline
with average weekly STR 20 prices reaching
Baht 65.8 in the last week of September. In the
first week of October prices mildly improved and
remained flat during the following weeks before
declining further in November. In December the
price recovered reaching Baht 65.18 per kg in
the last week compared to Baht 56.92 per kg in
the last week of November.
RSS Prices
The prices of RSS grades in Singapore and
Bangkok markets showed similar trends whereas
Colombo and Kottayam markets displayed some
variations. RSS 3 prices in Singapore and
Bangkok increased in Q1 2006 by around 15.5
per cent over the previous quarter. In Q2 the
RSS 3 prices in Singapore and Bangkok
increased by 18.5 and 17.5 per cent respectively
over Q1. And in Q3 the RSS 3 prices in
Singapore and Bangkok declined at relatively
higher rates at 10.7 and 11.1 per cent
respectively compared to other markets. RSS 4
prices at Kottayam and RSS 3 prices in Colombo
increased by 17.3 and 19.5 per cent respectively
in Q1 2006 over the previous quarter. In the
second quarter, Kottayam RSS 4 prices and
ANRPC Newsletter z Volume 21 No. 2
Colombo RSS 3 prices increased by 24.2 and
19.4 per cent respectively over Q1. However in
Q3, the RSS 4 prices in Kottayam and RSS 3
prices in Colombo declined by 7.0 and 2.3 per
cent respectively over Q2. In the last quarter of
the year average RSS 3 prices in Singapore and
Bangkok markets declined by 21.4 and 22.3 per
cent over Q2. In Colombo the average RSS 3
price declined at a lower rate of 16.6 per cent
in Q4 over Q3. And in India the average RSS 4
prices recorded only a noticeably lower rate of
decline in Q4 at 5.8 per cent over Q3.

Table 2. Average RSS prices in 2005 & 2006 The Colombo RSS 3 prices which had been
more or less flat in December 2005, started
2006 improving from the beginning of 2006. Prices
RSS 2005 Q1 Q2 Q3 Q4 continued to move up until mid-February with the
RSS 4 month recording an average price of Rs184 per
Kottayam 60.68 78.25 97.22 90.57 85.28 kg compared to Rs 147 per kg in December.
(Rs/kg) Thereafter prices remained flat for a few weeks
RSS 3 before improving from early May and the weekly
Singapore 249.83 328.89 390.00 346.73 272.65 average price of RSS 3 reached Rs 244.40 in
(Cents/kg) the first week of July. Then prices began to
RSS 3 decline and the weekly average price reached Rs
Colombo 136.91 178.00 212.59 207.74 173.14 175.05 per kg in the first week of October
(Rs/kg) followed by weeks of more or less flat prices
RSS 3 before declining again in November. Prices
Bangkok 60.17 79.12 92.96 82.64 64.22 recovered in December with the last week
(Baht/kg) recording an average of Rs 180 per kg.
Source: ANRPC Secretariat

The Singapore RSS 3 prices had started

improving from early December 2005 after a
marginal decline for a few weeks. The prices
continued to increase until around mid-February
and the month recorded an average price of
Singapore cents 338 per kg compared to
Singapore cents 284 per kg in December, an
increase of 19 per cent. For the next few weeks
prices remained more or less flat but began to
improve from the turn of May. The last week of
June had an average price of Singapore cents
438 per kg. Thereafter, prices retreated gradually
and the weekly average price reached Singapore
cents 282 per kg in the last week of September.
The prices had been more or less stable in
October but dipped in November averaging
Singapore cents 240 per kg in the last week.
The prices improved towards the end of the year
with the last week recording a price of Singapore
cents 299 per kg.

19 ANRPC Newsletter z Volume 21 No. 2

 In India, RSS 4 prices had been steadily The price premium of RSS 3 over STR 20
rising from early December 2005 crossing Rs 70 in Thailand in 2005, which went above Baht 10
per kg towards the end of the month. Prices per kg in late July, had narrowed towards the
continued to increase until around mid-February end of the year. In the initial weeks of 2006 the
2006 and the month recorded an average price price premium gradually rose reaching around
of Rs 80.5 compared to Rs 68.90 per kg for Baht 6 per kg by early February. Then the price
December. This was followed by a few weeks of premium came down for a few weeks and began
more or less flat prices. From early April, prices to rise from the end of March and in June the
began to improve steadily with the average price difference was around Baht 11 per kg. With
weekly price reaching around Rs 111 per kg in the improvement in NR supply the price premium
the week starting May 27 th . Thereafter, the of RSS 3 over STR 20 declined steadily in July
prices more or less remained flat till mid July beginning reaching around Baht 2 per kg by the
before declining gradually. The weekly average end of the month. Thereafter, the premium
price of RSS 4 reached Rs 78.33 in the last almost disappeared. In December when the
week of September. In the month of October the price of NR increased the price premium of RSS
RSS 4 prices registered a relatively faster 3 over STR 20 also increased reaching Baht
recovery compared to the other markets with 4.38 per kg in the last week.
weekly average price reaching Rs 92.40 per kg
in the last week. There was a deep dip in
prices in November followed by a strong recovery
in December. The last week of December
recorded an average price of Rs 93.45 per kg
compared to Rs 77.13 per kg in the last week
of November.
RSS 3 prices in Thailand, which had
recovered in December 2005 from a marginal
decline in the previous month, continued to
increase until mid-February 2006. The average
price of the grade in February was Baht 82.1 per
kg compared to Baht 69.20 per kg in December
2005. The prices, which remained more or less
flat for a few weeks from the middle of February,
began to improve steadily from around mid-May
and the weekly average reached Baht 104.1 in
the first week of June. The prices were more or Price Volatility
less flat until mid July. Thereafter, the prices The co-efficient of variation (CV) of the weekly
began retreating with the weekly average RSS 3 average prices of RSS and TSR 20 grades in
price reaching Baht 70.18 per kg in the first different markets in 2005 and 2006 are
week of September followed by weeks of more presented in Table 3. RSS prices were relatively
or less flat prices. The prices declined further more volatile in 2006 compared to TSR 20
in November and recovered in December prices.
reaching Baht 69.56 per kg in the last week
compared to Baht 56.24 per kg in the last week
of the previous month. Table 3. Co-efficient of variation of weekly average
NR prices in 2005 & 2006

