Plywood producers deny industry is bad debt source

Plywood producers deny industry is bad debt source

JAKARTA (JP): Forest-based industrialists have dismissed criticism which accuses the plywood industry of being a source of bad loans.

A. Tjipto Wignjoprajitno, the executive chairman of the Association of Indonesian Wood Panel Producers, said Wednesday night that if cases of bad debts at forest-based companies do occur, they should be examined on an individual basis.

He also highlighted the media's role in the issue.

"If the media carry negative reports on such cases for certain firms, banks may be reluctant to extend new loans to other companies. They will be more careful in giving out loans," he said.

Tjipto acknowledged that some plywood mills have had difficulties obtaining raw materials, which in turn caused their debts to go sour, but added that shortages of timber were only temporary.

Last year, he said, heavy downpours made the transportation of timber more difficult, especially between forests and plywood mills.

"If the rain subsides, I think there will be no problem with supplies," he said during Wednesday's breaking of the fast gathering with reporters.

Timber tycoon and chairman of the Indonesian Forestry Society Mohammad "Bob" Hasan, who also attended the gathering, said companies could avoid bad loans through sound forest management.

Tjipto said that plywood exporters last year faced difficult times as export values decreased by three percent and export volume by 2.9 percent.

He said the situation was "normal" and he was optimistic that the situations would be better this year, especially with the recovery of Japan's economy. Japan is one of the major importers of Indonesian plywood. Others are China, the United States, Canada, and European countries.

Minister of Forestry Djamaludin Suryohadikusumo predicted earlier this year that the volume and exports of Indonesia's plywood production would probably be stagnant due to a lack of raw materials caused by the decline of the standing stocks of natural forests.

Diversification

Djamaludin called on wood-based companies, especially plywood mills which used large-diameter trees, to diversify their wood products and optimize the use of timber from natural forests.

According to data from the Central Bureau of Statistics, the country's plywood exports have been declining steadily for the last few years. In the January-October period of last year, for example, plywood exports decreased by 8.79 percent to US$2.87 billion from $3.15 billion in the corresponding period of 1994.

In the same period, exports of sawn timber decreased by 10.27 percent to $378.49 million, while exports of other wood products increased by 13.19 percent to $881.55 million from $778.84 million.

During Wednesday's gathering, forestry executives said that by 1999, all forest concessionaires in the country would have undergone evaluation to implement eco-labeling requirements.

Eco-labeling, which is voluntary, was stipulated by the International Tropical Timber Organization to begin in the year 2000. Eco-labeling requires all timber traded on the international market to come from forests which are managed on an environmentally sound basis.

"Forest concessions which have been evaluated are expected to start implementing the eco-labeling requirements straight away," Tjipto said.

He said the Association of Indonesian Forestry Companies has so far evaluated 61 forest concessionaires. There are presently 435 concessionaires operating in Indonesia. (pwn)