Increase Tire Industry’s Rubber Absorption

KOMPAS/P RADITYA MAHENDRA YASA

A worker installs an infusion tool in a rubber tree trunk to stimulate sap production in Singorojo district, Kendal regency, Central Java, on Friday (9/9/2018). Data from Statistics Indonesia (BPS) shows that 775,339 tons of rubber and rubber products were exported from January to March in 2011. This was a 17.2% increase from the 661,559 tons exported in the corresponding period in 2010.

JAKARTA, KOMPAS — Indonesia, Thailand and Malaysia have agreed to increase the absorption of rubber in their domestic markets. In this case, Indonesia can optimize the tire industry capacity.

The Indonesian tire industry is expected to highly increase rubber absorption. Nevertheless, production capacity of the tire industry still needs to be optimized.

The domestic tire industry absorbs 460,000-550,000 tons of rubber. If production capacity is optimized, the absorption of rubber production is expected to increase.

"The production capacity of our tire industry could reach 88 million pieces, but production is 46 million to 51 million pieces," Azis Pane, the general chairman of the Indonesian Tire Company Association, said on Tuesday (26/2/2019).

Azis added that 15-17 percent of domestic tire production is used in the domestic market. About 12-13 percent is used to meet the original vehicle standards, and the rest is exported.

The ability of the tire industry to increase rubber absorption also depends on government policies. The control of imported tires is considered to have a good impact on the tire industry in Indonesia.

"Just allow radial or expensive tires because they have their own market. However, it is not a case where tires should be banned from being imported but can still enter simply because of the manipulation of their size or layer," Azis said.

According to Azis, so far, most tire imports for motorbikes come from Vietnam, Thailand and China. The imported tires for cars are mostly from China and India.

"Indonesia is the world\'s second-largest natural rubber producer. In addition to supervising imported rubber goods, including tires, we must also develop domestic industries. The industry that has not been fully developed is tire vulcanization," said Azis.

Limited

The Trade Ministry has strengthened restrictions on tire imports by issuing Trade Ministerial Regulation No.5/2019 on the import of tires. After import limitations and restrictions are returned to the customs area, imports can only be processed through a bonded logistics center.

Contacted from Jakarta on Tuesday, Foreign Trade Director General Oke Nurwan said the regulation, which will be enforced on March 1, 2019, aims to make the domestic tire industry the priority for businesspeople.

"For businesspeople holding API-U (identification numbers of general importers), namely tire traders, the checking of import approval by the surveyors must pass the bonded logistics center. For API-

Producer holders, namely those who use them for other businesses, the checking must be done through the bonded logistics center or in the countries of origin of the imported goods," said Oke.

Meanwhile, General Chairman of the Indonesian Rubber Companies Association (Gapkindo) Moenardji Soedargo expected the agreement between Thailand, Indonesia and Malaysia to reduce exports of natural rubber to increase rubber prices in the international market. He said that since there had been talks on the agreement to limit rubber exports, rubber prices had tended to increase from US$1.35 per kilogram (kg) to $1.40 per kg.

"Prices are sometimes corrected. However, an increase in prices is expected," he said.

Separately, the head of the Communication and Public Information Bureau of the Transportation Ministry, Hengki Angkasawan, said the role of rubber is very important in the transportation sector. Besides for motorized vehicle tires, 245 tons of rubber is needed for railroad bearings per year.

The Transportation Ministry will also maximize the use of rubber asphalt in port areas. (CAS/ FER/ARN/ E03)