Govt to review plywood export mechanism

Govt to review plywood export mechanism

JAKARTA (JP): Trade Minister S.B. Joedono said yesterday
that Indonesia's plywood export system was being evaluated to
reinvigorate exports, which have been declining steadily since
last year.

"We are looking into all aspects of the marketing system, such
as the export market and our export management," Joedono said at
a hearing with the House of Representatives' Trade Commission.

Joedono did not specifically mention the role of Apkindo --
the Association of Indonesian Wood Panel Producers -- which
monopolizes plywood exports from the country's 160 mills.

But he said his office was gathering information and
suggestions from all related parties for consideration in
developing the most effective mechanism to arrest the decline in
plywood exports.

Late last week, Industry Minister Tunky Ariwibowo also
criticized the plywood export monopoly of Apkindo as not
conducive to bolstering Indonesian exports.

"Our plywood export mechanism, whereby goods are exported
through the trading arms of Apkindo in the importing countries
turns out to be unfavorable to export promotion," Tunky told a
hearing with the House Industry Commission recently.

Tunky said he feared that if the current system was maintained
Indonesia's plywood exports would continue to decline.

He said Indonesian exports to South Korea, China, Japan and
Egypt had been declining as those countries had increasingly
turned to Malaysia, which offered cheaper prices.

Tunky said China had been importing more from Malaysia than
from Indonesia.

He said Indonesian exports of manufactured products had
increased in value terms by 15.80 percent between April 1994 and
February 1995.

Value

"But the value of wood exports during the same period fell by
10.57 percent," he added.

He said that even though sawn timber exports had risen by 25
percent during that period, the export value of processed wood as
a whole had still declined by 10.57 percent due to the fall in
plywood exports.

Plywood makes up the bulk of Indonesian wood exports.

Industry sources here say that, had it not been for the
massive reconstruction work in Japan in the aftermath of the Kobe
earthquake, Indonesian exports to Japan would have fallen much
further.

Standards

Plywood companies are allowed only to notify Apkindo's trading
arms of the volume and standards of plywood they have available
for export. It is the trading arms which are responsible for
seeking orders and distributing the plywood for the producers.

Apkindo's Chairman Mohammad (Bob) Hasan has consistently
maintained that Apkindo's trading arms have increased Indonesia's
share of the world plywood market.

"The trading arms have enabled us to dominate almost all the
major plywood markets overseas," Bob was quoted by the Bisnis
Indonesia daily as saying over the weekend.

Apkindo runs one trading arm for each of the major plywood
markets, including Japan, South Korea, Taiwan, China, Europe, the
Middle East and Hong Kong.

But plywood producers here have been complaining that the
trading arms have not been aggressive enough in seeking orders
from buyers overseas.

"Those trading arms face no risks at all," the industry
sources said, referring to the fee collected from producers by
the trading arms, which is additional to the promotion fee
collected by Apkindo in Jakarta.(vin)