Market/grade 2005 2006

Medan/SIR 20 9.0 11.3
Kuala Lumpur/SMR 20 12.2 12.2
Bangkok /STR 20 11.9 12.5
Kottayam/RSS 4 14.0 15.9
Singapore /RSS 3 10.2 12.2
Colombo/RSS 3 15.3 14.0
Bangkok /RSS 3 14.2 16.7

Source: ANRPC Secretariat

20 ANRPC Newsletter z Volume 21 No. 2

SBR Vs RSS
In 2005, SBR export unit values (Japan) and
RSS 3 prices (cif) in Tokyo market averaged Yen
182.4 and 165.1 per kg respectively. The
monthly SBR average export unit values which
stayed below average monthly RSS prices from
August 2003 had exhibited a reverse trend from
July 2004 in line with the rising trend in the price
of oil and the margin between the two widened
notably in early 2005. However, by mid-2005 the
gap narrowed considerably. From late December
the trend reversed and RSS 3 prices went above
SBR export unit values. During January-
September 2006 the monthly average RSS 3
price in Tokyo was higher at Yen 256.0 per kg
compared to the SBR average export unit value
of Yen 212 per kg. However, the difference
between the two which peaked to Yen 117 per
kg in June declined considerably in the recent
months and in September 2006 the gap
narrowed to 2 yen per kg (Rubber Statistical
Bulletin, IRSG, January-February 2007).
The average unit value of Chinese imports of
SRs was higher at US$ 1.65 per kg compared
to that of NR at US$ 1.32 per kg in 2005.
During January-October 2006, the unit value of
Chinese SR import stood at US $ 1.81 per kg
compared to that of NR at US $ 1.91 per kg. In
October 2006, the latest month for which data
are available, unit value of Chinese SR import
was marginally higher at US $ 1.90 compared to
that of NR at US $ 1.86 per kg. The comparison
between the import unit values of SR and NR in
China has to be noted with caution as they
comprise several types/grades (www.china.org.cn
January 2007).
NR Production
Statistics on ANRPC NR production for the latest
five years are presented in Table 4. In 2005 NR
21
production in some of the member countries had
been adversely affected by the drought in H1 of
the year, rains towards the end of the year and
other factors. The ANRPC countries together
produced 7.724 million tonnes in 2005, recording
an average annual compound growth rate of 7.24
per cent over the last five years. The estimated
world output of NR in 2005 was 8.80 million
tonnes. The positive supply response to higher
prices is evident from the annual growth rates
recorded in 2002, 2003 and 2004 at 6.6, 9.5 and
9.4 per cent respectively.
Table 4. NR production during 2001-2005
(‘000 tonnes)
Country 2001 2002 2003 2004 2005
India 631.5 640.8 707.1 742.6 772.0
Indonesia 1607.3 1630.0 1792.0 2066.0 2271.0
Malaysia 882.1 889.8 985.7 1168.7 1126.0
Papua New 4.1 4.2 4.0 4.5 4.7
Guinea
Sri Lanka 86.2 90.5 92.0 94.7 104.4
Thailand 2319.6 2615.1 2876.0 2984.3 2937.0
Vietnam 309.0 355.5 363.50 402.7 509.0
ANRPC 5839.8 6225.9 6820.3 7463.5 7724.1
Growth (%) 1.0 6.6 9.5 9.4 3.5
Source : ANRPC Secretariat
There are constraints in expanding NR
production in the short-run, rubber being a
perennial crop. The upper cut-off point depends
on the extent of planted area, clone, age of the
trees, exploitation techniques employed,
availability of labour etc. Much of the short term
potential to enhance rubber production in
response to higher prices may have already been
exploited at least in some of the member
countries. Hence though 2005 recorded the
highest NR price in the recent years the annual
growth in NR production in the ANRPC region
declined to 3.5 per cent compared to previous
year’s growth of 9.4 per cent.
NR Production Outlook
ANRPC NR production in 2006 and 2007 would
be around 8.11 and 8.39 million tonnes
respectively. According to the ANRPC Secretariat
estimates, world NR production would be around
9.20 and 9.51 million tonnes in 2006 and 2007
respectively. According to IRSG, world production
of NR in 2006 and 2007 will be 9.26 and 9.71
million tonnes respectively (Rubber Industry
Report, IRSG, January-February 2007).
ANRPC Newsletter z Volume 21 No. 2
 Table 5. NR Production projections (‘000 tonnes) 2006 marginally declined by 1.9 per cent
compared to the same period in the previous
Country 2006 2007 2010 2015 2020 year. During this period, elastomer consumption
India 853 874 929 988 1107 (NR and SR) increased by 2.0 per cent as SR
Indonesia 2367 2453 2708 3134 3460 consumption had increased by 4.9 per cent.
Malaysia 1230 1232 1236 1253 1185
Papua New 5 5 7 - -
Guinea Major NR Consuming Countries
Sri Lanka 112 118 124 150 185 NR consumption in some major consuming
Thailand 3000 3130 3290 3910 4210 countries and the underlying factors are
Vietnam 540 580 750 825 - discussed below.
Source: ANRPC Secretariat China: - The country has been on a sustained
growth path backed by strong exports and
domestic consumption during the recent years. In
NR Consumption 2005, GDP registered a growth of 9.9 per cent.
Table 6 provides NR consumption growth rates China’s measures to address overheating may
in the world’s top 10 consuming countries in not significantly impact its NR consumption as
recent years. These countries together accounted growth has not moderated. All the four quarters
for around 75 per cent of global NR consumption of 2006 recorded consistently high GDP growth
in 2005. rates of 10.4, 11.5, 10.6 and 10.4 per cent
respectively and the annual growth was 10.7 per
cent. During January-November 2006 vehicle
Table 6. Annual growth in NR consumption production amounted to 6.68 million units, up by
during 2003-2006 (%) 26.1 per cent compared to the same period in
the previous year (www.stats.gov.cn January
Jan-Oct 2006 2007). The economy is projected to grow by 9.5
Country 2003 2004 2005 over per cent in 2007 (Asian Development Outlook
Jan-Oct 2005 Update, ADB, September 2006). During January-
China 9.3 22.3 9.7 7.1 October 2006, NR consumption increased by 7.1
USA -2.9 6.0 1.4 -11.1 per cent over the same period in 2005. The
Japan 4.7 11.5 5.0 3.3 share of NR in rubber imports which had
India 5.5 3.9 5.9 3.6 declined from 53 per cent in Q1 to 48.1 per cent
Malaysia 3.2 -4.3 4.2 -2.9 in Q2 because of the relatively higher price of
South Korea 2.1 5.7 4.9 -1.6 NR recovered in Q3 to 55.5 per cent as the gap
Thailand 7.3 6.7 4.8 -0.6 between NR and SR prices narrowed (Rubber
Brazil 9.5 11.5 5.6 -8.7 Statistical Bulletin, IRSG, January-February
Germany 5.4 -6.9 7.9 0.9 2007).
France 30.1 -23.4 - -11.2
World 4.9 7.2 4.7 -1.9 USA: - During January-October 2006, NR and
SR consumption dropped by 11.1 and 5.5 per
Source: Computed from data in IRSG Rubber cent respectively compared to the same period
Statistical Bulletin, January-February 2007 in the previous year (Rubber Statistical Bulletin,
- Negligible IRSG, January-February 2007). The Consumer
Confidence Index of the US Conference Board
which dipped below 100 in August had improved
Global NR consumption had declined by 0.7 in September. In October it was 105.4. The
per cent in 2001 over 2000 when global GDP index which was virtually unchanged in
registered a marginal growth of 2.4 per cent. In November improved in December to 109.0
2002, the world economy and NR consumption (Consumer Confidence Index, The Conference
expanded by 3.0 per cent and 4.0 per cent Board, October 2006). The US Fed rate was
respectively over 2001. In 2003, the global raised to 5.25 per cent by June end, the highest
economy gained momentum with a GDP growth level in more than five years
rate of 4.0 per cent over 2002 and NR (www.washingtonpost.com, 30 June 2006). From
consumption rose by 4.9 per cent. The world Q2 of 2006 investment weakened dragged down
economy expanded by 5.1 per cent in 2004 and by the housing sector. The growth of 5.6 per
global NR consumption grew by 7.2 per cent. In cent recorded in Q1 could not be sustained and
2005 world economy expanded by 4.8 per cent the growth rates in the subsequent quarters were
and global NR consumption rose by 4.7 per cent. 2.6, 2.0 and 2.2 per cent respectively. The
Consumption of NR during January-October growth of the economy would moderate in 2007

