Road Infrastructure Projects Become Saviors

JAKARTA The decline in the value of crumb rubber exports over the past year was triggered by the trend of low rubber prices. For this reason, domestic absorption through the use of a mixture of road asphalt materials is expected to boost prices and demand.

Based on data released by the Central Statistics Agency (BPS), crumb rubber exports fell 22.62% on an annual basis from US $ 4.96 billion to US $ 3.84 billion. This commodity is the product that dominates the export of rubber industry, rubber and plastic goods with a total export value of US $ 7.58 billion.

Edy Sutopo, Director of the Forest and Plantation Products Industry at the Ministry of Industry, said the decline in export value was driven by price factors which last year remained at the level of US $ 1.3 per kilogram, while in early 2017 to April-May 2017 world rubber prices approached US $ 2 per kilogram.

“The price of rubber which is quite high during the beginning of 2017 to April was triggered by flooding in several regions in Thailand, even though in May / June 2017 and then prices dropped again,” he told Bisnis on Sunday (1/27).

SPECULATION

Edy explained that the decline in prices was actually not purely caused by supply and demand factors, but was allegedly caused more by speculation factors. Because, in 2018 there was no surge in supply, even the average world rubber stock throughout 2018 was still normal for needs of up to 2.2 months.

The low price condition is considered burdensome to the upstream and intermediate industries, while the downstream industry is the largest rubber user, namely the tire industry can enjoy greater margins. “There needs to be diplomacy, especially with the tire industry regarding fairer distribution of margins,” Edy said.

The government itself is currently working on the absorption of domestic rubber products in the hope that rubber prices can be lifted. One of the efforts made is to encourage the use of rubber as a mixture of asphalt materials.

Achmad Sigit Dwiwahjono, Acting. The Director General of Agro Industry at the Ministry of Industry, said the government had begun to use rubber as an asphalt mixture on national roads and would be extended to regions for district / city roads.

“We will encourage the regional government to use rubber asphalt because it turns out that district roads are 4 times the length of national roads,” he said.

Sigit mentioned that the length of district roads is around 380,000 kilometers throughout Indonesia, there is a potential of absorption of hundreds of thousands of rubber tons. He stressed from the industry side, his side would also encourage the readiness of the industry to support the expansion of the use of rubber for asphalt mixes. “There are those who are ready for the industry, some still need special treatment,” Sigit said.

Meanwhile, in the use of rubber as an asphalt mixture, there are three techniques, namely latex-based rubber asphalt technology, rubber powder-based asphalt rubber (SKAT), and solid masterbatch / compound rubber asphalt. This year, it is expected that the use of rubber for the asphalt mixture in the area can begin.

Previously, Chairman of the Indonesian Rubber Companies Association (Gapkindo) Moenardji Soedargo welcomed the government’s plan to increase the absorption of rubber as an asphalt mixture because of the potential to re-hoist rubber prices.

The use of rubber as a mixture of asphalt is considered to be able to thrill the international market and announce to the world that there is a new use of rubber that has never been calculated for infrastructure development.

“If the use is getting bigger, the world’s rubber supply will be absorbed in part in this sector so that prices will be better,” he explained.

At present, other rubber producing countries, such as Thailand, have said that they have applied rubber for asphalt mixtures and are followed by Malaysia.

Source: Ministry of Industry Republic of Indonesia