Apkindo estimates lower plywood exports next year

JAKARTA (JP): Indonesia's plywood exports are likely to continue to drop next year as demand from chief buyers such as Japan and South Korea would remain low, according to the Association of Indonesian Wood Panel Producers (Apkindo).

Apkindo's executive director, A. Tjipto Wignjoprajitno, said on Tuesday that plywood exports would drop by at least 30 percent in the first quarter of next year, down from about 2 million cubic meters in the same period of this year.

Tjipto said that demand from the chief buyers of Indonesian plywood, such as Japan, South Korea and Middle Eastern countries, had dropped sharply this year, and this low demand is expected to continue next year.

"We have predicted that demand for plywood will stay sluggish next year. We estimate that plywood exports will drop by at least 30 percent in the first quarter of 1999 alone," he told reporters.

Demand from the United States and European countries, he said, is also expected to be lower than usual because many companies would reduce their import activities during the winter and holiday seasons.

Tjipto said that Indonesian plywood exports to South Korea plunged by 79.2 percent during this year's January to August period, compared to the same period in 1997.

Plywood exports to Japan, he said, slumped by 68 percent during the first eight months of this year, while exports to the Middle East dropped by 39.2 percent during this period, compared to the corresponding period in 1997.

Tjipto said that aside from demand, the decline in plywood exports next year would also be partly due to the downturn in supply, as many plywood firms had reduced production until the end of January to celebrate the upcoming Christmas, New Year, Chinese New Year and Idul Fitri holidays.

Tjipto said that the lower production is also caused by a downturn in the log supply during the rainy season.

The Indonesian Forestry Society (MPI) had earlier predicted that Indonesia's log supply might decline by as much as 25 percent this year due to a drop in timber companies' logging activities and the heavy rainy season.

MPI said that heavy rain, caused by the La Nia weather phenomenon, had disrupted logging activities and the transportation of logs from logging areas to timber mills.

Tjipto said that the sluggish demand would hamper Indonesia's efforts to meet this year's target of US$3 billion in foreign exchange earnings from plywood exports.

He said that the Apkindo was likely to reach only $2.5 billion in earnings from plywood exports this year.

Plywood, a wood panel product, is Indonesia's second largest non-oil and non-gas foreign exchange earner after textiles and textile products.

Last year, the country's plywood exports totaled 7.85 million cubic meters worth $3.58 billion.

Meanwhile, Tjipto said that the government's recent decision to cut the export tax on logs from 200 percent to 30 percent has had no big impact on the supply of logs on the domestic market because many Indonesian timber companies were currently reluctant to export their logs, preferring to keep them in the more profitable local market. (gis)