Plywood exports tumble due to declining prices

JAKARTA (JP): Despite a slight increase in volume, Indonesia's plywood exports fell by 5 percent to US$1.97 billion during the first six months of this year due to declining prices on the international market, a forestry executive says.

A. Tjipto Wigjoprajitno, the executive chairman of the Association of Indonesian Wood Panel Producers (Apkindo), said yesterday that the volume of Indonesia's plywood exports increased by 1 percent to 4.49 million cubic meters in the January to June period of this year.

The plywood exports in the first six months of 1994 reached 4.44 million cubic meters and were worth $2.07 billion.

However, he was optimistic that prices would get better, saying that Indonesian plywood is known to be better quality than similar wood products from other countries.

"Research conducted by the University of Tokyo gives evidence that Indonesian plywood is stronger and stiffer and has a less tendency to swell than similar goods from other countries," he said.

Disregarding comments from Minister of Forestry Djamaludin Suryohadikusumo, who said last month that Indonesia would rely more on medium-density fiberboard rather than plywood for its exports in the future, Tjipto said plywood, although having a number of overlapping features with other wood products, "cannot be entirely substituted".

Indonesia, the world's largest plywood supplier, produces about 10 million cubic meters of plywood annually.

Major importers of Indonesian plywood include the far eastern countries, which spent up to $1.3 billion for 3.1 million cubic meters of plywood over the January to June period, while the United States and Canada ranked second with $216 million for 449,050 cubic meters of plywood.

Mexico

Tjipto said that Mexico, a minor importer of Indonesian plywood, announced through its official gazette early last month that it has lifted allegations of dumping practices by Indonesian plywood exporters.

According to a copy of the gazette, which was made available to The Jakarta Post yesterday, the Mexican government had formerly accused Indonesian plywood exporters of gaining unfair profits through subsidies.

The allegations, according to Tjipto, were launched in 1993 and since then Indonesia's plywood exports to that country have continued to fall.

Ever since investigations were conducted to prove the allegations, he said, importers of Indonesian plywood have had to pay fees of up to 50 percent of the price of wood.

Thus, plywood exports to Mexico were almost zero in 1994 and 1995, as compared to 88,533 cubic meters worth $43.9 million in 1993.

Tjipto said that Apkindo spent "a large amount of money" to cooperate with the Mexicans, including local lawyers, to clear the accusations.

The government revealed last January that export revenue from plywood, a major foreign currency earner among Indonesia's non- oil products, fell by 9 percent in the January to September period of last year to US$2.8 billion from the corresponding period in 1993.

Although Apkindo executives said the drop in exports were caused by lower demand from the recession-stricken Japan and increased supply from Malaysia, analysts have blamed Apkindo's policies, which allow only selected distributors to market their products, as the cause of the fall.

Indonesian regulations stipulate that Indonesian plywood producers cannot export their goods, or even process letters of credit, without the approval of Apkindo.

Tjipto said last month that the association was prepared to accept the change in the plywood marketing system as long as a the new mechanism benefits its members.

"(Our) members are not strong enough to face tough competition if Apkindo doesn't regulate exports. But by the time trade barriers are released five years from now, we will be strong enough," he said.

Plywood prices on the international market drop steeply in May and June each year because Japan, which is a major importer, imposes preference measures to importers during that period to conduct major construction projects, he said.

"That is when every producer makes their exports. Without our control, prices will plunge," he said. (pwn)