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)