Plywood exports tumble due to declining prices

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)