Plywood industry faces uncertainty<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The future of the country's plywood industry could be at risk if
\nthe government proceeds with plans to issue a forest
\nrehabilitation ruling, which industry players say would severely
\nreduce the supply of logs as raw material.<\/p>\n
The Association of Indonesian Wood Panel Producers (Apkindo)
\nsaid the ruling would cause about 75 percent of existing plywood
\ncompanies to close operations, rendering at least 500,000 people
\njobless.<\/p>\n
Foreign exchange revenue would also plunge as some 80 percent
\nof Indonesian plywood products are exported, according to the
\nassociation. Plywood has been one of the country's primary non-
\noil and gas export commodities.<\/p>\n
But the government, under pressure from international donors,
\nis determined to protect the country's forests, which
\nenvironmentalists say have been seriously damaged by forest-
\nrelated industries.<\/p>\n
According to the new ruling, to become effective early next
\nyear, forest concessionaires whose licenses expire will be
\ngranted extensions and allowed to continue felling trees only if
\nthe concession area can produce at least 75 cubic meters per
\nhectare of logs with a minimum diameter of 50 centimeters.<\/p>\n
In comparison, the existing ruling only stipulates that
\nconcession holders are not allowed to fell trees with a diameter
\nof less than 50 cm. But there is no minimum volume requirement.<\/p>\n
According to the Ministry of Forestry, the license of some 375
\nforest concessionaires will expire next year.<\/p>\n
Apkindo said the ruling was effectively a logging moratorium
\nbecause few concession areas could meet the new requirement.<\/p>\n
\"We appeal to the government to drop the plan ... because it
\nwill only kill the (plywood) industry,\" Apkindo chairman Martias
\ntold The Jakarta Post.<\/p>\n
If the Ministry of Forestry implements the ruling, total log
\nsupply at home is expected to drop to around 6.8 million m3 next
\nyear, compared to more than 12 million m3 estimated for this
\nyear. Of this log output volume, some seven million m3 goes to
\nthe plywood industry, which has an existing production capacity
\nof 10.5 million m3.<\/p>\n
But Apkindo said that if only 6.8 million m3 of logs were
\navailable next year, the plywood industry could only take up some
\nthree million m3 while the remainder would be consumed by other
\ntimber-related industries.<\/p>\n
\"So it's no exaggeration to say that around 75 percent of the
\nplywood companies could go under,\" said Martias.<\/p>\n
Some 90 percent of logs for the plywood industry come from
\nforest concession areas, while the remainder comes from
\nindustrial forest estates.<\/p>\n
The Ministry of Forestry said the moratorium measure was
\ncrucial to rehabilitating forests that had experienced severe
\ndeforestation.<\/p>\n
According to the ministry, deforestation has reached 40.26
\nmillion hectares out of the country's total natural forested
\nareas of 119.7 million hectares.<\/p>\n
The ministry also said that some 43 percent of the forest
\nconcession areas were either in critical condition or no longer
\nproductive.<\/p>\n
Such a situation has alarmed international donors, and has put
\nstrong pressure on Indonesia to take protective measures as a
\nprecondition for new badly needed loans.<\/p>\n
\"The destruction of our forests has been caused by
\nuncontrolled exploitation. We need to introduce prompt and stern
\nmeasures to prevent further forest destruction,\" said Ministry of
\nForestry spokesman Koes Sarjadi.<\/p>\n
Koes said that forest concessionaires whose areas were
\nclassified as critical would be forced to rehabilitate the forest
\nif they wanted license renewals. It will take concessionaires 10
\nto 20 years to rehabilitate their areas before they can fell
\ntrees again.<\/p>\n
As a longer-term solution to the problem of raw material
\nshortage faced by the plywood industry, the ministry is currently
\nencouraging people to open forest plantations under a program
\ncalled home-scale forest estate industry.<\/p>\n
\"We persuade people to open a forest plantation in which we
\nwill help them with the capital. Their logs can be sold directly
\nto the plywood industry,\" said Koes.<\/p>\n
Another program is to boost log supply from industrial forest
\nestates.<\/p>\n
Koes said it was also important to boost the production
\nefficiency of the local plywood industry.<\/p>\n
He said the country's plywood industry had not been efficient.<\/p>\n
He pointed out that the local industry needed two cubic meters
\nof logs to produce one cubic meter of plywood, while companies in
\nother countries needed only 1.6 cubic meters of logs to produce
\nthe same volume of plywood.<\/p>\n
Currently, there are some 128 plywood companies operating in
\nthe country that employ some 16 million workers. Total investment
\nin this sector has reached US$27 billion.<\/p>\n
Some 80 percent of the country's plywood output is exported,
\nproviding nearly 100 percent foreign exchange revenue since the
\nimport component is very small.<\/p>\n
From 1993 to 1997, foreign exchange earnings from this
\nindustry averaged around $4 billion per year, which accounted for
\n9.29 percent of the country's total foreign exchange revenue.<\/p>\n
However, due to the economic crisis, earnings from the
\nindustry have plummeted to an average of $2.5 billion per year.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/plywood-industry-faces-uncertainty-1447893297",
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"sponsor": "Okusi Associates",
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