Wood industries face severe shortage of logs

JAKARTA (JP): Indonesian wood-processing industries are facing a severe shortage of logs, according to the Indonesian Forestry Society (MPI).

MPI chairman Sudrajat DP said yesterday the country's processing capacities had exceeded log output.

The supply shortage is partly due to a lack of coordination among related government agencies, such as the Ministry of Forestry and Plantations, the Investment Coordinating Board (BKPM) and the Ministry of Industry and Trade, he said.

"BKPM issued permits to develop wood-processing industries without calculating the log supply with the Ministry of Forestry and Plantations," he said at a news conference.

Sudrajat said local wood-processing businesses would need about 35 million cubic meters to 36 million cubic meters a year, while the supply of logs would only total 26 million cubic meters.

"Wood-processing industries are only operating at 30 percent to 40 percent of their production capacity due to the scarcity of logs."

Sudrajat said the national demand for logs would be about 36.2 million cubic meters in the 1998/1999 fiscal year, of which 17 million cubic meters would be needed for the sawmill and woodworking industry, 18 million cubic meters for the plywood industry and 1.2 million cubic meters for the furniture industry.

The amount excludes local demand from the pulp industry.

Sudrajat said the situation would get worse if timber companies exported their logs without considering local demand.

"We cannot forbid them from exporting their logs because they have to maintain their cash flow considering the sluggish plywood market and the situation with other processed wood products. But we have urged them to supply domestic demand first. I'm sure they will prioritize their own industries," he said.

Earlier this year, former director general of forest utilization Titus Sarijanto said local wood-processing industries would face a log shortage of at least 14.5 million cubic meters per year over the next five years. He cited many of the same reasons on top of the country's recent forest fires.

Sudrajat also said MPI welcomed the government's plan to limit the ownership of the country's forest concessions, but said the maximum size should be based on the capacity of timber companies' processing industries.

He said some big business groups had gained control of the country's forest assets by taking over small companies which owned concessions but lacked the capital to run their own logging operations.

"Those small timber companies joined the big timber groups to supply raw materials for those groups' processing industries because they couldn't develop their own industries. As far as I know, the transfers of ownership were legal. But we welcome the minister's move to check them," he said.

Last month, Minister of Forestry and Plantations Muslimin Nasution said the government was considering limiting corporate and personal ownership of the country's forest concessions to prevent a concentration of forest assets in the hands of a small number of companies. (gis)