Evening star., 1952-07-07
MoIoyo and the Price of Rubber

The Federation Of Malaya-a key country in
the struggle to hold Southeast Asia against the
menace of Red aggression-has good reason to be
worried over the continuing downward trend IN
the price of natural rubber. For the trend,
unless checked, can lead to economic and politi-
cal consequences that would certainly be OF great
help to the Communists.
During the past year natural rubber CMalaya
produces about 40 per cent of the worlds total
supply has declined in price from 66 cents a
pound to less than SO cents in the American
market The decline, of course, has been whole
some to the extent that it has ended situation
in which the United States, as the chief buyer.
has had to pay for the commodity. at exorbitant
rates inflated beyond reason. However, the
defiationary process, although 1t has not yet
reached level of real danger, has already begun
to pinch hard at the Malayan economy.
The situation involves an additional element
of uncertainty because our Government has just
withdrawn entirely from its role as exclusive
importer and seller of natural rubber, IN the
United States With the business thus returned
to channels Of private trade, there may well
be further price declines, and II they 60 much
below the level of 80 cents or SO, the effect-in
the opinion of British and other experts lis likely
to be extremely serious for Malaga, politically as
well as economically, and that in turn would
be boon to the Communists.
Thus according to General Sir Gerald Tenn
pier, who is Britains High Commissioner for the
Malayan Federation, whenever there Is cent
decline in the price Of natural rubber, 1t means
an annual loss of about $12 million in the federa-
tion,s gross national income and 81 million in
export duty. In the circumstances, considering
that Malaga is committed to heavy expenditures
on it's bitter r-year-old jungle war against
the Communist terrorists, Sir Gerald does not
seem to have exaggerated in declaring that
,"This is very serious situation indeed It
affects not only the revenue OF the country but
also the livelihood Of many tens of thousands
of workers
AS matter of fact, some 800 600 OF those
workers now face wage cut in keeping with
sliding-sc contract under which their strong
anti-Communist union is committed to the
principle of such cut If the average price Of
rubber falls below 80 cents The workers, how
ever have refused to accept the move because
living costs have not decreased in any respect
Accordingly, there Is considerable fear that the
resulting deadlock with management, plus the
hands Of the Reds
In face of this situation, the British High
Commissioner has emphasized that the imme-
diate problem is to hold the line not only against
the Communist terrorists but also against further
price declines. In his Judgment, If matters can
be stabilized In that way for the next two or
three years. then the Red threat will be effectively
countered and Malaya's chief industry-given
special effort to modernize twill be able to
compete satisfactorily with synthetic rubber,
which the United States is producing on large
scale and selling at % cents pound.
As far as the long-range competitive factor
is concerned, Sir Geralds viewpoint may be a
bit on the optimistic side. But many American
experts-including congressional students of the
subject-believe that the price of the synthetic
product win go up when our Government-run
plants which do not have to reckon with such
things as taxes and merchandising costs, are
transferred to private enterprise If this is so.
then natural rubber should be able to hold its
own in the future. Meanwhile, though, the
anxiety In Malaga iS altogether understandable.