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Forestry industry expects to see boost this year after exports fall to $11.6b in 2019
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Workers attach wood panels to the body of a ship under construction in Sarang district, Rembang regency, Central Java, in 2017.
(The Jakarta Post/Suherdjoko)
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xports of Indonesian wood products totaled US$11.6 billion in 2019, a 4 percent drop from the previous year due to declining demand caused by the ongoing United States-China trade war and the weak competitiveness of local products. Industry players, however, are upbeat entering 2020 thanks to policy reforms.
Wood veneer, panel and woodwork products suffered the steepest declines, with annual exports falling 20 percent, 16.14 percent and 11.14 percent, respectively, said Association of Indonesian Forest Concessionaires (APHI) chairman Indroyono Soesilo.
Wood panel exports to China are close to zero as Indonesian products have become less competitive than foreign counterparts, while shipments of woodwork products to the US and China were dealt a blow from the ongoing trade war between the world’s two largest economies, an industry player said.
“APHI has become a member of the Food and Agriculture Organization’s [FAO] advisory committee on sustainable forest-based industries. Member countries told us that we’re promoting our forestry products poorly,” he told a press briefing in Jakarta on Jan. 3. Poor marketing efforts meant investors were unaware of the industry’s potential, Indroyono added.
Indroyono, however, is upbeat the forestry industry can bounce back thanks to the government’s policy reform plans. President Joko “Jokowi” Widodo’s administration is preparing omnibus bills that are expected to improve the ease of doing business and investing.
The President, himself a former furniture businessman, is also looking to boost the timber and furniture industries, which are major contributors to Indonesia’s wood product exports. The government is mulling plans to provide value-added tax (VAT) exemptions for log exports and partially relax the timber legality assurance system (SVLK) to ensure the industry’s products are accepted in select countries.
Indonesian Wood Panel Association (Apkindo) secretary-general Irwan Aten said wood panel production had been on the decline for years. He said outdated machinery, difficulties securing funds and the disruption of new products to the market had contributed to the decline in production.
