Rattan industry losing competition to China: Rattan entrepreneur
Rattan industry losing competition to China: Rattan entrepreneur
Nana Rukmana, The Jakarta Post, Cirebon
A major player in the rattan industry has repeated concerns that
local businesses are losing the competition with China, as seen
in declining export figures for rattan furniture over the last
several years.
"Buyers from Europe, Japan and the United States prefer
China's rattan products because they are sold at cheaper prices,
despite the superior quality of Indonesia's products," said
Sumartja, the chairman of the Indonesian Furniture and Handicraft
Association (Asmindo).
The difference in price between rattan products from China and
Indonesia, said Sumartja, is striking, reaching as high as 60
percent. "Rattan products from China are a lot cheaper because
its rattan industry is regulated by the government and is also
cost efficient, exempt from illegal fees, unlike what is
happening with the rattan industry here," said Sumartja.
Apart from China, Sumartja said that Vietnam and the
Philippines had also begun to emerge as threats to Indonesia's
rattan industry.
China accounts for almost 60 percent of rattan craft exports
to Europe, the U.S. and Japan, while Indonesia has less than 30
percent of the market. "If there is no goodwill on the part of
the government, Vietnam and the Philippines could catch us,"
added Sumartja.
Rattan handicraft export volumes from Indonesia's rattan
handicraft center in Tegalwangi, Cirebon regency, is at its
lowest points. Export volume in October, 2005, was 600
containers.
"The figure is a sharp decline from the figure in September,
2005, which reached 700 containers. During the golden years of
the 1990s, Indonesia's rattan craft exports reached 2,000
containers a month," said Sumartja.
The main reason Indonesia is losing out to China, added
Sumartja, is Indonesian trade ministry Decree No. 12/2005, which
authorizes exports of unprocessed rattan.
According to Sumartja, this decree benefited rattan industries
abroad like in China and Vietnam, which were able to meet demand
for raw materials by importing unprocessed rattan from Indonesia.
"The government's policy is like providing the enemy with the
ammunition to kill us," said Sumartja.
Indonesia's high-cost economy has also added to the local
rattan industry's woes. "Rattan craft producers must now pay 17
kinds of fees imposed by regency and provincial administrations,
as well as the central government," said Sumartja.
Also, the increase in fuel prices on Oct. 1 dealt a big blow
to the industry. "It has increased production costs by up to 20
percent," said Sumartja.
Given the situation, Sumartja said the national rattan
industry would likely go under.
"Of the 127 medium and large companies that used to operate,
only about 30 are still in business. More than 90 companies have
closed down. Mass firings are imminent because the companies can
no longer produce goods," said Sumartja.
Smaller producers have fared even worse. According to
Sumartja, the 1,100 small-scale producers can no longer operate
because they are totally dependent on larger companies to obtain
production orders.
"If the big companies collapse, the small ones will follow and
rattan workers will lose their jobs. Each large company employs
500 to 1,500 workers, while a small company usually employs
between 25 and 100 workers," he said.
According to Sumartja, about 40,000 rattan workers have
already lost their jobs.
Sumartja has urged the government to revoke trade ministry
Decree No. 12/2005 to help revive the local rattan industry.