Export of wood products drops 25% this year

JAKARTA (JP): The value of wood and wood-related exports is likely to drop by 25 percent this year to US$6.24 billion, from US$8.3 billion last year, a government minister said yesterday.

Minister of Forestry Djamaludin Suryohadikusumo predicted that Indonesia's exports of wood products would probably continue to decline next year due to expected falling demand from the main buyers, Japan and South Korea.

The regional monetary crisis, which is also affecting the two above countries, would result in the decline of the property sector, especially in Korea, the minister said.

"The monetary crisis has hit the property sector and as most wood products, especially plywood, are used by the property business, the demand for wood has also been hit," he said in a year-end news conference.

He said that in the past few months the decline had not yet been felt but since November the demand for plywood had dropped by over 30 percent.

"If the demand continues to fall in the coming three months the plywood industry will be on the brink of collapse," he said.

He said that Indonesian wood products should be more competitive in overseas markets with the rupiah's sharp decrease in value against the U.S dollar.

But currency depreciation in many Asian countries, including Japan, South Korea and Singapore, had not only slowed their property activities but also weakened their importers' ability to buy Indonesian products. Japan is the biggest importer of Indonesian plywood.

Indonesian wood exports are likely to continue to decline despite lower prices, he said.

Plywood, a wood panel product, is Indonesia's second largest nonoil and gas foreign currency earner after textiles and textile products.

According to official statistics, plywood exports last year exceeded US$3.59 billion.

Djamaludin also encouraged forest wood-based companies to diversify their markets to other countries, especially when their traditional markets were being hit by the currency crisis.

"It's dangerous if businesspeople rely on just one or two countries to export to. We should not depend on our traditional plywood markets, Japan and Korea, especially while the two countries are suffering from currency turmoil," he said.

New policy

At the press briefing, Djamaludin also said that the government had decided to set reforestation fees paid by forest concessionaires in rupiah instead of U.S dollars to provide timber companies with more certainty in the current monetary crisis.

"We will introduce the new policy on Jan.1 next year," he said.

The switch in the fee payment currency was necessary due the sharp depreciation in the rupiah's value against the American greenback, he said.

The government currently charges a reforestation fee of US$15 for every cubic meter of forest land leased to concession holders.

He said the government would also extend the concession rights given to industrial forest companies to 35 years from 20 years at present in a bid to encourage new investments in the forestry sector.

Djamaludin said that under the new system, the concession period would start from the harvesting of the trees.

"For example, if a company plants meranti trees whose age is 35, their concession right will be 70 years, comprising 35 years plus the meranti trees' age of 35 years," he said.

He said in the new system the planted trees would become the company's assets. Under the old concession rights, the planted trees belonged to the government.

"The new concession system will be carried out next year," he said, adding that 16 companies would operate under the new system next year.

Forest fires

The past 12 months has truly been a bad year for Indonesian forests as more than 165,000 hectares has been razed by fires, causing an estimated financial loss of Rp 132 billion (US$26.4 million).

Djamaludin said the forest fires were mostly caused by human carelessness and neglect as well as ignorance about forest protection and the changing global climate caused by the El Nio weather phenomenon.

"We should not blame El Nio for the fires. The phenomenon just made the fires worse, but it was we ourselves who started the fires," he said, adding that most timber companies burned the forest to clear land in order to reduce their costs.

He said that the loss figure did not include immeasurable ecological damage such as destroyed habitats and forest ecosystems.

"To avoid forest fires in the coming years, we will continue introducing the clearing of land without burning ... and strengthen our law enforcement measures against forest burners," he said.

This year's forest fires ravaged more than 125,000 hectares of industrial and protected forest, and more than 40,000 hectares of brush and other land in Central and West Kalimantan, and Sumatra's Riau and Jambi provinces.

At least 144 wood-use permits owned by 29 companies were revoked in October after the firms failed to present documents disproving the government's allegations that they were responsible for starting the fires.

But last month the government lifted the suspension of 45 permits after the holders proved their innocence. (gis)