Playwood exports expected to decline 25% in 1998

JAKARTA (JP): Indonesia's foreign exchange earnings from plywood exports is expected to fall by 25 percent this year to about US$2.6 billion from $3.58 billion last year, the Association of Indonesian Wood Panel Producers (Apkindo) said Saturday.

Apkindo chairman Abbas Adhar said yesterday the lower estimate was partly due to a 20 percent fall in export volume, caused by sluggish demand and a reduction in production.

"If the market remains unfavorable throughout the year, plywood exports are expected to stand at about $2 billion, a record low since 1990," Abbas said.

Last year, Indonesia exported 7.58 million cubic meters of plywood worth $3.58 billion.

He said the 25 percent fall was based on an assumption that plywood prices in the world market would increase to $300 per cubic meter in the third quarter of this year.

He added that international prices of Indonesian plywood had slightly increased last month to $270 per cubic meter from $260 per cubic meter in March.

Many Indonesian plywood producers cut their production this year following sluggish demand and an increase in production costs. But Abbas said Apkindo would not revise its target to export eight million cubic meters this year.

Indonesia is the world's biggest plywood producer, turning out 10 million cubic meters of plywood annually.

He said some plywood importing countries had started buying Malaysian plywood due to the declining volume of Indonesian plywood in the past few months.

But Abbas is optimistic that Malaysia, the world's second biggest plywood producer, will not replace Indonesia's position due to its higher prices.

"Malaysian plywood is more expensive because the price of their logs are higher than our logs," Abbas said, adding that Malaysian logs sold at $90 per cubic meter while Indonesian logs sold at Rp 300,000 ($30) per cubic meter. (gis)