Furniture industry seeks government help
Benget Simbolon Tnb., The Jakarta Post
The furniture industry is urging the government to curb the illegal exportation of wood and rattan and take other steps to shore up the industry's declining market share at home and overseas.
The newly elected chairman of the Indonesian Furniture Industry and Handicraft Association (Asmindo), Ambar Tjahyono, said over the weekend that a shortage of raw materials and tougher competition from furniture markers in China and Vietnam were hitting the local industry hard.
"If there is no immediate effort to empower the industry, we'll see our market share both at home and overseas (continue) declining," Ambar told a press conference after he was elected as chairman for 2006-2008.
He said the furniture industry plays a crucial role in the economy, since it involves some 3,500 companies directly employing more than two million people across the archipelago.
"Many producers of raw materials, particularly wood and rattan, prefer to illegally export them to foreign countries rather than sell them legally in the local market," Ambar said.
This, he said, had increased the price of raw materials and created shortages.
Hartono, the head of Asmindo's department of raw materials and production, said much higher prices overseas have prompted people to smuggle wood and rattan out of major production areas including Sumatra, Kalimantan, Sulawesi and Papua.
Ambar said another problem the local furniture industry faces is aggressive exports by producers from China and Vietnam, which erode local producers' sales in the domestic and international markets.
In recent years Indonesia has imported an increasing amount of furniture. Last year imports jumped by 25 percent to US$45.9 million, compared to US$36.8 million in 2004.
The country's furniture exports stayed flat at about $1.6 billion from 2004 to 2005.
Ambar said China, which has banned all timber cutting except in industrial forests, imported all of its wood and rattan from Indonesia. Indonesia is the world's largest producer of rattan and timber.
Vietnam has also limited the cutting of trees in wild forests. "It's ironic that we as the largest producer of raw materials can be outsold by those two countries." said Ambar.
Asmindo urged the government to take immediate action against the smuggling of wood and rattan out of the country, and impose new standards for the importation of furniture products, in order to limit the massive inflow of products from China and Vietnam.
Ambar said several member countries of the Association of South East Nations (ASEAN) had imposed new standards for imported furniture products.
Currently, Indonesia applies 20 standards to furniture imports, while Malaysia, for example, has 100 standards.
In addition, Asmindo urged the government to provide a mechanism for "soft loans" to furniture makers. He also called on the administration to help establish furniture schools, particularly in the area of creative design, which is a key to success in local and international markets.