Better deal sought on plywood exports

JAKARTA (JP): The government said yesterday it was seeking better alternatives to the export quota system on plywood, which has been criticized as restrictive and encouraging cartel practices.

Minister of Industry and Trade Mohamad "Bob" Hasan and Minister of Forestry and Plantations Sumahadi issued a joint statement responding to the recent press reports on the requested use of quotas for plywood exports.

"We are now working closely with forestry experts and the World Bank to develop a better alternative than firm-based quotas to help us reduce the pressure on our forest resources in the new trade environment," Sumahadi said.

The statement said the quota strategy was intended to protect forest resources.

"There are concerns that widespread illegal logging would occur in order to supply raw material to an industry with substantial excess capacity and a declining cost structure," it said.

Media reports have published a recent letter from the Association of Indonesia Wood Panel Producers (Apkindo) requesting approval for quotas of plywood exports, addressed to the Ministry of Industry and Trade.

In January, Hasan's predecessor, Tunky Ariwibowo, abolished restrictions on plywood trade and dismantled Apkindo's joint marketing boards in compliance with the International Monetary Fund.

Apkindo director Tjipto Wignjoprajitno insisted Wednesday the plywood export quota system, which has been applied since 1987, could be maintained until 2000 in accordance with the IMF program.

Plywood companies contend that Apkindo set the quotas and distributed them to plywood companies, while the minister simply rubber-stamped them.

Yesterday's statement also said the two ministries would issue a decree in the next few days to set the maximum number of logs which could be exported yearly.

"This number will set to include the annual allowable cuts from forests, plus expected plantation and small holder harvests," it said, adding that it was intended to prevent illegal logging.

Under the planned decree, all firms will be free to export the logs, contingent on them fulfilling all paper requirements and permits, and providing proof that their logging practices are environmentally sound.

"There is no system of registered exporters for logs -- the new rules are designed to simplify exports while ensuring that we take care of our forests," Hasan said. (das)