Timber firms in 'serious trouble'

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)