A lack of wood supplies continued to plague the country's wood-based industries last year.
According to a government-sanctioned agency tasked with rejuvenating the sector, no improvement is expected in the immediate future for the industry, which produces products such as plywood and wooden housing fixtures like window and door frames.
Zulfikal Adil, executive director of the Forestry Industry Revitalization Agency (BRIK), told The Jakarta Post over the weekend that wood-related industries are expected to remain in the doldrums this year.
"In 2007, only 700 of the approximately 2,000 registered companies in the wood-working subsector managed to export their products. This is about a hundred less than in 2006," said Zulfikal.
For plywood, only 40 percent of the 120 registered companies maintained operations, he said.
"Judging from those figures, I am very pessimistic about the forestry industry in 2008. It will be worse than last year," BRIK chairwoman Soewarni said.
Soewarni said Indonesia lost at least US$400 million in potential export revenue from the plywood and wood-work subsectors alone.
"Total plywood exports last year were valued at $1.3 billion, compared to $1.6 in 2006. Wood-working exports were $1.2 billion compared with $1.3 billion in 2006," she said.
Other wood-related subsectors include pulp and paper, furniture and handicrafts.
Soewarni said wood-based industries had been on the decline since 2005 due to a lack of raw materials. The industry reached its peak in 1997.
The policy of maintaining a maximum quota for wood cutting and the introduction of tighter wood legality requirements have contributed to the shortage, she said.
In 2007, the country produced around 44 million cubic meters of wood, while the annual domestic demand was 62 million cubic meters.
"In 2006, around 30,000 workers from a number of wood producers in South Kalimantan and around 20,000 in West Kalimantan were laid off. Although the number of people whose contracts were terminated in 2007 was much lower, the industry has continued to decline," she said.
"Other factors hampering the growth of the industry include rising fuel costs, access to transportation and legal uncertainty," she said.
According to the Forestry Ministry, the country's forestry industry currently employs about 3.8 million workers. Logging by many pulp and paper firms and their suppliers in Riau province has been halted, leaving the country's two biggest pulp and paper companies, PT Indah Kiat Pulp & Paper (IKPP) and PT Riau Andalan Pulp & Paper (RAPP), seriously short of raw materials.
Representatives of PT IKPP and PT RAPP said that with raw materials running out, they might be forced to lay off most of their 550,000 employees by the end of 2007.
RAPP president director Rudi Fajar said that raw materials were available but the police had prohibited their use, saying the materials had not yet passed legal requirements.
Soy M. Pardede of the Indonesian Chamber of Commerce and Industry (Kadin) blamed the government's lack of foresight in anticipating the current problems.
"The re-planting program should have been done earlier to avoid lack of raw materials," he told the Post. (rff)
Find Article by Date