Sat, 13 Aug 1994

Indonesia denies charges of slashing plywood prices

JAKARTA (JP): A war of words has erupted between the Indonesian and the Malaysian plywood exporters following sharp allegations that Indonesian producers had slashed prices to undercut their Malaysian counterparts in international markets.

A. Tjipto Wignjoprajitno, the executive president of the Association of Indonesian Wood Panel Producers (Apkindo), told The Jakarta Post here yesterday that the Malaysian allegation is baseless on the grounds that Indonesia had never sold plywood cheaper than Malaysia.

On the contrary, Malaysian plywood exporters had earlier started price competitions in the United States and European countries by selling cheaper plywood products, he said.

"The difference between the prices of our 32-millimeter plywood and Malaysia's similar products was between US$30 and $40 per cubic meter, which had forced us to abandon the markets," he said. However, he added that Indonesian exporters had accepted the move.

"We do not care because our delivery time, product quality and grade is better than theirs," he added.

The Malaysian Panel Products Manufacturers Association (MPMA) charged on Wednesday that Apkindo, after breaching a regional pact not to undercut prices, did not bother to follow the requirement.

Chai Fook Loong, the president of MPMA, was quoted by the Singapore-based Business Times as saying: "After dropping the bombshell, Apkindo is turning a deaf ear to the MPMA's call for a roundtable meeting."

Chai said that Apkindo did not explain why it breached the ASEAN pact and had ignored all agreements made by the MPMA and the Philippine Plywood Association about the issue.

He alleged that Apkindo unilaterally chopped plywood prices on July 4, after agreeing at the ASEAN Panel Products Federation (APPF) meeting in Kuala Lumpur on June 30 not to resort to such an action in the spirit of cooperation and solidarity.

ASEAN (the Association of Southeast Asian Nations) groups Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand.

No talks

Indonesian timber baron Muhammad (Bob) Hasan, however, said that participants of the APPF did not discuss the plywood price thoroughly, adding that Indonesian plywood exporters always sell its products at higher prices than Malaysia.

Hasan was quoted by the Jakarta-based Bisnis Indonesia daily as saying that Indonesian wood panel exporters had fulfilled a number of strict requirements, such as the Japan Agriculture Standard and the Indonesian Plywood Standard, which cause the Indonesian plywood to be better in quality and dearer in price than Malaysian products.

"We don't want to sell cheaper than Malaysia," Tjipto reiterated yesterday.

Hasan is a former chairman of APPF before handing in his two- year-term chairmanship to Chai in June.

Tjipto yesterday showed a two-page communique of the Kuala Lumpur APPF meeting, noting that it does not govern anything about pricing.

The communique, however, aired APPF's concern over, "the recent erosion of global plywood prices which was not caused by an oversupply but the disruptive pricing policies of new producers who are seeking a foothold in the international markets."

Chai said that Apkindo's price cut was unkindest to Malaysia as prices of plywood had plunged in China and the European countries, two of Kuala Lumpur's main markets, by 27 percent and 16 percent respectively.

"Plywood importers, distributors and merchants regard these price reductions as unnecessary," he said.

In a bid to find a solution, he added that MPMA would continue with efforts to contact Apkindo "for another week or two" before seeking government intervention.

As if knowing the proposal of Chai, Tjipto said that Apkindo was also ready to discuss the issue with both the Malaysian and the Philippine associations in what he called "the ASEAN cooperative spirit." (09)