Selling logs overseas less profitable<\/p>\n
JAKARTA (JP): Few timber companies have sold logs to the
\ninternational market despite the government's recent decision to
\nease log export restrictions, a minister said yesterday.<\/p>\n
Minister of Forestry and Plantations Sumahadi said selling
\nprocessed wood products was now more profitable than exporting
\nlogs.<\/p>\n
\"Indonesian timber companies mostly supply logs to their own
\nprocessing industries because it will be more profitable for them
\nto process the wood and then export it (rather) than exporting
\nlogs,\" the minister said.<\/p>\n
Most of the country's timber companies have their own wood-
\nprocessing industries, such as plywood factory, sawmill or
\nfurniture producer.<\/p>\n
The minister said the timber estates, especially those which
\nalso operate plywood industries, focused on efforts to market
\nunsold plywood products which reached 1.5 million cubic meters as
\nof March.<\/p>\n
He said the prices of processed-wood products had started to
\nincrease again in Japan and South Korea as their economic
\nrecovery began to prop up demand.<\/p>\n
Demand and prices for wood and wood-related products from the
\ntwo countries, the main buyers of Indonesian wood products, had
\ndropped sharply in the past six months because their property
\nsectors, the main users, were hit hard by the currency crisis.<\/p>\n
The government reduced export taxes on logs, sawn timber and
\nrattan to a maximum 10 percent from Feb. 1 as a part of reforms
\nagreed to with the International Monetary Fund.<\/p>\n
The government previously imposed an export tax of 200 percent
\non logs aimed at encouraging timber companies to fulfill the
\ndomestic demand and to force buyers to purchase Indonesian
\nprocessed wood.<\/p>\n
The high tax had resulted in rampant smuggling and illegal
\ntimber cutting in past years.<\/p>\n
To dissuade timber companies from excessively exporting logs,
\nthe government issued a regulation on Jan. 21 stating that timber
\ncompanies were only allowed to export logs if they have allocated
\nat least 5 percent of their logs to the domestic market.<\/p>\n
\"Export of wood and wood-related products is expected to
\nincrease again this year due to the lower export tax,\" he said.<\/p>\n
Export of wood and wood-related products dropped by about 25
\npercent last year to US$6.24 billion from $8.3 billion in 1996
\ndue to lowered demand and lower prices. (gis)<\/p>",
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