Furniture exporters face another bad year
Furniture exporters face another bad year
Rendi A. Witular, The Jakarta Post, Jakarta
It is estimated that Indonesia's furniture exports this year will
plunge to US$1.04 billion from $1.8 billion last year.
The chairman of the Indonesian Furniture Club, Yos S.
Theosabrata, told The Jakarta Post on Thursday the prospects for
2003 were even gloomier, with export value projected to decline
to below $1 billion.
He said that, ironically, the falling exports were occurring
at a time when overseas demand for furniture was quite strong.
Yos said local furniture makers were unable to take advantage
of the growing export opportunities because their products were
becoming less competitive, mainly due to excessive levies imposed
by provincial governments and rising labor wages.
He added that the smuggling of illegally cut logs from
Indonesia to China also harmed exports, with furniture makers in
China benefiting from the cheap illegal logs and undercutting the
competitiveness of Indonesian furniture.
For example, he said, Meranti timber, which is the most
popular raw material for furniture makers and grows only in
Indonesia, is cheaper in China than it is in Indonesia.
The availability of cheap timber has helped China take over
much of Indonesia's overseas markets.
The main export markets for Indonesian furniture are the U.S.,
Europe and Japan. These destinations account for at least 80
percent of the country's furniture exports.
"Many buyers have postponed placing orders for Indonesian
furniture because China offers cheaper prices with the same
quality wood," Yos said.
He also said that over the last two years, the local furniture
industry had been burdened with various fees imposed by
provincial administrations recently empowered to manage their own
economic affairs.
The fees vary from province to province, but Yos said the
highest fees could account for some 50 percent of total
production costs.
The association is also critical of the recent increase in
provincial minimum wages, which it says harm the profitability of
the furniture industry.
Yos fears that if the government continues to increase the
minimum wages amid an unfavorable business climate, the industry
will collapse costing thousands of people their jobs.
Illegal levies during shipment is another obstacle that
increases costs for the industry, he said. The association, which
groups furniture makers, traders and bankers, has long complained
about this problem.
Furniture makers, particularly those that ship their goods
through Tanjung Priok port in Jakarta, are forced to pay illegal
levies to corrupt public servants and hoodlums. These levies can
account for up to 10 percent of the production costs.