Rattan deregulation 'will stimulate' export drives

Rattan deregulation 'will stimulate' export drives

JAKARTA (JP): The recent deregulation of the rattan trade will
stimulate investment and boost exports, Director General of
Forest Utilization Titus Sarijanto said yesterday.

He said deregulation of rattan exports should boost rattan
farmers' and gatherers' welfare and therefore encourage them to
increase their rattan output and improve the quality of their
produce.

"Rattan as a main non-timber product has been an important
source of foreign exchange. Indonesian rattan producers should
benefit from the reduction of export taxes," Titus said in a
seminar on the impact of rattan deregulation.

The government reduced export taxes on rattan to a maximum of
10 percent starting from Feb.1 as a part of the reforms agreed
with the International Monetary Fund.

Previously, the government imposed an export tax of $15 per
kilogram for raw rattan and $10 per kilogram for semi-finished
rattan.

In addition to the reduction of the export tax, the
deregulation also included the removal of the export marketing
system and quotas for rattan carpets, or lampit, and the removal
of formal and informal levies, fees and administrative burdens on
rattan bound for export.

Due to various fees and export restrictions, rattan exports
have been declining in recent years. The country's rattan exports
dropped to US$674 million in 1996 from $736 million in 1995 while
the export volume in 1996 decreased to 173,658 tons from 207,337
tons in 1995.

Production has followed a similar trend in the past 10 years.
The country produced an average of 375,000 tons per year of raw
rattan from 1993 to 1998, a sharp drop from an annual average of
511,000 in 1988/1993.

Titus acknowledged that the old export restrictions had
resulted in a sharp drop in the price of rattan on the domestic
market, due to an excess of supply.

"The situation discouraged rattan gatherers and farmers from
producing rattan," Titus said.

Challenges

Titus said that Indonesian rattan producers would face many
challenges in boosting rattan production due to the decreasing
forest habitat for rattan as much rattan-producing land had been
converted into industrial timber estates and oil palm
plantations.

He said that Indonesia had the potential to produce up to
696,900 tons of raw rattan annually, but only 120,000 tons of
this could be absorbed by the country's rattan processing-
industries.

To boost production, Titus said mandatory forest royalties on
rattan would be replaced by resource rent taxes, whose amount
would be announced soon.

He said that the ministry was still considering imposing a
zero percent resource rent tax on thick rattan to boost farmers'
income and to encourage them to plant rattan.

"Most thick rattan is cultivated and not taken from the
forests. The resource rent taxes should not be imposed on them,"
he said.

Christian Gnner, research fellow at the German-funded
Sustainable Forest Management Project, said rattan gardens must
be protected from land conversion wherever possible due to their
important role as a source of income for local people.

He added that rattan farmers in East Kalimantan were suffering
great losses due to the forest fires ravaging the province. These
have already destroyed an estimated 300 tons of thick rattan in
Jempang, a rattan-producing center in Kutai district. (gis)