Indonesia is looking to strengthen cooperation with Thailand, another leading global rubber producer, as both nations grapple with declining rubber prices and the challenges posed by the European Union’s deforestation regulation (EUDR). Rubber trade was a key agenda item during a recent meeting between Indonesia’s Minister of Trade, Zulkifli Hasan, and Thailand’s Speaker of the House, Wan Muhamad Noor Matha.
Joint Efforts to Stabilize Rubber Prices
According to Minister Zulkifli Hasan, Thailand and Indonesia are the two largest rubber-producing countries in the world, yet both are struggling with prolonged price volatility and regulatory pressures.
“Both countries have been facing similar challenges as global natural rubber prices have continued to fluctuate over the past decade,” Zulkifli noted.
He also pointed out that the rubber leaf fall disease has “struck a heavy blow” to production, worsening conditions for smallholder farmers. Falling prices, he warned, could push farmers to abandon rubber cultivation in favor of other crops, potentially leading to a tight supply of natural rubber in the future.
Cooperation Within the International Tripartite Rubber Council (ITRC)
Zulkifli emphasized the importance of collaboration between the three members of the International Tripartite Rubber Council (ITRC)—Thailand, Indonesia, and Malaysia—which collectively account for 58% of global rubber output. The ITRC aims to maintain fair and profitable prices for smallholders through policy coordination and market management mechanisms such as:
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Agreed Export Tonnage Scheme (AETS): controls exports to balance supply.
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Supply Management Scheme (SMS): helps stabilize production levels.
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Demand Promotion Scheme (DPS): encourages domestic rubber consumption.
He further suggested that the ITRC should also cooperate with other major exporters, including Vietnam and the Philippines, to strengthen collective market influence and stabilize prices.
Indonesia’s Rubber Export Performance and EUDR Challenges
In 2022, Indonesia was the world’s second-largest natural rubber producer after Thailand, accounting for 21.57% of global supply. The country exported USD 3.66 billion worth of natural rubber, down 11.35% from USD 4.12 billion in 2021. Over the 2018–2022 period, Indonesia’s rubber exports declined at an average annual rate of 1.4%.
Rubber, along with palm oil, falls under the scope of the EU Deforestation Regulation (EUDR), which requires exporters to prove that their products are not sourced from deforested land in order to access the EU market. While Indonesia has been negotiating with the EU to ease these requirements—mainly focusing on palm oil—the regulation’s implications for rubber exports are increasingly evident.
Recently, Indonesia, Malaysia, and the EU agreed to establish a joint task force aimed at identifying practical solutions for EUDR implementation, ensuring that sustainable trade can continue without excessive burden on producers.