22 ANRPC Newsletter z Volume 21 No. 2

with a projected GDP expansion of 2.4 per cent
but would improve in 2008 with a growth at 2.7
per cent (OECD Economic Outlook, OECD,
December 2006).
Japan: - NR consumption grew by 5.0 per cent
in 2005 and by 3.3 per cent during January-
October 2006 over the corresponding period in
the previous year. Japan’s long anticipated
economic recovery strengthened in the recent
past with a GDP growth of 2.7 per cent in 2005,
up from 2.3 per cent in 2004. The moderate
growth in GDP of 1.9 per cent in 2006 is
expected to continue with a projected growth of
2 per cent in 2007 and 2008 (OECD Economic
Outlook, OECD, December 2006).
South Korea: - NR consumption, which had
increased by 5.7 and 4.9 per cent in 2004 and
2005 respectively declined by 1.6 per cent during
January-October 2006. The economy had grown
by 4.0 per cent in 2005. The first and second
quarters of the year could record growth of only
1.2 and 0.8 per cent over the previous quarters
mainly because of worsening terms of trade due
to high oil prices and a steep decrease in
construction investment. The growth projections
for 2006 and 2007 have been revised downwards
to 5.0 and 4.3 respectively (Quarterly Bulletin,
Bank of Korea, June & September 2006 & World
Economic Outlook, IMF, September 2006).
France & Germany: - These two major NR
consuming countries in the euro zone had
recorded declines in NR consumption in 2004. In
2005 consumption of NR in France remained
constant while there was an increase in Germany
by 7.9 per cent. During January-October 2006
NR consumption in France declined by 11.2 per
cent and that of Germany increased marginally
by 0.9 per cent compared to the corresponding
period in the previous year. France’s GDP growth
had declined in 2005 to 1.2 per cent from 2.0
per cent in 2004 but the first two quarters of
2006 recorded growth rates of 0.5 and 1.2 per
cent respectively over the previous quarters. In
Q3 GDP remained static with zero growth and
Q4 registered a growth rate of 0.6 per cent. The
economy is projected to expand by 1.8 and 1.7
per cent in 2006 and 2007 respectively
(Informations Rapide, National Institute for
Statistics and Economic Studies, February 2007
& OECD Economic Outlook, OECD, December
2006). The growth in Germany also had
decelerated in 2005 to 0.9 per cent from 1.6 per
cent in 2004. In the first three quarters of 2006
the German economy grew by 0.7, 1.2 and 1.0
per cent over the previous quarters respectively.
In Q4 the growth rate declined to 0.8 per cent.
In 2006 the GDP growth would be 2.0 per cent
and would decline to 1.7 per cent in 2007.
23
(Press Release, Federal Statistical Office,
November 2006 & OECD Economic Outlook,
OECD, December 2006).
Brazil: - The growth in NR consumption has
declined from 11.5 per cent in 2004 to 5.6 per
cent in 2005. During January-October 2006 there
was a decline in NR consumption by 8.7 per
cent over the same period in 2005. The
economy which grew by 4.9 per cent in 2004
could record a growth of only 2.3 per cent in
2005. However, industrial production indices
(1992=100) grew from 141 in January 2006 to
161 in May 2006 indicating industrial expansion.
Though the indices declined in the next two
months a recovery reaching 168 was observed
in August 2006. After remaining flat for the next
three months the indices fell to 148 in December
2006. The economy is projected to grow by 3.6
and 4.0 per cent respectively in 2006 and 2007
(Monthly Bulletin of Bank of Brazil, February
2007 & World Economic Outlook, IMF,
September 2006)).
India: - NR consumption in 2005 increased by
5.9 per cent over the previous year and January-
October 2006 recorded a growth of 3.6 per cent
over the corresponding period of the previous
year. Indian economy had achieved notable
growth of 9.0 and 9.2 per cent in the financial
years ending March 2005 and 2006 respectively.
The current financial year ending March 2007 is
also expected to return a growth of 9.2 per cent
supported by sustained industrial activities and
impressive performance in the agricultural and
services sectors. According to ADB the
economy would grow by 7.8 per cent each in
2006 and 2007 (Economic Survey 2006-07,
Government of India, February 2007 & Asian
Development Outlook, ADB, September 2006).
Malaysia: - NR consumption declined by around
4 per cent each in 2004 and 2005 and declined
by 2.9 per cent during January-October 2006
compared to the same period in the previous
year. The Malaysian economy grew at 5.3 per
cent in 2005 compared to the previous year’s
growth of 7.1 per cent. The four quarters of
2006 registered GDP growth rates of 5.5, 5.9,
5.8 and 5.7 per cent respectively supported by
sustained growth in manufacturing and services
sectors and strong performance on the
agricultural front. According to ADB the
economy would grow by 5.8 per cent in 2007
(Quarterly Bulletin Q4/2006, Bank Negara &
Asian Development Outlook Update, ADB,
September, 2006).
Thailand: - The annual growth in NR
consumption had declined from 6.7 per cent in
2004 to 4.8 per cent in 2005. During January-
ANRPC Newsletter z Volume 21 No. 2
October 2006 NR consumption marginally
declined by 0.6 per cent over the same period
in the previous year. Irrespective of the restraints
imposed on growth by the increase in oil prices
and the impact of natural calamities - tsunami
and drought – the economy grew by 4.5 per cent
in 2005 supported by the rebounding agricultural
sector and surging exports. The growth
momentum was sustained in the first quarter of
2006 with a GDP expansion of 6.3 per cent.
However GDP growth declined to 4.9 per cent
in Q2. Q3 and Q4 recorded GDP growth rates
of 4.7 and 4.2 per cent respectively and in the
year 2006 the economy expanded by 5.0 per
cent. The GDP growth projection was sharply
revised down to 4.0 per cent each in 2007 by
ADB because of the decline in government
spending and other developments
(www.nesdb.go.th, February 2007 & Asian
Development Outlook Update, ADB, September
2006).
NR Consumption Outlook
The consumption of NR in the short term is
mainly determined by global economic growth.
The global economic recovery which built up
momentum from H2 of 2003 had softened from
Q2 of 2004 and then improved from mid-2005.
Economic expansion in Developing Asia remains
solid with sustained growth in China and India.
According to ADB, developing Asia would grow
by 7.7 per cent in 2006 irrespective of the mild
slowdown elsewhere. However, growth in 2007 is
projected to ease to 7.1 per cent because of the
declining demand for Asian products from
industrial countries. According to IMF the
advanced countries would grow by 3.1 and 2.7
per cent in 2006 and 2007 respectively. The
OECD region recorded a growth of 3.2 per cent
in 2006 and the region is projected to grow by
2.5 and 2.7 per cent in 2007 and 2008
respectively. Projections indicate that the world
economy would grow by 5.1 and 4.9 per cent in
2006 and 2007 respectively (Asian Development
Outlook, ADB, September 2006; Press Briefing,
OECD, December 2006 & World Economic
Outlook Update, IMF, September 2006).
The moderation in the growth of the US
