Minister pledges to abide by IMF-backed reform program

JAKARTA (JP): Minister of Industry and Trade Mohamad (Bob) Hasan promised yesterday that he would abide by the terms of the IMF-backed reform program which diminishes the power of the highly controversial Association of Indonesian Wood Panel Producers (Apkindo) which he used to head.

Hasan said Apkindo would no longer serve as a joint marketing body for plywood companies because its function in that capacity had been ended when the government implemented a reform agreed with the International Monetary Fund on Jan. 21.

"Now all plywood trade is free, all companies can export or sell as they want, they don't have to be members of Apkindo and they can export their products through any shipping line they choose," he said.

However, Hasan was quick to reiterate that Apkindo was not a cartel or monopoly, but a joint marketing body designed to help monitor and control locally-produced plywood.

Apkindo was set up in 1984 under a trade ministerial decree.

Apkindo Chairman Abbas Adhar, who replaced Hasan last week, said yesterday the association was formed to increase the bargaining power of plywood producers amid falling plywood prices.

"At the time we were being played against each other by foreign parties, so that competition made our prices very low," Abbas said.

However, many plywood producers viewed Apkindo as a rent- seeking cartel, not an organization designed to altruistically set prices, production quotas and fees for plywood exports.

Apkindo obliged all companies to export through trading arms which it set up in various regions.

Furthermore, under the marketing scheme, plywood exports had to leave Indonesia via two shipping companies partially owned by Hasan.

Abbas said economic reforms, agreed in exchange for US$43 billion in aid, made it impossible to maintain these practices.

"We are now merely a business forum which keeps our members informed of industry developments," he said.

Abbas said plywood sales had been sluggish this year due to economic difficulties in several of Indonesia's largest markets, including Japan and South Korea.

He estimated exports would fall to 6 million cubic meters this year, down from 8.5 million cubic meters last year. The value of exports is expected to fall to about US$2 billion, down from US$3.5 billion last year.

Hasan also said yesterday that his ministry had no plans to lift the ban on the export of crude palm oil and its derivatives, imposed in January, until there were clear signs that product prices had stabilized and supplies were sufficient. (das)