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)