Rubber Sector of Indonesia – Analysis of Rubber Plantations, Production and Trade
Indonesia ranks among the world’s biggest natural rubber producing countries. For many years now, Indonesia –Southeast Asia’s largest economy– is positioned second in terms of biggest natural rubber producers. At the same time, and obviously highly related to its position as a top producer, Indonesia also ranks as the world’s second-biggest exporter of natural rubber.
However, as is the case with a number of other agricultural commodities, Indonesia is facing some serious challenges that have been undermining its rubber production and export. This implies missed opportunities for the country’s social and economic development. In this article we take a detailed look into Indonesia’s rubber sector, analyzing its plantations, production, and trade.
What is Rubber? Who Are the Global Production Leaders?
Rubber is a widely used material due to its three key characteristics. First, it is elastic which means rubber can be stretched (without breaking) and return to its original form once the stretching force is removed. Second, rubber is resilient, meaning it can withstand heavy loads and return to its original shape. Third, it is waterproof.
Combined, these three characteristics make rubber a very popular material in a wide range of industries, such as for the manufacturing of tires, mechanical parts, clothing (wetsuit), flooring, gloves, and many other products.
It is important to note that there are two types of rubber: (1) natural rubber and (2) synthetic rubber. Natural rubber comes from the juice (latex) of rubber trees (Hevea Brasiliensis), whereas the synthetic type is made from petroleum or natural gas.
Both types are interchangeable and, as such, in fact influence each other's demand on the world market. For example, when the price of petroleum rises, then demand for natural rubber will grow. However, when supply disruptions of natural rubber cause its price to increase, then the market tends to turn to synthetic rubber (as long as crude oil prices are safe). In this article we particularly zoom in on natural rubber.
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