Three Asean cities vying to house rubber exchange

IN 1876, hevea brasiliensis, or natural rubber, which was brought into Malaya by the British, had catapulted Malaysia to become world’s largest producer in the 1980s.

That honour now, however, belongs to Thailand, followed by Indonesia, Vietnam and Malaysia, which has since dropped to the sixth place.

Malaysia, however, remains as the world’s largest producer of rubber-based products like rubber gloves, tyre tubes and catheters, which are expected to contribute more than RM50 billion to the country’s gross national income by 2020, from RM30 billion currently.

Ironically, when companies want to buy rubber from the open market, buyers have to get price quotations at the Singapore Commodity Exchange, the Tokyo Commodity Exchange and to a lesser extent, the Malaysian Rubber Board.

No doubt, this is due to consumers like tyre producers who want to dictate prices of the commodity to their advantage as they can’t grow rubber in their home countries.

So, it was heartening when Plantation Industries and Commodities Minister Datuk Amar Douglas Uggah Embas announced a week ago that Thailand, Indonesia and Malaysia will set up a regional rubber exchange.

This exchange, which is expected to be up and running in 18 months from now, will help bolster the commodity’s trading activities and support prices.

The regional rubber exchange will provide a platform for better price discovery and effective hedging functions, bringing benefits to producers, consumers and market players.

It is only logical to finally set up the long awaited exchange, as the Asean region produces 67 per cent of the world’s natural rubber output, accounting for 80 per cent of global natural rubber net export and is home to more than four million smallholders across the region.

With the rubber exchange, the rubber producers will be able to exercise better control over the commodity and give Tokyo Commodity Exchange and the Singapore Exchange a run for their money.

The exchange will later be able to trade other rubber-related products such as rubberwood, which is used to make furniture.

However, the prickly issue right now is the location of the exchange, which is set to be called the Asean Rubber Exchange.

Already Bangkok is clamouring for it by virtue of its number one position, while Kuala Lumpur too wants it as it is the pioneer country with Jakarta also wanting it to be located there.