Indonesia asked to reduce exports of plywood to Japan

JAKARTA (JP): Japanese plywood producers, facing tough competition from Indonesia, yesterday requested its exporters to reduce supplies to Japan.

"Executives of the Japanese Plywood Manufacturers' Association (JPMA) are here to negotiate with us so that our exports do not bankrupt its members," Chairman of the Association of Indonesian Wood Panel Producers (Apkindo) Mohammad (Bob) Hasan told reporters, while introducing the Japanese delegates.

"In return, we will ask them to reduce their tariff and non- tariff barriers," he added without going into details.

Indonesia last year exported 3.44 million cubic meters of plywood, worth US$1.6 billion, to Japan, its biggest plywood market.

Indonesia, which produces 10 million cubic meters of plywood annually, last year exported wood products worth US$5.5 billion (15 percent of its total exports worth $36.82 billion), including $4.2 billion of plywood.

Data from the Japanese embassy shows that, along with the growth of Indonesian plywood exports, the number of Japanese producers has fallen from 148 in 1986 to 111 last year.

The embassy projects that, by the end of this year, the number will further decline to 108.

Hasan emphasized that Apkindo will not "engineer" or "predetermine" its market share in Japan in order to leave space for the Japanese producers.

"We are not a cartel," he said.

Despite Hasan's statement, Indonesian regulations stipulate that Indonesian plywood producers cannot export their products and process letters of credit without the approval of Apkindo.

Marketing

Apkindo allows only selected distributors to market their plywood. In Japan, Apkindo commands its members to trade only through Nippindo, the sole importer of Indonesian plywood in the country.

Nippindo, established in 1988, is 95 percent owned by Apkindo and five percent by a local wood trader, Masaki Corporation.

Hiroshi Inoue, chairman of JPMA, said yesterday that out of Japan's 1993 annual consumption of nine million cubic meters of plywood, only 4.48 million cubic meters were provided by the Japanese firms.

Out of the imported 4.52 million cubic meters, 3.45 million were Indonesian products, he said.

"This is a direct contrast from the 1980s, when we used to make eight million cubic meters per annum," he added.

Inoue warned Japan might reduce plywood consumption this year due to an economic recession and a slowing down in the growth of housing projects.

"This year we estimate we will consume less than nine million cubic meters and reduce imports to 4.04 million cubic meters," he said.

Inoue added Indonesia will still provide 3.3 million cubic meters of the imports.

The Japanese executive indicated that imports of Malaysian plywood are increasing rapidly. The imports are projected to surge to 500,000 cubic meters this year, from 300,000 cubic meters last year.(hdj)