Apkindo chief denies business cartel charge

JAKARTA (JP): The Association of Indonesian Wood Panel Producers (Apkindo) denied that it had been operating as a business cartel.

"Apkindo is not a cartel. The association does not fix prices and export quotas, we just provide price and market information in overseas countries to exporters," the association's executive director, Tjipto Wigjoprajitno, said Wednesday.

However, many plywood producers have long complained about rent-seeking practices by the association and its trading arms which have virtually monopolized the trading of plywood in Asia, Europe and the United States.

Tjipto said Apkindo's duties were to provide information about prices, markets, demand of major buyers, enhance cooperation between companies and the government, and act as a business forum for wood panel companies.

He, however, added the association fully supported the government's commitment to eliminate all kinds of monopolistic practices.

"If the government considers the association's operations to be like that of a cartel, we will stop the activities. But Apkindo will still exist as a business forum for its 112 members," he said.

Tjipto said Apkindo was established to prevent price wars between plywood exporters, such as the one in 1984 which caused plywood prices to drop drastically to US$125 per cubic meter. The price of plywood currently reaches US$600 per cubic meter.

President Soeharto announced massive economic reforms last week in exchange for a US$40 billion bailout program arranged by the International Monetary Fund.

Under structural reforms, the government will abolish all restrictive marketing arrangements starting Feb. 1, leaving firms free to produce and export their products as they wish and as the market determines. Specifically, cement, paper and plywood cartels will be dissolved.

The reforms specifically stipulate that "no firms will be forced to sell their products through a joint marketing organization (such as Apkindo), nor be required to pay fees or commissions to it."

Tjipto said export quotas for plywood, a wood panel product, are determined by the Ministry of Industry and Trade, not by Apkindo, but Apkindo's members decide the amount of each companies' exports on their own.

He also said the quota aimed to manage forests in a sustainable manner and to protect forest from severe exploitation.

"If timber companies could export plywood freely, our forests would be exploited excessively. It would endanger the supply of wood and forest resources," he said.

Indonesia is the world's biggest producer of plywood. The country's export of plywood reached US$3.59 billion in the January-November period last year, slightly down from US$3.65 billion in the corresponding period of 1995. The country sold most of its plywood to Japan, the United States and South Korea.

Minister of Forestry Djamaludin Suryohadikusumo said last week that he was ready to dissolve all cartel-like associations under his ministry as part of the government's commitment to abolish all monopolistic practices in the country. (gis)