At a two-day rubber conference, he said production problems were due to the fact that most rubber plantations were owned or managed by tappers who lacked not only capital but also the technology needed to boost production and improve quality.

Vice President Jusuf Kalla was scheduled on Thursday to address the annual gathering bringing together experts, policy-makers and rubber-industry stakeholders from 16 member countries, including India, Thailand, China and Malaysia.

Indonesian's foreign-exchange earnings from rubber exports increased by 60 per cent to US$4 billion (Bt139 billion) in 2006 from $2.58 billion in 2005.

This year rubber output may rise 4.9 per cent to 2.77 million tonnes as the area under rubber has increased to 3.3 million hectares from 3.29 million, Mukti Sardjono, director for perennial crops, told the conference.

Indonesia expects production to rise 8 per cent by next year as plantations are expanded and yields improve, an official from the Agriculture Ministry said.

About 85 per cent of the 3.3 million hectares under rubber are operated by smallholder tappers, and have very low productivity. Private-sector firms and state-owned enterprises operate the remaining plantations, mainly in Kalimantan and Sumatra.

The productivity of smallholder plantations varies between 600 kilograms and 800kg per hectare per year, as compared to 1,300kg from rubber estates. Thailand and India produce between 1,800kg and 1,900kg per hectare a year.

According to Suryana, the low productivity of smallholder plantations in Indonesia is caused by a number of factors. First, the trees in smallholder plantations arer grown from low-yielding seed. Second, a large proportion of the smallholder plantations consist of old and unproductive trees.

Indonesia has the potential to profit greatly from the rubber sector. Currently the price of standard Indonesian rubber stands at $2 per kilogram while processed rubber timber, such as that used for parquet flooring, is worth more than $500 per cubic metre.