Timber firms in 'serious trouble'

JAKARTA (JP): Many timber companies have serious financial problems due to sluggish demand for timber and wood-related products in domestic and overseas markets, a minister said yesterday.

Minister of Forestry Djamaludin Suryohadikusumo said most timber firms had stopped operations due to the gloomy export market that has resulted from the monetary crisis, which has hit Southeast Asian countries and important buyers of Indonesian woods such as South Korea and Japan.

"I have received a report that at least 5.9 million cubic meters of cut logs remain untouched in forests because the timber estates have stopped operations," he said.

"In the next three months the logs will start to rot and cannot then be processed. It will cause great losses for timber companies and for the country," he added.

He said the companies had stopped activities because their operational costs were higher than their earnings due to the slowdown in overseas demand.

He said Japan, the biggest importer of Indonesian wood, and Korea, another major buyer, had cut their imports of Indonesian timber and wood-related products.

He said the situation was worsening because demand from the United States, which firms had hoped would replace Japan as lead buyer, was also sluggish.

Djamaludin said financial difficulties were forcing firms to lay off workers.

Djamaludin said that at least five timber firms in Central Kalimantan had asked the government for permission to dismiss employees because of financial problems caused by the monetary crisis.

He said the Kalimanis Group, a group of timber estates owned by timber tycoon Mohammad "Bob" Hasan, had recently announced it would dismiss 1,400 workers due to major financial problems.

These companies have said that dismissing workers is the only choice they have if they are to avoid bankruptcy.

But he suggested the timber companies rent out their workers and heavy equipment to develop plantation areas.

Meanwhile, timber tycoon Prajogo Pangestu -- the chief commissioner of PT Barito Pacific Timber -- said his company had no plans to dismiss its workers because it was still sound.

"We have about 70,000 workers, and I hope the currency crisis will not force us to lay them off," he said. (gis)