HANOI (Dec. 19, 2011)—Six member nations of the Association of Southeast Asian Nations plan to crack down on natural rubber buyers who default on forward contracts.
The six nations—Thailand, Indonesia, Malaysia, Singapore, Vietnam and Cambodia—comprise the ASEAN Rubber Business Council. Together, according to an ARBC press release, those countries account for about 80 percent of the world's NR production.
NR prices have fallen some 30 percent since mid-September 2011, the press release said, and this has caused fears among NR growers that at least some buyers will default on contracts in hopes of getting a lower price.
Concerns about defaults have accelerated the price decreases begun by the European debt crisis, the ARBC said. ARBC representatives met in Hanoi Dec. 3 to devise measures to prevent contract defaults, the ARBC said. Among the measures are:
—Compiling and circulating a list of defaulters, with an advisory for ARBC members to stop dealing with defaulters.
—Encouraging members to seek arbitration with defaulting buyers, but also providing lists of lawyers who will take the cases of aggrieved members if arbitration fails.
—Advising members not to acquiesce to buyer demands for price discounts, particularly in light of current low prices. “Allowing for price discounts could encourage more buyers to demand the same to the detriment of contract sanctity,” the ARBC said.
—Assisting members in informing their national associations and government agencies about defaulters, to ensure that defaulters are required to perform their contractual obligations.