Malaysia and China onslaught hits RI's plywood exports

Malaysia and China onslaught hits RI's plywood exports

Rendi A. Witular, The Jakarta Post, Jakarta

Exports of plywood from Indonesia plunged by 15 percent in the
first semester of this year as China and Malaysia flooded the
export market with cheaper products.

Indonesian Wood Panel Association (Apkindo) chairman Martias
told The Jakarta Post that for the first half of the year, the
country's plywood exports dropped to 2.7 million cubic meters
from 3.2 million in the same period last year.

"Malaysia and China are flooding the market with cheaper
plywood made of logs illegally taken from our forests. We cannot
compete with them," Martias, who is also the president
commissioner of publicly listed plywood company PT Surya Dumai,
said.

Plywood made from illegal felled trees is less expensive
because it is not subject to taxes and other levies imposed by
the government.

Martias said inexpensive plywood from Malaysia and China had
caused the global price of the commodity to remain stagnant at
about US$280 a cubic meter.

As a result of the stagnant prices, the country's plywood
exports plunged in value to $870 million in the first half of the
year from $1 billion in the same period last year, he said.

The country's share of the plywood market has also declined
from about 85 percent in 1995 to just 55 percent last year.

Martias said Malaysia now exported nearly the same volume of
plywood as Indonesia, while China, which had been one of the
country's main export markets, could gradually become self-
sufficient in the product.

In view of this, Apkindo predicted plywood exports this year
would drop to 5.5 million cubic meters from 6.5 million last
year. The association also predicted export value would slide to
$1.7 billion from about $2 billion.

The association said global demand for plywood this year was
expected to remain unchanged from last year at between nine
million and 10 million cubic meters.

Those involved in the industry, which was a major foreign
exchange earner for the country before the economic crisis, have
complained to the government about the rampant smuggling of the
country's illegally cut logs to countries such as Malaysia and
China.

However, the government has thus far failed to take the
necessary steps to stop the smuggling.

Analyst Ella Nusantoro of Bahana Securities blamed the
industry's woes on government indifference.

"There is always a demand for plywood in the global market.
However, the government seems to lack interest in helping the
industry, which has long been known as a dollar earner," Ella
said.

She said that because of the industry's problems, most plywood
companies listed on the Jakarta Stock Exchange had performed
poorly.

Most of the companies, including Surya Dumai, PT Sumalindo
Lestari and PT Daya Sakti Unggul, booked declines in first-half
sales.

Surya Dumai's sales dropped to Rp 209 billion in the first
half of the year from Rp 244 billion in the corresponding period
of last year, while Sumalindo's sales dropped to Rp 364 billion
from Rp 418 billion. Daya Sakti sales fell to Rp 256 billion from
Rp 262 billion.

Other listed plywood firms are PT Barito Pacific, PT Intan
Wijaya Internasional and PT Tirta Mahakam.

Eyebox Grafik

Year Volume Value

(in cubic meters) (in US dollars)

1996 8.5 million 4.0 billion
1997 8.3 million 3.8 billion
1998 8.0 million 2.4 billion
1999 7.7 million 2.7 billion
2000 6.9 million 2.4 billion
2001 6.3 million 2.0 billion
2002 6.5 million 2.0 billion
2003* 5.5 million 1.7 billion

* Predicted
Source: Apkindo