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.