Many Timber Firms Facing Closure in Indonesia
10/9/98
OVERVIEW & COMMENTARY by EE
The epicentre of the East Asian economic crisis has been Indonesia,
whose timber industry has been equally hard hit. Out of tragedy comes
an opportunity to pursue more community based, and sustainable forest
and land management. The scale and intensity of harvest, which in
many cases left the land virtually barren, must be reduced to
environmentally and socially sustainable levels. Wise, restrained
long-term management of forest and other resources will be a keystone
element of economic recovery and sustainable community development.
g.b.
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Title: Many Timber Firms Facing Closure in Indonesia
Source: Cable News Network
Status: Copyright, contact source for permission to reprint
Date: October 6, 1998
JAKARTA (Oct. 7) XINHUA - Almost half of Indonesia's timber-related
companies may call it quits due to growing uncertainty over their
business, the Jakarta Post reported Wednesday.
The Indonesian Forestry Society's chairman, Sudradjat, Tuesday said
that at least 40 percent of the country's timber-related companies
planned to switch to more promising business sectors such as
plantations.
Depletion of the country's forest resources, the soaring prices of
timber and wood-processing equipment, high capital costs and the
government's wavering policies are the major reasons that they are
mulling leaving the industry.
"Many timber companies here no longer expect that their logging
contracts will be extended. They are preparing to enter new businesses
which they consider have better prospects, such as plantations,"
Sudradjat said.
He added that the government's plan to limit ownership of forest
assets has raised concerns because wood-processing industries would no
longer have a sufficient log supply if the legislation is introduced.
Indonesia currently has 421 timber companies, 1,701 sawmill companies,
115 plywood companies and six pulp and paper companies.
Sudradjat said that at least 156 timber companies whose logging
contracts have ended are still awaiting the government's decision on
whether the contracts would be extended.
Meanwhile, overseas demand for Indonesian plywood has shown signs of
improvement with increases in orders from several Asian countries, the
United States and Europe.
"I have checked with all of Apkindo's (the Association of Indonesian
Wood Panel Producers) member companies. Most of them have said they
have closed their doors to new contracts until the end of December.
But they will receive new orders for next year's delivery," Sudradjat
said.
Indonesia is currently the world's biggest plywood producer, with 80
percent of its annual output of 10 million cubic meters exported.
Plywood is Indonesia's second largest non-oil and non-gas foreign
exchange earner after textiles and textile products.
Apkindo targeted to earn 2.6 billion U.S. dollars from plywood exports
this year. Last year, the country's plywood exports totaled 7.85
million cubic meters worth 3.58 billion dollars.