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Replanting, downstream plants key to rubber industry
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A man collects raw rubber on the banks of the Subayang River in Riau in this file photo. Rubber is currently selling for Rp 6,500 (44 US cents) per kilogram down from a high of Rp 20,000 per kg. (The Jakarta Post/Tarko Sudiarno)
T
he liberalization of foreign investment in the crumb rubber industry is an example of misguided policy-making, which instead of achieving the objective of attracting investment could adversely affect the whole industry.
As natural rubber is Indonesia’s seventh-largest export commodity with an annual income of about US$5.5 billion, it was included in the latest economic reform package last November that focused on wooing more foreign direct investment.
But the Indonesian Rubber Producers Association (Gapkindo) has strongly opposed the new policy, arguing that the crumb rubber industry has been suffering from acute raw material shortages and most plants have been operating mostly at 60 percent of their installed capacity as a result of a lack of raw materials.
“The crumb rubber industry has a capacity of 5.6 million tons while the upstream sector [plantations] is able to supply only about 3.6 million tons of raw rubber,” noted Widyantoko Sumarlin, a senior executive of Gapkindo and chief sustainability officer of Kirana Megatara, one of the country’s largest crumb rubber producers.
