RI faces hurdle in log export target

RI faces hurdle in log export target

JAKARTA (JP): Indonesia is facing difficulties in meeting its
log export quota because of a domestic shortage of timber, a
senior official at the Ministry of Forestry and Plantations said.

Director of Supervision and Distribution of Forest Products
Walter Nadapdap said Indonesian timber companies were given a
quota to export 862,000 cubic meters of logs in the 1998/1999
fiscal year, which ends next month.

He said the log export realization in the first 10 months of
the fiscal year was only 13.26 percent of the total export quota,
generating US$13.22 million in foreign revenue.

Nadapdap said 11 timber companies had exported their logs,
including the country's second-largest timber company, the
Djajanti Group, and state forestry firm PT Inhutani III.

Djajanti and its sister company Budhi Nusa Group exported
39,218 cubic meters of logs to China, India and Thailand, while
Inhutani II exported 21,917 cubic meters of logs to Japan, China,
India and Singapore.

Nadapdap said the low export realization was due to the sharp
drop in domestic timber supplies, primarily caused by the heavy
rains which have disrupted logging activities and the
transportation of timber to mills.

He also said that most companies were still reluctant to
export their timber because local sales were now more profitable
because of the scarcity of domestic timber.

Nadapdap also believed the low export realization was due to
low overseas demand. Many importers still doubt the continuity of
supply from the country.

He said exporting logs would only be used as a short-term
emergency measure to offset the low demand at home during the
economic crisis.

However, Nadapdap also said that the domestic log supply was
much lower than expected, causing a scarcity at home.

"Annual local demand is estimated to reach 57.18 million cubic
meters, while supply is projected at only 4.8 million cubic
meters," he added

Nadapdap said that to operate optimally, the country's 1,701
sawmills needed 26.57 million cubic meters of logs annually. He
also said the country's 105 plywood companies and six pulp and
paper firms needed 16.3 million cubic meters and 14.31 million
cubic meters of logs respectively.

The country's log supply only reached 45.8 million cubic
meters last year, 28.9 million cubic meters of which came from
natural forests, 9.9 million cubic meters came from wood use
permits and seven million cubic meters came from timber estates.

Minister of Forestry and Plantations Muslimin Nasution said
earlier this month that he asked the International Monetary
Fund's approval to postpone the plan to reduce the export tax on
timber in order to prevent the domestic log supply from growing
even scarcer.

According to the economic reform program agreed to by the
government and the IMF, in exchange for the agency-brokered
multibillion bailout fund, Indonesia's export taxes would be
gradually reduced.

In June, as part of its agreement with the IMF, the government
replaced the technical ban on log exports with a 30 percent
export tax, with a staggered reduction system to 20 percent by
the end of 1998, and 15 percent by the end of 1999.

To address the domestic shortage of logs, Muslimin said the
government would lower the log export quota in the next fiscal
year. (gis)