There was a time when Malaysia's decision to bolt the International Natural Rubber Organization would have thrown the NR industry into shock and dismay. Not anymore. ``Ho, hum,'' is the general reaction from rubber producing and, in particular, consuming nations to Malaysia's resignation from the international commodity group, effective Oct. 15, 1999.
When the first International Natural Rubber Agreement was ratified in 1979, Malaysia was the big mover and shaker behind it. It also was the world's largest NR producer. Today, Malaysia has left the organization in anger over its alleged inability to buy rubber and raise prices in the worst bear market for NR in years. Let's count the ironies of this:
INRO's ineffectiveness over the last 11/2 years was because Malaysia and other NR producers insisted from the outset on buffer stock price ranges being denominated in Asian currencies, not the U.S. dollar as consumer nations wanted. When Asian currency values went south, so did INRO's ability to intervene in the market.
Even with the Malaysian ringgit's free fall getting in the way, the INRO buffer stock manager was still able to buy rubber earlier this year—at least 40,000 metric tons, according to sources—and raise prices a little.
Malaysia has dropped to third among world NR producers, and the current chaos in its government and economy further dampens its influence among INRO member nations.
Malaysia's exit date is almost a full year away—and who knows what will happen between now and then?
Only if Thailand makes good on its threat to follow Malaysia out the door is INRO as good as dead. But even then, what happens? Maybe Malaysia and Thailand will succeed in their plan to develop a new NR cartel, under the auspices of the Association of Natural Rubber Producing Countries. That could prove very successful. Like OPEC.