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)