economy in the near past could be partly
attributed to the cooling of the housing sector
partly. Several analysts expect that the possible
resurge in consumer spending from lower fuel
prices decrease would compensate to some
extent the slowdown in the housing sector. The
growth performance of the large economies in
the euro zone, Germany and France in the
recent months was lower compared to the initial
months of the year. Growth in Japan is
moderate. The impact of a mild slowdown in
24
economic activities in the industrial countries was
reflected in the declining demand/prices of
industrial raw materials from the third quarter of
the year. The uncertainties in oil prices, rising
interest rates, widening current account
imbalances, depreciating US dollar, geo-political
factors etc. are matters of concern.
Middle East developments and unrest in
Nigeria affected oil supply towards the middle of
the year. The oil rigs damaged by the hurricanes
in the US were reported to be in operation by
the third quarter of the year. The oil supply and
demand projections stand at 86.0 and 86.7
million barrels per day respectively in 2006.
The abnormally warm temperatures in the US
and throughout the northern hemisphere in Q4
reduced the demand for heating oil. The WTI
crude oil price which averaged US $ 74.41 per
barrel in July 2006 had declined to US$ 58.39
per barrel in October. Then the average WTI oil
price moved up slightly in November and
December to US $ 59.08 and US $ 61.96 per
barrel respectively and the average for the year
was US $ 66.02 per barrel (Oil Market Report,
International Energy Agency, February 2007 &
Short-Term Energy Outlook, Energy Information
Administration, US, February 2007).
According to the IRSG, NR consumption in
2006 amounted to 8.97 million tonnes. The NR
consumption projections for 2007 and 2008 are
9.41 and 9.95 million tonnes respectively,
marking annual growth rates of 4.9 and 5.7 per
cent respectively. The consumption of NR is
projected to increase to 10.51 million tonnes in
2009, an increase of 5.6 per cent (Rubber
Industry Report, IRSG, January-February 2007).
NR Market outlook
The outlook for the world economy and major
consuming regions indicates a mild slowdown in
global economic activities in 2007. It could be
short-lived as a relatively higher rate of growth
is projected for 2008. On the supply side, the
short-term potential to enhance production of NR
may have been almost exploited. Further, the
impact of the slowdown in rubber planting/
replanting from 1997 to 2002 would be felt in the
market in the next few years. The NR market
is constantly in the fear of tight supply concerns
because of predictions of adverse climatic
conditions and other factors.
Oil prices could influence SR/NR input mix in
product manufacturing, to a certain extent,
depending on the relative prices of NR and SR.
The oil supply and demand projections for 2007
are 88.4 and 88.5 million barrels per day
respectively. The price projections for WTI oil in
2007 and 2008 are US$ 59.46 and US $ 62.58
per barrel respectively. The supply and price of
ANRPC Newsletter z Volume 21 No. 2
oil could be highly influenced by geo-political
factors (Oil Market Report, International Energy
Agency, February 2007 & Short-Term Energy
Outlook, Energy Information Administration, US,
February 2007).
According to the Secretariat’s projections,
there was a small surplus of 232 thousand
tonnes in 2006 between NR production and
consumption. In 2007 there could be a marginal
surplus of 102 thousand tonnes. However
production of NR could be highly influenced by
climatic and geo-political factors. As production
and consumption of NR in 2007 are expected to
be close, the market could be highly sensitive as
in the previous year to seasonal, currency and
speculative factors. There are reports of a
slowdown in replanting to take advantage of the
prevailing relatively higher NR prices in the major
producing countries. On the other hand there is
also a renewed interest in rubber planting. The
net impact may be an increase in NR supply
from the start of the next decade.
WTO CORNER
Growing Role for Developing Countries
Developing countries are playing a growing role
in the WTO, in the Doha negotiations, in the
dispute settlement process and in all facets of
WTO activities, according to the annual report
published by the WTO in December 2006.
Currently the real dynamism in trade is found in
the developing world, where Brazil, China, India,
Malaysia, Mexico and Thailand all posted double
digit growth in exports. Africa too has staked its
claim to a bigger share of the pie by posting
export growth in excess of 25 per cent in each
of the past three years. The formation of groups
like the G-90, G-33 and G-20 illustrates the role
of developing countries in powerful collective
bargaining. The new edition of the Annual Report
presents an overview of the activities of the
WTO from the latest Ministerial Conference to
the work of the different committees and bodies,
and also facts and figures to illustrate the
functioning of the Organization.
Transparency Mechanism for RTAs
The General Council, on 14 December 2006,
established on a provisional basis a new
Transparency Mechanism for all regional trade
agreements (RTAs) in accordance with Para 47
of the Doha Ministerial Declaration. Information
on new RTAs and changes affecting the
implementation of RTAs or the operation of
already implemented RTAs shall be notified to
25
the WTO Secretariat. At the end of the
implementation period of RTAs, the parties shall
submit to the WTO a short written report on the
realization of the liberalization commitments in
the RTAs as originally notified. The Committee
on Regional Trade Agreements (CRTA) and the
Committee on Trade and Development (CTD) are
instructed to implement the Transparency
Mechanism.
Vietnam to Join WTO in January 2007
Vietnam informed the WTO on 12 December
2006 that it had ratified its membership
agreement. It would now become the WTO’s
150th member on 11 January 2007. The
General Council had approved Vietnam’s
membership on 7 November 2006. Vietnam was
complimented for the remarkable efforts put into
preparing for membership.
WTO Trade Report Focuses on Subsidies
The World Trade Report published by the WTO
in July 2006 had focused on subsidies.
Government subsidies can be useful instruments
in correcting market failures and working towards
social objectives but can also distort trade and
provoke strong responses from trading partners.
Many governments maintain extensive subsidy
programmes at the national and sub-national
levels, and invoke a multiplicity of objectives to
justify the programmes. As subsidies can be
trade distorting, WTO Member governments must
notify the organization of any such support. Yet
few governments fully meet their notification
obligations under the WTO, contributing to a
serious lack of information and transparency on
the use and effect of subsidies.
The Report estimates that 21 developed
countries spent almost US$250 billion on
subsidies, while all countries spent over US$300
billion. The average ratio of subsidies to GDP is
