For Focus Issue: Sunday, July 4

For Focus Issue: Sunday, July 4

Cool domestic response challenges rattan producers' creativity

Rudijanto
Contributor

Considered as second class, cheap and old-fashioned furniture
by many locals, Indonesian rattan furniture has spread to almost
all European and Asian countries, as well as the US, Australia,
Canada, and the North and South African countries.

Rattan certainly is an exotic material for those living in
non-tropical countries as it mostly grows in tropical regions,
particularly Southeast Asia. People in the Middle East,
particularly the Jordanians, even confuse rattan with bamboo,
though the two materials are very different from each other.

Unlike bamboo, a rattan stem is solid and can be bent into a
variety of shapes when heated. Popular as a material for making
outdoor furniture, rattan mostly grows in Indonesian forests. No
wonder that about 85 percent of the traded rattan in the world
comes from this country.

Data from Indonesia Furniture & Handicraft Industry
Association (ASMINDO) reveals that Indonesian exports of
unprocessed rattan reached 16,000 tons, with a value of US$9.4
million, in 2002.

During the same period, the country also exported 133,000 tons
of rattan products, mostly furniture, with a total value of
US$302 million. Aside from rattan products and unprocessed
rattan, Indonesia also exports half-processed rattan, including
polished rattan poles, cores and peel.

In 2003 alone, Indonesia exported 1.8 million kilograms of
polished rattan poles valued at US$3.1 million. The country also
exported 11.6 million kilograms of rattan cores with a total
value of US$19.4 million.

Up to November 2003, Indonesian exports of unprocessed rattan
stood at 5,200 tons with a value of US$4.1 million, while its
export of rattan products, including furniture, amounted to
136,000 tons with a value of US$313 million.

Though there was a slight increase of 3.8 percent in the
export value of rattan furniture in 2003 as compared to 2002,
ASMINDO's Executive Director Sae Tanangga Karim revealed that the
Indonesian rattan furniture industry was in trouble.

"The increase in the export figure does not reflect the
reality of the rattan furniture industry because most of the
contribution to that figure came from only the 20% of big rattan
furniture makers, while the majority of home and cottage
industries are dying," says Karim.

Hartono, the owner of rattan furniture company PT Arsinco,
confirmed Karim's statement by saying that some rattan furniture
factories in Cirebon have stopped operating due to a drop in
orders.

"If previously they could achieve economies of scale by
exporting 10 containers of rattan furniture per month, their
situation is worse now as they can export only four containers
per month," says Hartono.

Increasingly tough competition in overseas markets seems to be
responsible for the problems affecting the local rattan furniture
industry. Accustomed to producing customized orders from buyers,
Indonesian rattan furniture producers still lag behind their
counterparts in the Philippines, who produce higher quality
designs.

China, with its lower wages and strong support industries, and
government policy of boosting exports, has taken significant
market share in overseas rattan furniture markets.

At the same time, Vietnamese products also pose a serious
threat to the Indonesian rattan furniture industry. Ironically,
all these competitor countries -- China, Vietnam and the
Philippines -- import most of their rattan supplies from
Indonesia.

In order to save the country's rattan furniture industry from
disaster, the government imposed a ban on the export of
unprocessed and half-processed rattan in May, 2004. By still
allowing the export of cultivated unprocessed and half-processed
rattan, this ban is similar to a ban imposed in 1987

Deprived of their rattan supplies from the biggest rattan
producer in the world, thriving rattan processing and furniture
companies in Taiwan, Japan and South Korea were forced to close
down. The ban was only lifted in 1998.

"We hope the current ban will improve the condition of our
rattan industry and our export performance. We hope that we can
become the biggest rattan furniture supplier in the world once
again," says Karim, commenting on ban.

The owner of Krishna Furniture, Setyawan, hopes that producers
can also learn to utilize other rattan species that are currently
not used in furniture production. Of approximately 600 rattan
species, only around 20 of them have commercial value. The rest
are simply not used.

Though agreeing that unprocessed and half-processed rattan
export ban may help local furniture makers, Hartono believes that
the ban is not the only way to help the country's rattan
industry, as the raw materials only constitute 45% of production
cost.

"We cannot compete with the Chinese manufacturers because we
are no match for them almost in every aspect, including labor
costs and supporting chemical industries. China has improved its
production quality by hiring Filipino designers. Thus, don't
think that Chinese rattan furniture is of low quality now," says
Hartono.

However, he still expressed optimism that Indonesia could
still find certain market niches with no Chinese competitors in
the international rattan furniture market. Japanese-born rattan
furniture designer Yuzuru Yamakawa, who works in his Cirebon-
based factory, has proved that with good design and quality,
Indonesian rattan furniture can compete on the international
market.

With a number of design awards from prestigious fairs such as
International Furniture Fair Singapore and Furnicraft Indonesia,
Yamakawa believes that with its vast supply of rattan, Indonesia
has major potential to develop its furniture industry. The only
thing needed is better design.

With the recent unprocessed and half-processed rattan export
ban, Indonesian furniture makers should find their position
strengthened on the international market.

However, the disturbing question is whether such ban reflects
the inability of local furniture makers to compete fairly and
squarely in the market and their need to seek protection from the
government in the form of the rattan export ban.

"We admit that this ban is protectionism. But there is nothing
wrong with a government trying to protect its industry. Other
countries also do so," said Karim, whose organization had been
lobbying the government for the ban since last year.

While the ban is still new, potential problems may yet come
from disappointed rattan farmers and suppliers who are no longer
able to export their harvests. As of now, the price of Sega
rattan has increased to Rp 11,000 per kilo, while the normal
price is between Rp 8,000 to Rp 9,000 per kilo.

The reason for these increases are that many farmers and
suppliers abandoned their rattan supply businesses immediately
after the government announced the export ban. Supplies are
feared to further dwindle as more suppliers close down their
businesses.

"We are still waiting to see whether there is reaction to the
ban. Currently, there is a shortage of Sega rattan. We hope this
shortage is only temporary," says Karim.

Amid the struggle among Indonesian rattan exporters to regain
their exclusive rights to the country's rattan, Indonesians have
been paying very little attention on the issue. While it is true
that Euro 2004 football matches are more captivating than the
rattan problem, it is also true that most Indonesians have no
appreciation for rattan furniture.

"Many Indonesians still consider rattan as cheap street
furniture. They still are worried that rattan furniture will be
infested with bugs," said Yos Theosabrata, the owner of Victor
Furniture.

Local furniture maker Willy Wonoto of CV Jaya expressed
frustration over the low appreciation of Indonesians for rattan
furniture. Hoping to popularize rattan furniture sets in the
local market, Willy conducted a media campaign last year but he
admitted to having received a cool response from local consumers.

Whether the local market is simply uninterested in rattan
furniture or whether local manufacturers themselves lack
creativity in stimulating the market remains to be seen. "Hoping
that the recent rattan export ban will help local manufacturers,
we also hope that the ban will help to nurture the sort of
creativity that is needed to compete both on the domestic and
international markets," he said.