EU rule may jeopardise Indonesian rubber industry

Indonesian rubber producers fear that the European Union’s Deforestation Regulation (EUDR) will pile more pressure on an already ailing industry by hindering exports to EU countries and beyond.

South-East Asia’s largest economy exported 2.08 million tonnes of rubber worth US$3.66bil in 2022, Statistics Indonesia (BPS) data show, with exports to EU countries recorded at 300,000 tonnes, or around 14% of the total.

Erwin Tunas, the executive director of the Indonesian Rubber Association, estimated the rule would take a toll of roughly US$527mil on export values should the domestic rubber supply chain, including smallholder farmers and rubber product manufacturers, prove unable to meet the EUDR requirements.

“Around 300,000 tonnes [of rubber] are exported to the EU, to almost 27 countries. This will be hindered if we [producers] are unable to provide geolocation coordinates as required,” Erwin told The Jakarta Post.

Erwin is concerned that other countries exporting finished rubber products like tires to EU member states will also approach Indonesian producers to request geolocation documentation.

The geolocation requirement is equivalent to Indonesia’s plantation cultivation permit (STDB), which must be obtained through registration with the Agriculture Ministry’s Plantations Directorate General.

Plantations director-general Andi Nur Alam Syah said the ministry would push regional governments to expedite data collection, mapping, verification and issuance of STDB for rubber farmers by the end of the year, when the EUDR comes into force.

“The government is collecting geolocation data of smallholder rubber plantations by establishing traceability methods, so that Indonesian natural rubber and its derivative products can still be exported to the EU,” he said in a statement issued on Wednesday.

Eliza Mardian, a researcher at the Centre of Reform on Economics (CORE) Indonesia, said that, so far, Indonesia’s largest trading partners, including the United States, China and Japan, had yet to discuss the impact of the EUDR.

However, she did not rule out the possibility that these countries would require Indonesia to meet the anti-deforestation requirements if they wanted to export their rubber derivatives to the EU market.

“If China requires Indonesian producers to fulfil the anti-deforestation [requirements] or certification, the government must provide assistance and incentives for rubber farmers to get their [certificates],” Eliza told the Post on Wednesday.

Meanwhile, Aziz Pane, chairman of the Indonesian Rubber Council, told CNBC Indonesia on Jan 18 that Turkiye had diverted rubber purchases from Indonesia to Ivory Coast in anticipation of the EU rule.

“So, [if] the government does not take any serious steps [and] just lets it happen, this is dangerous,” Aziz said. — The Jakarta Post/ANN

Read More: EU rule may jeopardise Indonesian rubber industry | The Star