Wood processing firms want limit log exports

JAKARTA (JP): Associations representing the wood processing industry here have called on the government to limit log exports to protect local companies.

Adi Warsita Adinegoro, the vice chairman of the Indonesian Forestry Society, said on Wednesday that an increase in log exports would further hurt wood processing companies.

He said around 30 percent of local wood processing companies have temporarily stopped operating due to a shortage of logs on the domestic market.

The shortage in supply worsened earlier this month after the government eased log export restrictions to allow timber companies to sell logs overseas, he said.

"If the government does not limit log exports, our wood processing industry will die while those overseas prosper. Don't forget, the wood processing industry employs over 4 million in this country," Adi said in a meeting between the Indonesian Forestry Society -- which groups nine associations representing timber producers and the wood processing industry -- and the Minister of Forestry and Plantations, Muslimin Nasution.

He said the society understood that it would be difficult to reimpose log export restrictions because any such move would be in direct violation of the terms of the government's agreement with the International Monetary Fund (IMF).

"We are not seeking a reimposition of the log export ban, but we do want the government to limit exports," he added.

Adi said the Indonesian wood processing industry was facing a shortage of logs even before the government relaxed export restrictions on unprocessed logs.

He said the industry needed at least 45 million cubic meters annually while log production was running at only 26 million cubic meters a year.

He questioned the ministry's recent report which said that Indonesia will have a log surplus of 5 million cubic meters in the 1998/99 fiscal year.

Adi said the government should only allow log exports from areas that have an abundant supply but lack processing industries, such as Irian Jaya.

The types of logs which it is permissible to export should be limited to those which are not used by local companies, he added.

He said that logs from areas where wood processing companies are concentrated, such as Central and East Kalimantan, should not be exported. Most logs from these areas are used to manufacture plywood.

Adi said that the ministry has issued log export licenses to 20 of the 43 companies that applied. The licenses will allow the companies to export a total of 470,000 cubic meters of logs.

Muslimin reiterated that log exports would only be allowed as a short term emergency measure during the economic crisis and confirmed an earlier statement that the government has no intention of promoting exports in the long term.

"Timber companies will be allowed to export logs only after the domestic supply is capable of meeting domestic demand for a minimum of three months," he said.

He did not specify how domestic supply and demand would be determined, but said his ministry was working on a plan with the Ministry of Industry and Trade.

Previously, the government technically banned log exports through the use of a 200 percent export tax. The tax was cut to 30 percent in June this year to comply with the program of reform agreed with the IMF.

The government has said it will further cut the export tax to 20 percent by December of this year, then to 15 percent by the end of 1999 and to 10 percent in December, 2000. (gis)