REPUBLIKA.CO.ID, PALEMBANG -- Industry Minister, Saleh Husin said on Saturday that the government will use domestic rubber in its infrastructure projects to protect the country's farmers from selling prices having dipped in the export market.
"Several meetings have been held with a number of ministries regarding how we can absorb the domestic rubber stocks at home so that they (farmers) do not have to rely on exports completely," Saleh said after speaking at a seminar.
He said the price of rubber in the international market had dropped steeply, in turn impacting the price at the farmer level.
Saleh added that the government had appointed the Ministry of Public Works and the Ministry of Transportation to play a role in absorbing domestic rubber stocks.
"It is known that asphalt needs rubber as a mixture and so do cushions at ports. The government has appointed the two ministries to ensure the use of domestic rubber," he said.
He said the government would also urge the Michelin tire company to immediately implement its investment plan as a long-term measure.
"If it is realized, domestically-produced natural and synthetic rubber could be absorbed and help cut exports," he said.
The presence of the foreign investor in the downstream industry has been long awaited in South Sumatra, which is the biggest producer of natural rubber in Indonesia.
The Secretary of the provincial administration, Mukti Sulaiman, said rubber plantations in South Sumatra were spread over an area of more one thousand hectares, of which about 400 hectares belonged to the farmers.
"It is deplorable that until now no tire company has been set up in South Sumatra. In view of that, the provincial government has urged the central government to encourage investors by providing better infrastructure," he stated.
The price of natural rubber at the farmer level had dropped during the global economic crisis, which had hurt demand for the commodity.
In 2011, the price of rubber was pegged at around Rp25,000 per kilogram in line with Chinese economic growth, which was recorded at 9.2 percent.
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