Minister pledges to abide by IMF-backed reform program

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)