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)