E. Kalimantan needs more rattan processing plants

JAKARTA (JP): The Association of the Dayak Tribes in East Kalimantan said yesterday they needed more processing plants to boost semi-finished rattan exports in the province.

Rama Asia, an association executive, told Minister of Trade and Industry Mohamad "Bob" Hasan in a meeting yesterday that East Kalimantan, one of the country's largest producers of rattan, needed government help to boost its rattan processing industry.

"We are urging the government to help us provide equipment to process raw rattan into finished and semi-finished rattan," Rama told reporters after the association's meeting here.

Without a modern processing industry, rattan producers in the province would not be able to export their commodity, he said

Currently, rattan farmers and gatherers must sell their products to processing companies in Java, mostly in Surabaya and Cirebon, he said.

The factories bought the rattan at low prices, discouraging rattan gatherers and farmers, he said.

"People do not want to invest in rattan processing in our area because they would lose out to the processing factories in Java," he said.

Most traditional rattan-processing industries in Kalimantan and Sulawesi, which processed mainly semi-finished rattan, went bankrupt after the government imposed restrictions on raw and semi-finished rattan through various fees and restrictions.

The restrictions, introduced in 1986 and 1988, lasted until early this year when the government reduced export taxes as part of reforms agreed with the International Monetary Fund.

The restrictions were designed to stimulate the development of the domestic rattan industry but only prompted an oversupply of rattan on the domestic market.

The depressed prices drove rattan farmers and gatherers to abandon vast areas of cultivated rattan and go out of business. Many of the rattan forests were converted into industrial timber estates and palm oil plantations.

The ban also resulted in rampant smuggling of raw rattan to Singapore, Malaysia and the Philippines.

Rama said that before the government restricted the exports, East Kalimantan's rattan forest had the potential to export at least 50,000 tons of rattan a year, he said.

But now, even after the export ban was lifted, it still could not export the products directly, as the rattan had to be processed in factories in Java, he said.

On April 22, the government reduced export taxes to 30 percent, and will gradually continue to reduce the taxes until they reach 10 percent by the end of December 2000.

The tax reduction was followed by the removal of the export marketing system, quotas for certain types of rattan, and levies on rattan bound for export. (das)