RI plywood exports fall 35% due to tardy market
JAKARTA (JP): Indonesia's plywood and other wood panel exports fell by 35 percent in 1998 to US$2.5 billion due to a sluggish overseas market, the Association of Indonesian Wood Panel Producers (Apkindo) said on Tuesday.
The executive director of Apkindo, Tjipto Wignjoprajitno, said in terms of volume, plywood exports dropped by only 3.6 percent to 8 million cubic meters from 8.3 million cubic meters in 1997.
"The lower export value was due to weak demand and depressed prices rising from economic crises affecting several main importing countries, particularly Japan and South Korea," he said.
The association initially projected $3 billion in earnings from exports in 1998. Plywood exports were valued at $3.9 billion in 1997.
Tjipto estimated that the world's depressed plywood market would recover in the second quarter of this year and Indonesia's exports would also pick up during this period.
"I am confident that we can export over 8 million cubic meters of plywood this year," he said. However, he said he could not predict Indonesia's foreign exchange earnings from the exports because prices would remain uncertain,
Tjipto said the demand for Indonesian plywood had risen in the last two months, especially after Malaysian plywood producers cut their exports due to the scarcity of logs.
The higher orders mostly came from Japan, he said.
He said that the Japanese government had raised its proposed budget by 1.7 percent for the 1999/2000 fiscal year, which begins in April, adding that a large part of the budget would be allocated for the crisis-hit property and construction sector.
He said that plywood prices in Japan currently ranged between $380 and $540 per cubic meter.
Demand for plywood from other Asian countries, particularly China, is also expected to increase significantly in April. China imports birch wood from Europe to support the country's fancy plywood industry.
"China will also need Indonesian base panel to make the fancy plywood," Tjipto said, adding that the price of Indonesian plywood in China was encouraging.
Meanwhile, he said, demand from South Korea was sluggish because the country was still facing economic turmoil. The country currently is able to import low quality plywood only, which is usually sold on the domestic market.
Tjipto said demand from the Middle East was currently low because business activities in the region had halted for the Haj pilgrimage.
Demand and prices in European countries and the United States are stable, while Mexico plans to directly import Indonesian plywood, he said.
"Mexico want us to sell directly to the country. At present, we export our plywood to the Unites States which then sells the plywood to Mexico," he added.
Tjipto also questioned the policies enacted by the International Monetary Fund (IMF) to help the forestry sectors of crisis-hit countries.
He quoted the Japan Lumber Report, which stated that the Cameroon government banned log exports in accordance with its agreement with the IMF to receive financial aid from the fund.
"Indonesia is obliged to ease export restrictions by reducing export taxes from 200 percent to 30 percent. From my point of view, the IMF sets different standards to help crisis-hit countries. If the IMF was consistent, Cameroon would also be required to open its log exports," he said.
According to the economic reform program agreed to by the government and the IMF, in exchange for the agency-brokered multibillion bailout fund, Indonesia has to gradually reduce its export taxes.
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 which will lower the export tax to 20 percent by the end of 1998 and 15 percent by the end of 1999.
However, the government has asked the IMF to postpone the reduction because many local wood-processing companies have complained about the scarcity of logs on the domestic market. (gis)