lower in developing than developed countries, but
large variations of the ratio can be found in both
country groups. For a sample of 31 developing
countries the average ratio of subsidies to GDP
was 0.6 per cent, while the comparable figure for
a sample of 22 developed countries was 1.4 per
cent.
WTO Documents Related to Rubber and
Rubber Products Issued during July-
December 2006
1. Notification No. G/TBT/N/KOR/122 dated 30th
October 2006 (06-5210) by the Republic of
Korea on safety criteria on retreaded tyres.
2. Notification No.G/TBT/N/TPKM/36 dated 29th
September 2006 (06-4646) by Taiwan on
ANRPC Newsletter z Volume 21 No. 2
 labelling requirements of shoes with soles
made of rubber and others.
3. Notification No. G/TBT/N/KEN/69 dated 29th
September 2006 (06-4574) by Kenya
prescribing requirements and methods of
sampling and test for rubber erasers for
removing pencil writing, ink pen writing,
ballpoint pen ink writing, typewriting, carbon
copy characters and for drawing cleaning.
4. Notification No. G/TBT/N/KEN/56 dated 15th
September 2006 (06-4415) by Kenya
prescribing the requirements and test
methods for intermediate super abrasion
furnace carbon black used in rubber
products.
5. Notification No. G/TBT/N/KEN/45 dated 24
August 2006 (06-4002) by Kenya specifying
the requirements of flexible rubber hose for
use in vehicles for the transport of liquefied
petroleum gases.
6. Notification No. G/TBT/N/IND/20 dated 17 th
July 2006 (06-3447) by India bringing
production and import of automotive tyres
and tubes under mandatory certification. For
compliance of this requirement, all
manufactures of these products, shall be
required to obtain certification from Bureau of
Indian Standards (BIS).
7. Communication No. WT/DS332/7 dated 22
December 2006 (06-6146) by Chairman of
the Dispute Settlement Panel on Brazil’s
measures affecting imports of retreaded tyres
informing that its final report would be ready
by April 2007.
8. Notification No. G/TBT/N/CAN/186 dated 13
December 2006 (06-5977) by Canada on
motor vehicles which covers tyre and rim
safety regulations in line with U.S.Federal
Motor Vehicle Safety Standards No.110 and
120.
9. Notification No. G/TBT/N/COL/58/Add.2 dated
13 December 2006 (06-5985) by Columbia
related to an amendment of technical and
labelling regulations of new, retreaded, radial
or non-radial pneumatic tyres.
10. Notification No. G/TBT/N/ECU/9/Add.1 dated
6 November 2006 (06-5334) by Ecuador
related to technical regulations of domestically
produced or imported pneumatic tyres.
OTHER REGIONAL AGREEMENTS
ASEAN, India to Resume Talks
The ASEAN and India agreed to resume stalled
free trade talks, although several issues remain
26
in dispute still. Negotiations to forge an FTA
stalled after the dispute over India’s exclusion list
of 1,414 products could not be settled. India
submitted a revised list which reclassified
products for tariff reduction over different
timeframes and reduced items in the exclusion
list to 560. The ASEAN appreciated India’s
efforts but expressed dissatisfaction on the
permanent exclusion of some products of interest
to ASEAN, including ceramics, wooden furniture
and agricultural products, and also the proposal
to reduce tariffs on palm oil products over 16
years. The negotiations at the level of officials
would proceed to liberalising trade in services
and investment once issues related to trade in
goods had been resolved. However no deadline
for the completion of negotiations is fixed. India
is keen to expand trade ties with ASEAN, but
wants to protect its own sensitive sectors, such
as agriculture and textiles which provide
livelihoods to millions of people.
Source: www.aseansec.org, August 2006
Asia-Pacific Trade Agreement
The first Agreement on Trade Negotiations
Among Developing Member Countries of the
Economic and Social Commission of Asia and
Pacific (ESCAP), known as the Bangkok
Agreement, was signed in July 1975 under the
auspices of ESCAP. The Ministerial Council
Session held in November 2005 renamed it into
Asia Pacific Trade Agreement (APTA). The
Session also agreed that the results of the Third
Round would be implemented as of 1 July 2006
pending completion of domestic approval and
ratification procedures. Subsequently this date
was postponed to 1 September 2006. A meeting
of the Standing Committee of APTA held in
November 2006 in Kolkata, India made an
assessment of the Third Round Results.
The Third Round of negotiations took place
from October 2001 to April 2003 along with
negotiations for a revised text to the Bangkok
Agreement. At the end of the Third Round the
Participating States had exchanged concessions
on 4,270 products and an additional 587
products concessions were offered exclusively to
least developed countries. This is a marked
increase from the 1,721 products (plus 112
products for LDCs) on which concessions were
offered before the Third Round. The average
margin of preference (MOP) upon completion of
the Third Round was 26.8 per cent compared
with 32.2 per cent before the Second Round but
the MOP offered as special concessions on
products from LDCs almost doubled.
Consolidated results showed that China offered
concessions on the largest number of products
ANRPC Newsletter z Volume 21 No. 2
followed by Korea and India. The margin of
preference offered by China is the highest
followed by Korea for both general and special
products.
Source: www.unescap.org, November 2006
Japan-Indonesia FTA
Tokyo and Jakarta agreed on an overall
framework for liberalizing bilateral trade, including
Japanese autos and Indonesian natural gas and
human resources, in November 2006. The move
for an FTA came as Japan tries to secure a
stable supply of natural gas, including liquefied
natural gas, and Indonesia hopes to increase the
competitiveness of its products in Japan.
Indonesia also needs to attract foreign investors.
The Japanese government had been pursuing
FTAs in Southeast Asia. The accord with
Indonesia would be Japan’s seventh; after pacts
with Singapore, Mexico, the Philippines, Malaysia,
Thailand and Chile.
Under the two countries’ FTA framework,
Indonesia would cut tariffs on about 90 percent
of Japanese imports from the current level of
roughly 30 percent, while Japan would lift tariffs
on about 93 percent of Indonesian imports, which
were set at around 70 percent. Tariffs on autos
with engine displacements higher than 3 litres will
be lifted by 2012, while those under this size will
be reduced to 5 percent or less by 2016. Tariffs
on Japanese steel used for automobiles and auto
parts, electronics and construction machinery will
be cut. Import tariffs on some electronic goods
will also be eliminated. Japan for its part will
scrap some 90 percent of the import tariffs on
Indonesian industrial product imports and lift the
tariffs on shrimp, tropical fruit, including bananas
and pineapples, and forestry and marine
products.
Source: Japan Times, 29th November 2006
Asia Pacific Free Trade Area
The Eighteenth APEC Ministerial Meeting was
held in Hanoi, Vietnam on 15 and 16 November
2006. The theme of the Meeting was “Towards
