Temporary ban on natural rubber imports implemented

• Synthetic rubber imports not banned
  
• Government announces stimulus package for industry

In an attempt to stabilise the prices of domestic rubber, the government last week implemented the cabinet proposal to ban all natural rubber imports from entering the country.

“This is a temporary measure undertaken by the government to stabilise the domestic natural rubber prices,” Rubber Development Department Director General Wimal Rubasinghe told The Bottom Line. “The Government of Sri Lanka wants to protect the domestic rubber cultivators and ensure that the prices they get are profitable.”

The current market price for rubber, as determined at the Colombo rubber Auction, stood at nearly Rs. 150 per kg which covers the cost of production of Rs. 125 but Rubasinghe says these prices must be established on longer term. “We want to ensure that these prices remain for a few months at least so the rubber cultivators can survive and not because it is an artificially inflated amount.”

Refuting claims that synthetic rubber is also to be banned, Rubasinghe specified that the imports of synthetic rubber will continue, because they are a necessary component added to the natural rubber when manufacturing certain products such as tyres or gloves. “It is not necessary to ban synthetic rubber,” he informed and added that the cultivators and suppliers of natural rubber are pleased at the news of the natural rubber imports being banned.

Rubber in Sri Lanka saw high prices in 2008 with a peak of Rs. 375/kg in the months of June/July, till the global recession and slump in the market brought prices down to as less as Rs. 100/kg in November. The country produced over 120,000 Metric Tonnes of rubber in 2008, which Rubasinghe assures is more than sufficient to cater to the local demand of natural rubber.

Stimulus package
Meanwhile, Managing Director, DSI Samson Group, D.K. Rajapakse told The Bottom Line that it is important to let the synthetic rubber imports continue. “Prices of natural rubber are not influenced by synthetic rubber. Synthetic rubber is more expensive in the market place, but is needed to manufacture certain rubber based products.”

Rajapakse explained that in 2008 only 3,000 tonnes of synthetic rubber was imported into the country on a purely requirement basis. “Synthetic rubber is not used to substitute natural rubber. Instead it’s required for certain properties like oil resistance, which cannot be achieved by natural rubber alone.”

However, Rajapakse was enthusiastic about the government’s plan to provide a ‘Stimulus Package’ to the industry where the price offered to the rubber cultivator would be assured at Rs. 150. The date of implementation of this package has not been announced.

Officials at the Export Development Board told The Bottom Line that the measures taken by the government are with the objective of promoting and safe guarding the interests of natural rubber cultivators. However, the rubber produce exporters will not be affected by the ban as the surplus of rubber available in the domestic market is sufficient to maintain the industry requirements of 80,000 MT annually.