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Expansion of plywood industry hampered by scarcity in basic material supply.

Backgrounds

Japan asks for larger supply of plywood but producers could not easily increase production to meet the requests on scarce basic material. Japan needs more plywood for reconstruction after the recent devastating tsunami. Japan has asked for supply of 2.2 million pieces of plywood with special price, secretary general of the forestry ministry Hadi Daryanto. Japan asked that the products of processed timber they need include plywood, sawn wood, laminated wood and other timber products would be exempted from export tax.

Indonesia is the second largest supplier of plywood to Japan, after Malaysia. Another major supplier of plywood for Japan is China.

Hadi said Japan is the main donor for International Tropical Timber Organization (ITTO), therefore, Indonesia will consider giving Japan a special treatment.

Meanwhile, the existence of plywood industry in East Kalimantan, one of the largest production centers for plywood in the country, is being threatened with the growing scarcity of log basic material. A plywood company in that region, PT Inne Donghwa, said its production has been on the decline in the past five years, both in quantity and quality as the company relies more on supply from other regions including Maluku and Papua for of basic material.

Apart from scarcity of basic material supply, the government policies, which have been critical of the industry, contributed to the decline of the industry. In addition, competition is sharper in plywood market from neighboring countries.

Difficulties are faced not only by plywood producers in East Kalimantan but almost in all regions

Production of Plywood Shrinking

The country's production plywood has been on the decline in the past several years because of the scarcity of basic material supply. Contribution from industrial timber estates (HTI) is not yet sufficient to support development of the industry. Meanwhile, the government has slapped tighter restriction on the use of trees from natural forests. In fact many plywood factories have stopped operation.

In 2005, the country's production of plywood reached 4,533,749 cubic meters, down 15.90% to 3,811,794 cubic meters in 2006, and down again by 9.38% to 3,454,350 cubic meters in 2007. The production continued to decline in the following years to reach 3,004,950 cubic meters in 2009. See the following table.

Kalimantan is the largest producers of plywood among the islands and East Kalimantan is the largest among the provinces. East Kalimantan's plywood production totaled 613,911 cubic meters in 2009, followed by South Kalimantan with production of 341,902 cubic meters and West Kalimantan with production of 301,208 cubic meters. In Java, the largest producing regions are Banten with a production 284,965 cubic meters and Central Java 203,147 cubic meters per year.

Plywood is he main product of processed timber in the country and has been a major export earner.

Plywood is made of layers of veneers. Exports of veneers have been relatively stable compared to plywood exports. In 2009, exports of veneer reached 8,409 tons.

The value of exports of plywood rose from year to year in 2005-2008 period despite a decline in volume. The export value was recorded at US$2,055.5 million in 2008, up 31.31% from US$ 1,565 million in 2007. In 2009, the export value dropped to US$ 1,314.1 million as a result of the global market slump.

Japan the largest export market for Indonesian plywood

Exports of plywood by Indonesia to Japan dropped sharply in 2008 to 163,640 tons from 679,154 tons in 2007, but rose again in 2009 to 573,698 tons. Japan, however, remain the largest buyer despite the decline in 2008.

Taiwan is the second largest to which exports of plywood totaled 146,540 tons in 2009, followed by the United States to which exports totaled 98,219 tons and South Korea 97,927 tons.

In 2005, China was the second largest buyer after Japan. Exports to China that year totaled 173,612 tons, but the export volume continued to decline to reach only 82,960 tons in 2009 or the 6th largest. Plywood industry grew fast in China which because the world's largest exporter of plywood in 2007, putting behind Indonesia and Malaysia previously dominating the world plywood market.

Imports of plywood by Indonesia have tended to increase but the volume is small --totaling 20,751 tons in 2005, up to 36,958 tons in 2009.

The value of plywood imports has been fluctuating. In 2006, imports surged 164.74%, but fell sharply 22.61 % in 2009 to US$21,614,882 from US$27,929,352 in 2008.

China is the largest supplier of plywood for Indonesia totaling 27,000 tons in 2009, down from 45,708 tons in 2006 and 48,535 tons in 2007. Malaysia is the second largest supplier.

Main producers of plywood in Indonesia

PT Plywood Indonesia (KLI) is one of the largest logging and timber processing companies in Indonesia. The company has two large plywood factories--one in Java (PT Plywood Indonesia) and one in Papua (PT Henrison Iriana). The company accounts for 10% of the country's production capacity for plywood.

In cooperation with Sumitomo Forest Industries of Japan KLI also operates a fiber board plan PT Rimba Partikel Indonesia, in Java. Logs from he plants are supplied from its forest concessions (HPH). Its forest concessions totaled 1.7 million hectares by the end of 2003 and 1.4 million hectares of which are in Papua.

PT Plywood Indonesia was established in 1977 and began commercial operation three years alter. In addition to plywood, PT Plywood produces sawn wood, vinyl coated plywood and furniture.