One Dynamic Community for Sustainable
Development and Prosperity”. The status of
RTAs/FTAs in the region was discussed and
their implications were examined. The Meeting
acknowledged the role of RTAs/FTAs in
advancing trade liberalization and reducing trade
transaction costs. The APEC Meeting also dealt
with model measures on RTAs/FTAs. The
model measures would be non-binding and
voluntary and would not prejudice the positions
of APEC members in their existing and future
27
RTAs/FTAs negotiations. The work on model
measures would be continued. The need for
greater economic integration in the Asia-Pacific
region was reiterated but the Meeting noted that
there were practical difficulties in negotiating a
Free Trade Area of the Asia-Pacific. However,
ways and means to promote regional economic
integration including a Free Trade Area of the
Asia-Pacific as a long term prospect would be
studied.
Source: www.apecsec.org.sg, December 2006
ASEAN Ministers Signed Six Accords
Economic Ministers of the Association of
Southeast Asian Nations (ASEAN) signed six
agreements in Cebu, Philippines in December
2006. Of the six agreements signed, four
documents were intra-ASEAN and two were
ASEAN-China. The six agreements signed were
the following:
ASEAN Framework (Amendment) Agreement
for the Integration of Priority Sectors; ASEAN
Sectoral Integration (Amendment) Protocol for the
Integration of Priority Sectors; Protocol to
Implement the 5th Package of Commitments
under the ASEAN Framework Agreement on
Services (AFAS); ASEAN Mutual Recognition
Agreement (MRA) on Nursing Services; Second
Protocol to Amend the Framework Agreement on
Comprehensive Economic Cooperation between
ASEAN and the People’s Republic of China; and,
the Protocol to Amend the Trade in Goods in the
Framework on Comprehensive Economic
Cooperation between ASEAN and the People’s
Republic of China.
The first two intra ASEAN agreements reflect
the amendments necessary to implement Phase
2 of the Priority Integration Sectors (PIS). The
ministers also agreed to add the logistics sector
as the 12th PIS to the 11 original PIS that include
agro-based products, air travel, automotive
products, information and communications
technology, electronics, fisheries, healthcare,
rubber-based products, textiles and apparel,
tourism and wood based products. The original
six ASEAN countries agreed to fully bring down
to zero the tariffs and eliminate non- tariff
barriers in the 12 sectors by 2007 and the four
new members (Cambodia, Laos, Myanmar, and
Vietnam) by 2012. The latter were given five
years to fully integrate these sectors. Under the
Common Effective Preferential Tariff Scheme, the
regular tariff reduction program of AFTA, the
original six member countries should attain full
economic integration by 2010 while the four
others by 2015.
The third agreement relates to the
consolidation of commitments made in previous
ANRPC Newsletter z Volume 21 No. 2
packages under the AFAS and the General study of the Upulima Rubber Smallholdings Sub-
Agreement on Trade in Services in one division (URSSD) under the Cape Rodney
document. The ASEAN MRA on Nursing Agricultural Development Project (CRADP). The
Services is a Philippine initiative and is in support data source comprises information collected
of the Bali Concord II for the completion of through field visits undertaken in October 2004
MRAs for qualifications in major professional and statistics available at the Secretariat.
services. The two other agreements with China
were the amendment to the framework with the
accession of the Philippines in the Early Harvest Overview of PNG Rubber Industry
Program, and the amendment on trade in goods
of the framework agreement between China and Area under rubber
Vietnam.
Statistics of rubber planted area in the estate
and smallholding sectors are presented in Table
Source: Manila Bulletin, 10th December 2006
1. Estates are defined as lands aggregating more
than 20.23 hectares, planted with rubber. Lands
aggregating less than 20.23 hectares, planted
with rubber are classified as smallholdings. Area
NATURAL RUBBER INDUSTRY IN under rubber increased from 14,000 hectares in
PAPUA NEW GUINEA2 1970 to 19,280 hectares in 2004. The share of
smallholdings increased from 3.6 per cent in
Natural rubber is one of the first perennial crops 1970 to 55.3 per cent in 1990, but later declined
introduced by the erstwhile colonial administration to 47.6 per cent in 2000. In 2004, the
in the then territories of Papua and New Guinea smallholding sector accounted for 50.7 per cent
(now Papua New Guinea (PNG)) in early 20 th of total planted area. Currently, there is only one
century on a plantation mode of production. It rubber estate in operation, Galley Reach
was mainly cultivated in the southern region Holdings Ltd., owned by Sipet, a Belgium
comprising Central, Gulf and Oro provinces. company. The company has 5112 hectares of
Growth in rubber planted area was minimal until rubber plantations in Galley Reach in Central
the second half of the 20th century. In 1960s the Province.
government through the erstwhile Department of
Agriculture, Stock and Fisheries (DASF), now
Department of Agriculture and Livestock (DAL)), Table 1. Area under rubber in estates and
crafted a policy to promote rubber as a smallholdings (1970-2004)
smallholder crop in the villages in coastal
provinces. At the time of independence in 1975, Area under rubber
there were around 13,000 hectares of land under Estates Relative Small Relative
Year
rubber cultivation but output was low at about (ha) share holdings share Total
5000 tonnes per annum. Australia had been the (%) (ha) (%)
main market for rubber from PNG under a 1970 13500 96.4 500 3.6 14000
sheltered marketing arrangement resulting from 1975 10100 78.3 2800 21.7 12900
close historical ties between the two countries. 1980 7500 60.5 4900 39.5 12400
The concept of rubber based resettlement 1985 8848 54.5 7385 45.5 16233
scheme was introduced in 1970s under the Asian 1990 7504 44.7 9294 55.3 16798
Development Bank (ADB) assistance package for 1995 9555 52.4 8675 47.6 18230
integrated rural development and poverty 2000 9555 52.4 8675 47.6 18230
alleviation programme in PNG. Under the ADB 2004 9499 49.3 9781 50.7 19280
programme two agricultural development projects
involving rubber cultivation were implemented in Source : ANRPC Quarterly Rubber Statistical
Gavien in East Sepik and in Cape Rodney in Bulletin (various issues) and Report of the
Central Province. Through the projects the Twenty-eighth Meeting of the ANRPC Executive
government envisaged to modernize the rubber Committee
sector mainly by introducing budded planting
materials and switching over from processing
ribbed smoked sheet (RSS) to technically A major portion of the rubber area under
specified rubber (TSR), both of which have since smallholdings is in Central and Western
become standard practices in PNG. provinces. Other provinces with smallholder
This report provides a general overview of rubber cultivation are Gulf, Oro, East Sepik,
the natural rubber industry in PNG and a case West Sepik, Manus and New Ireland. The

