Timber firms prefer to export sawn timber

Timber firms prefer to export sawn timber

JAKARTA (JP): The government's decision to ease wood export
restrictions will encourage timber companies to export sawn
timber rather than logs, the Association of Indonesian Forest
Concessionaires (APHI) said here yesterday.

APHI's deputy executive chairman, Hendro Prastowo, said that
selling sawn timber overseas would be more profitable than
exporting logs due to its higher added-value and the growing
market.

"Indonesian timber companies should take the deregulation as a
good opportunity to export their sawn timber which has higher
value than exporting logs," Hendro told reporters.

He said that sawn timber had better market prospects in
countries such as China, Brazil, Japan and European countries,
which are currently experiencing a housing boom.

Another advantage of exporting sawn timber, Hendro said, was
that unlike logs, it had more buyers because it could be used
directly, for example in housing construction.

Logs, on the other hand, have fewer buyers as not all
importing countries have adequate timber processing facilities.

"In addition, by exporting sawn timber we can guarantee a
sufficient supply of logs in the domestic market and it can also
absorb more workers."

Hendro said that wood-processing industries overseas had
switched to processing small-diameter logs following Indonesia's
wood-export ban nine years ago.

He added Indonesia's export ban had resulted in a scarcity of
large-diameter logs in the world market. Small-diameter logs
could be found in European forests and other non-tropical areas.

Indonesia, which mostly produces large-diameter logs, would
not get many buyers for its logs except for fancy woods, such as
teak.

According to economic reform programs agreed to with the
International Monetary Fund, the Indonesian government will
gradually reduce export taxes on logs, sawn timber and rattan to
30 percent by today, 20 percent by the end of December, this
year, 15 percent by end of December 1999 and 10 percent by
December 2000.

The government previously imposed a 200 percent export tax on
log exports.

The export tax for sawn timber was previously set at $500 per
cubic meter while the levels for raw rattan and semi-finished
rattan were set at $15 per and $10 per kilogram respectively.

But Hendro added that Indonesian sawn timber exporters would
face challenges from Malaysia, which had eliminated its export
taxes on sawn timber much earlier.

Malaysia is the world's biggest sawn timber exporter,
exporting more than 3.5 million cubic meters in 1996.

Hendro said that Indonesia's sawn timber exports still had
good prospects because the country's sawn timber potential was
higher than Malaysia's.

The abundant resources could guarantee a continuing supply, he
said.

Indonesia produced more than 6.7 million cubic meters of sawn
timber in 1996. Domestic consumption was 6 million cubic meters
that year. (gis)