Local wood industry collapses

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.