Chakarn Sangraksawong told Reuters the proposal would be discussed at a May 24-26 meeting between Thai Agriculture Minister Newin Chidchob and Malaysian primary industries minister Lim Keng Yaik in Kuala Lumpur. "Thailand will propose to Malaysia the setting up of our own buffer stock which will account for around 10 per cent of the two countries' total production -- or around 300,000 tonnes of rubber," Chakarn said.

Thailand and Malaysia are the world's number-one and number-three exporters respectively. They have said they plan to boost bilateral cooperation after deciding to withdraw from the International Natural Rubber Organisation considering it had failed to effectively support prices.

Malaysia will leave INRO in October and Thailand will leave in March 2000.

"Thailand also expects tocooperate with Malaysia to cut the two countries' total exports to 2.1 to 2.2 million tonnes per year, or around 50 per cent of the world's yearly trading, from 2.4 to 2.5 million tonnes now," Chakarn said.

In 1998, Thailand exported 1.84 million tonnes of rubber, up from 1.76 million tonnes in 1997.Under the plan, it would cut its exports to around 1.6 million tonnes.

Chakarn said the proposal would be a good way to reduce supply in the world market while demand was still weak. "Even though there are some costs involved in doing this I believe it's worth doing," he said. He said that with world demand weak, Thailand needed to find ways to stimulate rubber usage in the local market.

Thailand produces around 2.1 to 2.2 million tonnes of natural rubber per year but less than 20 per cent of the total is consumed in the country. Chakarn said that in the medium-term, Thailand hoped to cooperate with both Malaysia and Singapore to give Southeast Asian producers a bigger role in controlling prices.

"We hopeto establish a single reference price for rubber sales in the three markets," he said. He said the results of the meeting in Malaysia would need Thai cabinet approval before the signing of a memorandum of understanding with Kuala Lumpur.