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Indonesia's plan to lift log export ban opposed

Publication Date : 16-04-2014

 

A group of wood-based producers strongly opposed the Indonesian government’s plan to resume exportation of logs, fearing the move would cause a shortage of domestic supply.

The Indonesian Rattan Furniture and Craft Association (AMKRI) secretary-general Abdul Sobur said Tuesday that such a shortage would prevent the local wood processing industry from tapping into surging demand here and overseas.

The demand for wood products, such as furniture, would rise significantly nationwide along with stronger purchasing power of the country’s population, Sobur said.

He said the business group had targeted exports of all wood products, including rattan-based ones, to top US$5 billion in the next four years.

Data from independent surveyor Sucofindo shows that in January-March this year, exports of rattan products surged by 30 per cent year-on-year to $48 million.

To meet overall local and overseas demand of wood products, the wood processing industry will need up to 45 million cubic metres of wood for the next four years, according to the association’s estimate.

“The furniture and craft industry is now in recovery after a prolonged slowdown caused by a shortage of rattan supply in the past,” Sobur said.

“It would a be significant blow to the domestic industry if log exports are re-opened,” he added, pointing out that the move would contradict the government’s much-touted goal to develop the downstream industry.

AMKRI chairman Soenoto said logs contributed up to 40 per cent of the total production cost, and a shortage of logs would potentially push up the cost by 8 per cent.

At the end of 2011, the Trade Ministry started to ban raw rattan exports to feed the local industry, as a result exports of rattan products have since risen markedly.

Also, Indonesia, once the world’s biggest log exporter back in the 1970s, totally banned log shipments at the end of 2001, following massive outflows of logs between

1998 and 2001, when the government cut export taxes on logs dramatically from 200 per cent to 10 per cent.

The relaxation of log exports, which was part of a deal with the International Monetary Fund (IMF) to reform its ailing economy for a sizeable bailout, eventually resulted in excessive illegal logging due to weak control.

Now under a Forestry Ministry proposal, logs sourced from production forests — either community plantation forests (HTR) or industrial forest concessions (HTI) — will be allowed for outbound shipment by firms certified under the timber legality verification system (SVLK).

The proposal has met a stumbling block from the industry and trade ministries over domestic interest issues, but discussions on the issue remain underway.

Industry Minister MS Hidayat said related ministries were still discussing the proposal following concerns among regional administrations that unemployment had risen following the enforcement of the total ban on logs.

 

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