Editorial

Editorial: To the bottom
of the value chain

The Association of Indonesian Forest Concessionaires (APHI) has demanded that the government lift its ban on timber (log) exports, arguing that the trade barrier has pushed down timber prices so low that fewer than 40 percent of the country’s total natural forest concessionaires remain active.

The association’s executive chairman, Purwadi, expressed concern that if the ban was not lifted then only about 5 percent of the forest concessionaires would still be around by 2017, which would hurt the development of Indonesia’s downstream wood-based industries.

However, insensible APHI’s policy recommendation seems to be given the stronger national campaign to move our national resources higher up on the value-added chain, the association’s demand did not simply come out of the blue.

The Forestry Ministry itself revealed early this year it was mulling over a plan to restart the export of timber, ending a 12-year ban, arguing that prices have fallen drastically to as low as US$30 per cubic meter, compared to $80 in other ASEAN countries, due to weak domestic demand.

The ministry claimed that the low prices had discouraged the development of industrial forests. Hence, the export market should be reopened to boost demand and thus increase prices.

We see this argument as illogical and pathetic, contrary to the policy measures the government has been promoting in the natural resource sector. For example, the government has extended a two-year moratorium on forest clearing that expired last May. The moratorium was issued in May 2011 after Indonesia and Norway signed a $1 billion deal to help Indonesia reduce greenhouse gas emissions and deforestation.

To again export timber would completely contradict the government’s strategy to extract higher value from the country’s natural resources. Last year, the government passed a rule that prohibits the export of unprocessed minerals (besides oil and gas) starting in 2014, thereby requiring mining firms to build smelters in the country.

Also, export taxes with progressive rates have been imposed on palm oil. The lower the commodity on the value chain the higher the export taxes, a scheme designed to encourage more domestic palm oil downstream industries.

Moreover, the argument put forth by APHI confuses natural forest concessions with industrial forests or timber estates. Natural forests only produce logs with wide diameters to be processed in the furniture industry, while timber estates are developed to feed pulp and paper manufacturers. That is why industrial forests only plant fast-growing species that can be harvested after three to four years to feed pulp mills.

Reopening log exports would encourage reckless and even illegal logging, especially in Kalimantan.

We therefore urge environmentalists and all civil society organizations to join hands in opposing this ridiculous, insensible idea because even while the timber export ban remains effective, its enforcement has been notoriously weak, especially in the border areas between West Kalimantan and Sarawak.

Paper Edition | Page: 6

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