Local wood industry collapses

The Jakarta Post, Jakarta

About two-thirds of the nation's wood-based industry has collapsed, with a "high cost economy" and aging machinery making them uncompetitive against more efficient economies such as China and Malaysia, said Indonesian Forestry Society (MPI).

"About 60 percent of the 115 wood-based manufacturers have collapsed. If there is no action in the next six months to improve the situation, more will follow suit," MPI chairman Sudrajat DP told Antara on Saturday.

He said China and Malaysia have managed to establish more efficient industries, thus producing cheaper products.

Meanwhile, Indonesian producers had to bear numerous kinds of fees, both legal and illegal, he said.

"Such fees comprise about 35 percent of total production costs," he said, adding that Indonesian end-product prices become more expensive due to the inefficient and aging machinery, which consequently need more operational costs.

Moreover, local wood-based manufactures were stuck in producing only plywood, while Malaysia and China have focus on down-stream industries producing furniture.

Sudrajat suggested that the government could help by assisting the industry to restructure their machinery and expand the export market.

The government should also solve the illegal logging problem, he said. As the government intensified measures against illegal logging, raw materials are now in short supply.

The Ministry of Forestry has estimated that illegal trade in forestry products from Indonesia to China alone, especially raw timber, over the past couple of years has reached some 9 million cubic meters valued at Rp 18 trillion (US$1.86 billion).

Sudrajat explained that after years of misconduct, it was hard for manufacturers to determine the legal status of forest products.

Consequently, many manufacturers were trapped into acquiring illegal products and could not use them, as the authorities forbid them to do so, he said.