Log shortage no threat to plywood exports: Apkindo

JAKARTA (JP): The Association of Indonesian Wood Panel Producers (Apkindo) reassured Japanese buyers on Thursday that a domestic shortage of logs would not hurt the plywood supply to the country.

Apkindo's chairman Abbas Adhar attributed the scarcity to an unusually heavy rainy season which hampered distribution of logs from logging areas to wood-processing industries.

"If there is any decline in production, it will be very small and will not disrupt our exports," he said after meeting representatives of the Japanese Plywood Manufacturers Association (JPMA).

Abbas also pledged the Indonesian plywood industry would continue producing despite the country's unstable social and political condition.

JPMA also buys raw plywood from Indonesia for the production of high-quality plywood products.

JPMA's president Koichi Mataga said association members feared a decline in plywood exports from Indonesia because it would affect their production.

"We have read several reports that Indonesia will face a severe shortage of its log supply in the next two or three years. If it happens, it will disrupt plywood exports to Japan."

He said Indonesia and JPMA's members supplied over 80 percent of Japan's total consumption of plywood annually. The rest is imported from other plywood-producing countries.

In 1998, total consumption of plywood in the Japanese market reached 7.18 million cubic meters, 3.3 million cubic meters of which were produced domestically by JPMA members. The remaining 3.87 million cubic meters was imported, in which 2.33 million cubic meters, or 61 percent, was imported from Indonesia.

The figure is much lower than in 1997, when Japan consumed 9.5 million cubic meters of plywood, producing 4.2 million and importing 3.2 million cubic meters from Indonesia.

The lower demand was caused by Japan's economic crisis battering the country's property and construction sector.

Mataga said demand for plywood was expected to increase this year as the Japanese government planned to increase housing construction to 1.3 million units from 1.2 million units last year. Construction will need at least 7.3 million cubic meters of plywood.

He added that the Japanese government allocated US$2.6 billion for the crisis-hit property and construction sector in its budget for the 1999/2000 fiscal year, beginning in April.

"Continuous supply from Indonesia is badly needed to maintain the stable market of plywood in Japan."

Mataga said the Japanese plywood industries basically had annual production capacity of five million cubic meters, but most plywood manufacturers in the country were operating below capacity due to scarcity of raw materials, including logs.

Abbas said the two associations agreed to cooperate in stabilizing the Japanese plywood market and promoting the use of plywood in Japan.

He acknowledged that the Japanese government imposed high import duties, set at 8.5 percent and 10 percent on hardwood, which hampered Indonesia in raising its plywood exports.

In a similar development, chairman of the Association of Indonesian Concessionaires (APHI) Adi Warsita Adinegoro urged the government on Thursday to approve the annual working plan proposed by each timber company as soon as possible.

In the past, 40 percent of logging plans submitted by timber companies were approved by the month of March. This year, none of the timber companies have received approval.

The government sets annual logging quotas for each timber company based on the plans. (gis)