Export problems face Kalimantan plywood plants

Export problems face Kalimantan plywood plants

JAKARTA (JP): Plywood plants in East Kalimantan, which
contribute 25 percent to Indonesia's total plywood production,
are facing difficulties in exporting their products, an executive
said over the weekend.

"If the difficulties go on until the end of this year, 90
percent of the 23 plants operating in the province will probably
stop operation," said the chairman of the East Kalimantan chapter
of the Indonesian Forestry Society, B.S. Suba.

According to the provincial trade office of East Kalimantan,
plywood exports from the province dropped by 23 percent to 1.6
million cubic meters last year from 2.1 million cubic meters in
1993.

"Hundreds of thousands of cubic meters of plywood are piled up
in companies' warehouses because the companies cannot export them
or sell them domestically," Suba said, Antara reported in
Samarinda.

Suba noted that a number of plywood companies in South and
Central Kalimantan have closed their plants due to difficulties
in marketing their products.

He blamed the decline of plywood exports on Malaysia, which
undercuts plywood prices to steal part of Indonesia's market
shares.

"Malaysia can sell their plywood at lower prices because they
are not burdened with many levies and their export mechanism is
very simple. Many of East Kalimantan's market shares in Japan
have been taken over by Malaysia," Suba said.

However, Suba did not directly relate the export difficulties
to the marketing monopoly of plywood by the Association of
Indonesian Wood Panel Producers (Apkindo).

Minister

In a hearing with the Trade and Logistics Commission of the
House of Representatives last week, Minister of Trade Satrio B.
Joedono faulted Apkindo's rigid marketing system for the drop in
the country's plywood exports.

Revenues from plywood exports fell by 8.4 percent during the
January-October period of last year to US$3.49 billion from the
corresponding period of 1993.

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

The leading company, PT Barito Pacific Timber, defended
Apkindo's plywood export monopoly, saying it had led to higher
prices.

Joso Abdullah Gotama of Barito noted that since Apkindo became
the sole distributor of plywood in 1983, the prices of plywood
had risen from less than $200 per cubic meter to more than $350.

He said, although prices had recently fallen, his company did
not feel it had lost out.

The current price of $350 per cubic meter of plywood indicates
a 37.5 percent drop from $560 in the third quarter of 1993.

Indonesia, the world's largest plywood exporter, produces
about 10 million cubic meters annually, most of which is exported
to Japan, South Korea and the United States.

Official data shows that plywood exports to Japan for the
January-October period of last year fell by 10.1 percent to $1.39
billion for 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.

Minister Joedono noted that although Indonesia's exports to
the three countries had decreased significantly, the demand from
the three countries did not decline.

Joso said that because the world demand for plywood still
overpasses the combined total production of Indonesia and
Malaysia, Apkindo's system will still be valid to be maintained.

"Because of the high demand, it is not necessary to create
competition in which we can kill each other," Joso said. (rid)