2 The views expressed are entirely the ANRPC Secretariat’s.

28 ANRPC Newsletter z Volume 21 No. 2

national average size of a rubber holding was
1.67 ha. The average size of a holding in
Central province was notably higher at 4.72 ha
compared to 1.03 ha in Western province and
1.18 ha in the rest of the country.
Planting material
The major clones planted are the Malaysian
clones - RRIM 600 and PB varieties, and the
Indonesian clone, GT1. In most of the places
mixed planting had been done with these clones.
NR Production and exports
Out of the about 19000 hectares of mature
rubber plantations only around 6000 hectares are
being tapped because of constraints such as
poor infrastructural facilities, low farm-gate price,
non-availability of tapping accessories and lack
of marketing outlets. The smallholding sector
contributed around 50 per cent of NR production
in 2004. Fig.1 shows the trends in NR exports
from PNG from 1966 to 2005. The average
annual exports of NR declined from 5,911 tonnes
in the second half of 1960s to 5,007 tonnes in
1970s and further declined to 4,109 tonnes in
1980s. However, during 1990s average annual
exports of NR marginally increased to 4,353
tonnes because of the relatively higher exports
in 1995 and 1996 at 5,396 and 7,019 tonnes
respectively, presumably responding to the then
high NR prices. During 2005, the country
exported 4,719 tonnes of NR.
Processing and marketing
During early 1980s, factories were established to
process NR into TSR under the Papua New
Guinea Classified Rubber (PNGCR) Scheme.
Currently the entire rubber output is exported as
PNGCR 10. There are four TSR factories in the
country, viz., Cape Rodney, North Fly, Doa and
Gavien. Currently, the factories at Doa in Central
Province and North Fly in Western Province are
in operation. Galley Reach procures rubber from
29
smallholders in addition to its plantations. North
Fly entirely processes smallholders’ rubber from
Western Province. The companies directly
export the processed PNGCR 10.
Institutional set-up
The DAL is currently the lead government
agency in charge of the functional responsibility
for the development of rubber industry at the
national level. In September 2006 the
government established PNG Rubber Board
which would serve as a conduit for the
corporatization of the rubber industry as a
parastatal entity. The Board would be
institutionally mandated to be responsible for all
matters related to the rubber sector at the
national level.
Upulima Rubber Smallholdings Sub-Division
Upulima is one of the sub-divisions of
smallholder blocks of rubber developed under the
CRADP. It was funded by the ADB and the
Government of PNG. The other sub-divisions
where rubber smallholdings were developed
under the CRADP are Cocolands, Manabo and
Ianu which are located in the Abau district in
Central Province. There are 265 smallholder
blocks in the Upulima sub-division and the total
area is above 1800 hectares. Generally, each
block measures 7.5 hectares, comprising 4
hectares rubber, 3 hectares other crops and 0.5
hectare for homestead. Social services were also
provided including a police station, health centre
and a community school.
Plantation development and upkeep
Clearing and other pre-planting operations started
in 1982 and planting of rubber was completed in
1985. The rubber blocks were mixed planted with
RRIM 600, GT1 and PB varieties. Initial planting
density was 470 plants per hectare. The
development costs were entirely met by the
Project. In 1995, the blocks were handed over
to the designated settlers under a 99 year lease
arrangement. The settlers, brought from different
villages, were given training on tapping of rubber
trees.
Tapping
Generally ½ S d/2 tapping system is followed.
The tappers are mainly men but women also are
showing an interest. Tapping task is around 500
trees and if tapping cannot be completed in
morning hours the rest of the trees are tapped
in the afternoon. In blocks where settlers reside
ANRPC Newsletter z Volume 21 No. 2
in their holdings tapping is regularly undertaken Table 3. Monthly sales of cup lump from Upulima
and partial incidence of tapping panel dryness is sub-division (tonnes)
observed. But in blocks where growers reside
elsewhere tapping is not undertaken regularly Month 2001 2002 2003
and tapping panel dryness is not observed. The January - 23 25
tapping intensity is reported to be influenced by February - - 39
