Forest export earning estimated at $8.5b

JAKARTA (JP): The Indonesian Forestry Society (MPI) expects that foreign exchange earnings from exports of wood and other forest-related products will reach US$8.5 billion this year despite a sluggish market in the first two months of this year.

MPI's chairman Sudradjat DP said on Friday that MPI is optimistic that the export target could be achieved because the overseas demand for Indonesia's forest-related products would pick up in the second quarter.

"Overseas demand and prices for Indonesian wood and wood- related products have shown an improvement since February. I'm very optimistic that we can achieve the targeted $8.5 billion," he said.

Sudradjat was quoted by the Antara news agency as saying that overseas demand for Indonesian plywood from its main buyers Japan, the United States, China and European countries had picked up again since last month. An increase in demand has raised international prices.

Demand from those countries, he said, was sluggish in the December-January period because many companies had reduced their import activities during the winter and holiday seasons.

"Overseas demand has been increasing, especially for plywood, pulp and final wood products. According to Apkindo (the Association of Indonesian Wood Panel Producers), plywood producers will be unable to take new orders because they are already overwhelmed," he said.

Sudrajat said that local plywood producers are have signed contracts for six-months delivery with buyers from China, the United States and European countries. They also tied up with Japanese importers for two years delivery.

The better demand has pushed up international plywood prices to the current $420 per cubic meter from $380 in December, he said.

The increase in prices was also due to the scarcity of logs in several main producers of plywood caused by heavy rainfall. The price of Indonesian logs is currently at $110 per cubic meter.

The government has not yet announced the actual receipts from exports of wood and wood related products last year but the society estimated it would be around $7 billion, far below the initial target of $8.25 billion.

"The decline in the export value of wood products was mostly due to lower plywood prices caused by a lessened demand from Indonesia's two main buyers, Japan and South Korea, which are experiencing economic downturns," he said.

According to Apkindo, Indonesia's plywood and other wood panel exports fell by 35 percent in 1998 to $2.5 billion from $3.9 billion in 1997 due to a sluggish overseas market.

Plywood, a wood panel product, is Indonesia's second largest non-oil and non-gas foreign exchange earner after textiles and textile products. (gis)