Despite some market doubts about whether the pact will have the teeth to achieve its objectives, ministers from the two countries said after signing the agreement that it was a first positive step for producers to jointly support prices.

The pact was signed by Malaysian primary industries minister Lim Keng Yaik and Thai deputy agriculture minister Arkom Engchuan after its details had been finalised by their officials at a meeting in this resort town from September 14.

Officials also said Thailand and Malaysia hoped to persuade Indonesia, another leading rubber producer, to join their efforts to boost prices via various joint market actions.

``It is agreed between Thailand and Malaysia that only two of us might not be enough. It is better to get Indonesia to join the pact,'' Arkom said.

The three Southeast Asian countries produce 80per cent of the world's rubber.

The move comes ahead of Malaysia's effective departure from the producer-consumer International Natural Rubber Organisation (INRO) in mid-October.

Thailand and Malaysia have both said they were leaving the producer-consumer grouping expressing disappointment over its inability to prop up weak prices. Their move has sparked fears that the 19-year-old INRO might collapse.

The two countries had vowed to take their own action to boost prices in the absence of INRO help.

Arkom said Malaysia's Lim had agreed to try to convince Indonesia to join the two countries for discussions on joint rubber act in the future.

The first of such meetings was expected to take place in a few months in Singapore, officials said.

Under the pact, Thailand and Malaysia will jointly execute supply rationalisation schemes, stock witholdings and disposals, handle downstream business expansion and price supports.

The two nations hope to achieve a price level of at least 80 US cents a kg fortheir rubber, below which they would refuse to sell on the world market.

They set up a committee and two sub-committees to work on joint rubber trading action, pricing and technical cooperation.

The initial plan of action would cover the period 2000-2003.

They also pledged to keep confidential information regarding their rubber stocks from the public and to dispose stockpile rubber in an orderly manner to avoid market disruption.

Market and industry sources in Thailand said the pact must produce some positive results fast if it was to gain credibility. The joint action would carry more weight if Indonesia decided to join, they said.

``This is just a start. It is difficult to say which direction the pact is heading. The pact in itself might not be able to prop up prices fast, although that would be expected of it,'' said a regional trader.

``But if the group gets Indonesia to join, which I doubt it could, then this could be expanded into a real producers' pact because the three countries accountfor more than 80 per cent of the world supply,'' he said. Indonesia has declined in the past to join Thailand and Malaysia in taking unilateral action.

Lim said he was confident Indonesia, the only major producing country that still supports INRO, would respond positively.

``I am sure the Indonesian government wants to help their small holders. I will not persuade them to leave INRO, but if asked, I will tell them why Malaysia left it,'' he said.

``This agreement will provide momentum and spirit for producing countries to work together to establish a better price system,'' he added.