Plywood income likely to fall by 16 percent

JAKARTA (JP): Indonesia's foreign exchange earnings from plywood exports is expected to fall 16 percent this year to US$3 billion from $3.58 billion last year, the Association of Indonesian Wood Panel Producers (Apkindo) estimates.

Apkindo executive director A. Tjipto Wignjorajitno said yesterday the lower estimate was partly due to the fall in prices and export volume.

"If the market is still unfavorable through this year, plywood exports are expected to stand below $3 billion, a record low since 1992," Tjipto said.

He said current low prices were the result of a smaller demand from Indonesia's two main buyers, Japan and South Korea, which are experiencing economic downturns.

He added that the government's reduction of the plywood export quota imposed on Indonesian plywood producers to 6.9 million cubic meters from 8 million cubic meters last year was also a main cause of the lower estimate.

The government limits plywood exports to ensure that forests are managed in a sustainable manner.

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

Plywood, a wood panel product, is Indonesia's second largest non-oil and non-gas foreign exchange earner after textiles and textile-products.

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

Tjipto said the government cut of the export tax on logs to 30 percent from 200 percent would not pose another blow to Indonesian plywood industries.

He said timber companies preferred selling processed wood products such as sawn timber because it was more profitable than exporting logs.

"Indonesian timber companies mostly supply logs to their own processing industries because it's more profitable for them to process the wood and then export it rather than exporting logs," he said.

He said the export tax reduction would stimulate timber companies to export sawn timber and processed wood besides plywood, due to a growing demand from European countries, Hong Kong and Taiwan. (gis)