Indonesia furniture exports stagnant
Indonesia furniture exports stagnant
Anissa S. Febrina, The Jakarta Post, Jakarta
The furniture industry saw its exports stay flat and production
capacity decline in the first half of the year, with the trend
set to continue into next year unless the government speeds up
measures to address the high-cost economy, an association says.
The Indonesian Furniture Producers Association (Asmindo) has
reported furniture exports in the first half of the year were
valued at US$775 million, about half of total exports in 2004.
However, the Central Statistics Agency (BPS) put first-half
exports at $900 million. It also reported that Indonesia exported
$1.55 billion worth of furniture in 2004, slightly lower than the
$1.6 billion booked in 2003.
"The facts from the field show there has been a decline in the
production capacity since last month, when 46 producers stopped
operating and 79 others temporarily halted operations," Asmindo
executive director Sae Tanangga Karim said, adding that the
situation affected between 4,000 and 6,000 workers.
Currently, there are 2,016 furniture producers under the
association -- 90 percent of which are exporters -- with about
two million workers nationwide.
While Asmindo did not give a reason for the differences in its
export numbers and those of the BPS, Minister of Trade Mari E.
Pangestu warned earlier that reports on export growth might need
to be revised due to a shift in statistical and data collecting
methods.
Asmindo also noted a decline in total on-the-spot transactions
at the recent Export Commodity Expo, from $8.3 million last year
to $6.5 million this year.
Taking into account the fuel price hike, Asmindo estimates
that this year's total exports will stand at about $1.6 billion.
"We estimate the value will remain stagnant in 2006, even
while global demand grows by 5 percent to 7 percent," Tanangga
said.
Last year, global demand for furniture was valued at $66
billion, with China and Italy leading market suppliers with
combined exports of $9.3 billion.
"We only had a 2 percent share of the market. Our ranking in
the Southeast Asian market has also declined, and we were
outclassed by Malaysia and Vietnam," Tanangga said.
With the fuel price hike, furniture producers have to deal
with an increase of up to 25 percent in production costs, a
situation that has led to four local companies employing at least
900 workers to consider relocating their businesses to Vietnam,
Tanangga said.
"Vietnam offers a three-year tax holiday for any investors
willing to invest at least $500,000 to set up a business in the
country," he said.
Tanangga said similar measures could be taken in Indonesia,
along with other policies to lower economic costs, such as
reducing the terminal handling charges at ports.