Apkindo defends good prospects of plywood trade

Apkindo defends good prospects of plywood trade

JAKARTA (JP): The wood panel association, responding to an assertion that Indonesia's plywood industry is dying, said yesterday that the country's policies would guarantee the long- term viability of the industry.

"The Indonesian plywood industry has very secure prospects to continue well into several decades in the future", Tjipto Wigjonprajitno, secretary general of the Association of Indonesian Wood Panel Producers (Apkindo), told reporters yesterday.

Tjipto was reacting to claims by analysts that the future of the Indonesian plywood industry was doubtful in view of the scarcity of raw materials and the poor market conditions obtaining throughout last year.

"Those claims are absolutely groundless", he said after attending a ceremony for the inauguration of senior forestry officials here.

Indonesia, the world's largest plywood supplier, produces about 10 million cubic meters of plywood annually. Most of this is exported to Japan, South Korea and Taiwan.

The government revealed last week that export revenues from the plywood sector, a major foreign currency earner among Indonesia's non-oil exports, fell by nine percent in the January- September period of last year to US$2.8 billion, from the corresponding period in 1993.

Analysts noted that plywood is currently priced at about $380 per cubic meter, and that this price represents a 32.14 percent drop from $560 in the third quarter of 1993.

They argued that the drop was caused by low demand from recession-stricken Japan and increased supply from Malaysia.

Indonesian regulations stipulate that Indonesian plywood producers cannot export their goods, or even process letters of credit, without the approval of Apkindo. The association, moreover, uses only selected distributors to market their products.

In Japan, the biggest market of Indonesian plywood, Apkindo has operated a subsidiary called Nippindo, since 1985, to distribute their products.

In South Korea, Apkindo appointed Sesil Industries Co. Ltd last year as the sole importer of Indonesian plywood. This firm later gave power of attorney to another company, called Sesil Trading Co., which in turn has appointed five main distributors.

Tjipto yesterday denied that last year's decline in revenue from plywood exports was caused by Apkindo's policies. The association's policies have been branded "monopolistic" by both buyers and analysts.

"The decline was due to purely economic reasons, namely recessions in Japan and South Korea", he said.

"Our mechanism is the best and simplest in the world, and we appoint strong distributors", said Tjipto, adding that plywood marketing would soon improve due to a better world economy.

"We will maintain our mechanism", he said.

He said Apkindo would not initiate negotiations with Malaysian plywood producers, who have heavily discounted their prices on the world market.

"There is no use talking to those who flood the market with insanely discounted products", Tjipto said, adding that Apkindo would not join the price war because of "environmental concerns".

South Korea

Contrary to Tjipto's assurances, a trade official at the South Korean embassy told The Jakarta Post that the principal reason for last year's decline in Indonesia's plywood exports to his country was "Apkindo's arrogant policies".

"Korean consumers do not like Apkindo's single distributor policy which prevents any contact between consumers and producers", said the official, who requested anonymity.

The official claimed that during the January-November period of last year, Apkindo's plywood exports to South Korea were worth only $270 million, marking a decline of almost 50 percent from the same period in 1993.

In 1992, Indonesia's market share was 90 percent, which rose to 94 percent in 1993 but then dropped to 85 percent last year, he said.

The official also noted that the volume of Indonesian plywood exports to his country had also declined. The export volume rose from 1.2 million cubic meters in 1992 to 1.89 million cubic meters in 1993, but dropped dramatically to around 700,000 cubic meters last year.

Tjipto himself conceded yesterday that Apkindo had been able to export only around 700,000 cubic meters of plywood to South Korea in 1994, as compared to its target of 800,000 cubic meters.

The South Korean official said that this year Apkindo aims to export "only around 600,000 cubic meters" of plywood.

Tjipto said yesterday that the long-term prospects of the domestic plywood industry were still secure, because raw material conditions were "manageable".

Because there is only a limited number of substitutes to plywood, the industry has a secure future, Tjipto said.

He said that Apkindo had accepted the Ministry of Forestry's recent proposal that control of the log trade and the supply of plywood be tightened.

The government announced last week that it planned to ban exports of all wood-based products originating from unsoundly managed forests or made from illegally-traded logs.

The government stated last year that it planned to reduce the country's timber output from natural forests from 25 million cubic metres, the figure for the last five fiscal years to March 1994, to 22.5 million cubic metres in the following five years. (hdj)