Wood processing firms want limit log exports

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)