a host of factors which include the location of March 46 35 35
the residence of the settler, social activities and April 21 - 124
cash requirements. May 38 81 52
June 30 - 68
July - 57 48
Table 2. Targeted and actual cup lump production August - 42 106
in URSSD 1995 to 2003 (tonnes) September 136 90 77
October - 70 54
Cup lump production November 60 - 60
Year Targeted Actual December 67 68 103
1995 50 10 Total 398 466 791
1996 300 226
1997 400 387 Source: URSSD Field Office, Upulima
1998 500 481
1999 500 471
2000 500 280 The month-wise sales of cup lump from the
2001 500 398 sub-division are presented in Table 3. The blank
2002 500 466 cells show months when the factory truck could
2003 750 791 not reach the sub-division. The pattern of
monthly sales cannot be related directly to agro-
Source: URSSD Field office, Upulima climatic factors as tapping is mainly determined
by other factors mentioned earlier.

Yield and production

The targeted and actual production of cup lump
in URSSD is shown in Table 2. Yield per ha
in 2003 when production reached its highest was
around 800 kg of cup lump per hectare. This is
considerably lower compared to the relatively
higher yield reported in some estates upto 1800
kg per ha.
Other crops
The main crops being cultivated are pineapple,
banana, cassava, sweet potato, taro, yam, sugar
cane, ibica etc. The farming is done
predominantly for subsistence purposes as
market accessibility is limited.

Processing and marketing
The TSR processing factory, established under
the Project at Moreguina to process rubber from
all the four sub-divisions, was closed in 2001.
Since then Galley Reach factory at Doa has
been processing the cup lump from URSSD
under a Memorandum of Understanding signed
with the DAL. Cup lumps are collected and
packed as 90 kg lots in plastic bags. The factory
truck collects the cup lump bags once a week
and the proceeds are credited to settlers’
accounts in BSP Bank in Port Moresby.
However there were times when the truck could
not reach the sub-division because of poor road
conditions. In 2004, the average farm-gate price
received by the growers averaged around 60
toea per kg of cup lump. During the 1995-2004
period the farm-gate price ranged from 48 to 63
toea per kg of cup lump.
Concluding remarks
The CRADP covered institutional arrangements
for processing and marketing of rubber and had
taken into consideration the food requirements of
the settlers and provided basic social necessities.
The URSSD is a well-conceived model but there
were implementation and follow-up issues. The
model could be replicated with appropriate
modifications in other places.
PNG has tremendous potential to expand
rubber cultivation in terms of availability of
suitable land, congenial agro-climatic conditions
and labour. Rubber cultivation could be used as
a means to resettle villagers. Moreover, rubber
plantations can also earn substantial revenue for
the country. Schemes are being drawn up under
the National Agricultural Development Plan
(NADP) for the promotion of rubber cultivation in
the country.

30 ANRPC Newsletter z Volume 21 No. 2

COUNTRY PROFILE IN BRIEF: INDONESIA

General

Land Area : 1,860,359.67 km2 (2005)

Climate : Tropical

Temperature : 25.300C – 31.470C (2004)

Annual rainfall : 497.20 mm – 996.60 mm (2003)

Population (million) : 219.21 (2005)

Population growth rate (%) : 1.34 / year (2005)

Economic and Trade Statistics 2003 2004 2005

Total workforce (million) 100.32 103.97 105.80

Unemployment rate (%) 9.50 9.86 10.26

Employment by sector (%):

a) Agriculture, Forestry and Fishing 46.26 43.32 44.04

b) Manufacturing 12.04 11.81 12.27

c) Services 10.74 11.22 11.14

d) Others 30.96 33.75 32.55

GDP (current prices, billion US$) 209.51 246.02 277.13

Real GDP Growth (%) 4.10 5.13 5.60

Contribution to GDP by sector (%):

a) Agriculture, Forestry and Fishing 16.58 15.38 13.40

b) Manufacturing 24.65 28.34 28.06

c) Services 10.39 10.18 10.10

d) Others 48.38 46.10 48.44

Nominal GDP per capita (US$) 930.37 1,097.80 1,224.51

Consumer price Index (%) 5.06 6.40 17.11

Current account balance (billion US$) 8.11 1.56 0.34

Source: Central Bureau of Statistics, Indonesia, 2005

31 ANRPC Newsletter z Volume 21 No. 2

 EXCHANGE RATE: 29TH DECEMBER 2006
US$1 = 44.13 Indian Rupee
8,964.24 Rupiah
3.530 Ringgit
3.080 Kina
1.534 Singapore Dollar
107.41 Sri Lankan Rupee
36.15 Baht
14,051.13 Dong

Source: www.exchangerate.com, December 2006

32 ANRPC Newsletter z Volume 21 No. 2