Apkindo faulted for export drop

Apkindo faulted for export drop

JAKARTA (JP): Minister of Trade Satrio B. Joedono blamed the 'sole marketing' system of the Association of Indonesian Wood Panel Producers (Apkindo) yesterday for the drop in the country's plywood exports.

"I think Apkindo's sole marketing system should be revised," Joedono told the House of Representatives.

Joedono told the House Commission on Trade and Logistics that export revenue from plywood, a major foreign currency earner, had fallen by 8.4 percent during the January-October period of last year to US$3.49 billion, as compared with the corresponding period of 1993.

Exports of wood products, mostly plywood, account for almost 16 percent of Indonesia's total export earnings.

The minister said the drop was not the result of economic recession in major importing countries, such as Japan and South Korea, as had been claimed by Apkindo. Rather, it had been caused by the association's rigid marketing system, he said.

"The data shows that plywood demand in the three major importing countries -- Japan, South Korea and the United States -- have not decreased. But our exports to these countries have fallen significantly," Joedono said.

Indonesia's exports of wood products to Japan for the January- October period of last year fell by 10.1 percent to $1.39 billion from the same period of 1993, to South Korea by 26.2 percent to $379.6 million and to the United States by 7.9 percent to $369.3 million.

A.A. Baramuli, an outspoken legislator from the ruling Golkar group, demanded that Minister Joedono dismantle Apkindo's export monopoly and allow all plywood producers to export their products directly to foreign importers without using Apkindo's trading arms.

Joedono did not respond directly to Baramuli's demand, simply stating that the government had challenged Apkindo to reinvigorate plywood exports by improving its marketing system.

Baramuli described Apkindo's trading system as totally wrong because producers cannot export their products directly to overseas importers but have to export them through Apkindo's trading arms in Singapore, Hong Kong and Japan.

Subsidiaries

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

Apkindo appointed Indo Kor as the sole export window to South Korea and Sesil Trading Co. as the sole importer of Indonesian plywood early last year, prompting many Korean buyers to turn to Malaysian suppliers.

The association has also set up other subsidiaries as its sole trading arms in Hong Kong, China, Europe and the Middle East. According to its critics, this system lengthens the marketing chain and unnecessarily adds to the price of plywood.

Under the Apkindo system, plywood producers cannot export directly. They must notify Apkindo's overseas offices of their stock available for export. The trading arms, which receive orders from importers abroad, then distribute the orders among the producers and handle deliveries.

Apkindo's marketing monopoly has rendered the marketing managers of around 200 plywood companies idle and forced many plywood firms to abandon any marketing promotion.

Baramuli predicted that if the current plywood export system is not dismantled Indonesia's plywood exports might drop by a further $1 billion this year.

He challenged the commission to cooperate with other House commissions to exercise their parliamentary right to investigate cases involving the public interests.

At the close of the hearing Joedono said: "The approach adopted by the House and that adopted by the government might be different, but the essence is the same. We want to solve the problem in the national interest." (rid)