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