Indonesia's Rubber Producers Unhappy with Foreign Investment
Indonesian rubber producers do not welcome the government's decision to open the nation's crumb rubber sector to foreign ownership for the full 100 percent. This decision is part of the government's tenth economic stimulus package, announced last week. Stakeholders in Indonesia's rubber sector argue that current installed production capacity of existing rubber processing plants in Indonesia already exceeds domestic demand. Crumb rubber is recycled rubber produced from automotive as well as truck scrap tires.
Moenardji Soedargo, Chairman at the Indonesian Rubber Producers Association (Gapkindo), said there currently exist 140 rubber plants with a total combined installed production capacity of 5.2 million tons. However, rubber output in full-year 2015 was only 3.12 million tons, implying a gap (between production and demand) of more than two million tons.
Soedargo added that the natural rubber that Indonesian farmers supply to the 140 plants are the most filthy supplies in Southeast Asia (other key rubber producing countries are Thailand and Malaysia). Therefore, it requires more time at the plants to clean the rubber. As such, Indonesia's upstream rubber industry is the most inefficient and uncompetitive upstream rubber sector compared to its counterparts. As such, Soedargo suggests the government to focus on improving the domestic upstream rubber sector rather than the downstream sector.