Apkindo plans to cut plywood production to prop up price
Apkindo plans to cut plywood production to prop up price
Antara, Jakarta
The Association of Indonesian Wood Panel Producers (Apkindo)
plans to cut its plywood production in an effort to prop up the
commodity's price in the international market which currently
stands at US$230 per cubic meter.
"We don't need to increase plywood production if the
commodity's price continues to drop. We prefer to lower
production to between just five million and six million cubic
meters if this could push up international prices," Apkindo's
chairman Cahirman Martias said here on Friday.
Indonesia's plywood production this year was expected to range
between seven million and eight million cubic meters, he noted.
In 1997, plywood prices averaged $400 per cubic meter but
dropped to $230 per cubic meter after the government -- under
pressure from the International Monetary Fund (IMF) -- allowed
logs to be exported, a policy that sparked log smuggling to
neighboring countries.
Increased log smuggling caused Indonesian plywood to lose its
competitiveness because neighboring countries had access to
lower-priced logs and were thus able to lower their production
costs.
Those countries, Martias said, then exported plywood -- even
to Indonesia -- at $230 per cubic meter.
In addition to the plan to cut production, the association
plans to establish a board to monitor supply of raw material and
keep a balance with domestic demand.
"The board is expected to control the balance between supply
and demand and at the same time conserve the forests as the
source of raw material," Martias said.
Martias said he was optimistic Apkindo would succeed in its
efforts to make the world plywood price increase in the next
three months if raw material supply could be controlled and log
exports were banned.
Moreover, the raw material stock in international markets
would only be enough for the next six months.
The association also proposed that the envisaged board to
monitor raw material supply be given the authority to endorse
plywood exports, in a bid to avoid dumping practices.
Martias said he believed better plywood prices in
international markets would encourage the restructuring of the
national industry.
Separately, forestry minister M. Prakosa said that the
Indonesia's competitiveness in the plywood industry was still
low.
The local industry would need two cubic meters of logs to
produce one cubic meter of plywood, while industries in other
countries needed only 1.6 cubic meters of logs to produce the
same amount of plywood.
The minister said efficiency needed to be improved as the
government would also lower the limit of trees that could be cut
from 20 million cubic meters to 15 million cubic meters a year.