PT Sumalindo Lestari Jaya Tbk was established in 1980 as a forest concessionaire and a producer of plywood in East Kalimantan. PT Sumalindo also produces various wood-based products partly for exports.

PT Sumalindo Lestari Jaya Tbk has a forest concession of 132,000 hectares with a production capacity of 66,000 cubic meters per year. In 1985 four forestry companies--PT Rimba Nusantara, PT Emporium Lumber, PT Rimba Lapis Permai and PT Gonpu Indonesia Ltd were merged into PT Sumalinddo Lestari Jaya, expanding the concession of PT Sumalindo Lestari Jaya by 150,000 hectares and production capacity by 120,000 cubic meters of plywood per year.

PT Sumalindo Lestari Jaya Tbk bult a second production unit producing plywood, bringing its total production capacity to 190,000 cubic meters per year. In 1994 PT Sumalindo Lestari Jaya was registered a public company producing Medium Density Fiberboard (MDF), with a capacity of 100,000 cubic meters.

PT Tirta Mahakam Resources Tbk was established in 1981, with the name of PT Tirta Mahakam Plywood Industry. The company became a public company in 1999. PT Tirta Mahakam Resources produces plywood, fancy wood, polyurethane color floor, UV single strip engineered hardwood floor, Moulding and block board.

PT Tirta Mahakam Resources has an integrated timber processing factory near the Mahakam river in the village of Bukuaan, Palaran Samaarinda, East Kalimantan In 2001, this company moved its unit of UV Color from Samarinda in East Kalimantan to Gresik, East Java.

Conclusion

Indonesia had once been the largest plywood supplier to the world market but now its production of plywood has declined sharply.

The decline in the country's exports of plywood could be attributed to a number of factors including sharper competition from other producers, some of them were formerly net buyers and market destinations for Indonesian plywood.

Another major factor is growing difficulties in securing log basic material. The country has been a target of criticism by environmentalists accusing the country of arbitrary felling of natural forest trees. The government, therefore, is more restrictive in its forestry policy. A number of regulations have been issued to protect natural forests. As a result the country has been left behind by Malaysia and China which was formerly a major importer of plywood from Indonesia

Increase in plywood requirement in India opens an opportunity for Indonesia to boost plywood exports and regain its domination of the market in the world. Meanwhile, demand also increased from Japan that needs restoration of areas following the recent tsunami.
Table--1
Production of Plywood 2005-2009
(Cubic meters)

Year 2005 2006 2007 2008 2009

Volume 4,533,749 3,811,794 3,454,350 3,353,479 3,004,950
Growth (%) -- -15,90 -9,38 -2,92 -10,39

Sources : Directorate of BPPHH, BPK
directorate general, Forestry Ministry

Table--2
Production of plywood by provinces, 2005-2009
(Cubic meters)

No. Provinces 2005 2006 2007

1 Aceh 0 0 0
2 North Sumatra 153,345 98,807 73,705
3 West Sumatra 548 0 0
4 Riau 176,828 148,982 54,379
5 Riau Islands 0 94,804 107,585
6 Jambi 364,748 270,092 183,214
7 South Sumatra 36,475 64,597 43,752
8 Bangka Belitung 0 0 0
9 Bengkulu 0 0 0
10 Lampung 82,717 78,603 101,646
11 Banten 0 0 0
12 DKI Jakarta 0 0 0
13 West Java 0 0 8,893
14 Central Java 201,924 175,717 169,014
15 Yogyakarta 0 0 0
16 East Java 0 218,955 209,161
17 Bali 0 0 0
18 West Nusa 0 0 0
 Tenggara
19 East Nusa 0 0 0
 Tenggara
20 West Kalimantan 558,133 366,475 611,288
21 Central 231,421 200,514 197,644
 Kalimantan
22 South Kalimantan 927,960 467,206 449,702
23 East Kalimantan 1,357,314 811,816 786,831
24 North Sulawesi 5 406 0 0
25 Gorontalo 0 0 0
26 Centra Sulawesi 0 0 0
27 Siutheast Sulawesi 0 0 0
28 South Sulawesi 167,460 196,315 142,132
29 West Sulawesi 0 0 0
30 Maluku 0 17,800 17,834
31 North Maluku 101,684 104,585 70,029
32 Papua 167,787 199,692 139,629
33 West Papua 0 53,947 47,821

No. Provinces 2008 2009

1 Aceh 100 0
2 North Sumatra 70,837 63,632
3 West Sumatra 0 0
4 Riau 63,956 101,901
5 Riau Islands 58,242 3,887
6 Jambi 152,422 81,134
7 South Sumatra 37,602 14,333
8 Bangka Belitung 0 0
9 Bengkulu 0 0
10 Lampung 93,558 72,801
11 Banten 0 0
12 DKI Jakarta 0 0
13 West Java 11,905 15,949
14 Central Java 245,778 203,147
15 Yogyakarta 0 0
16 East Java 382,316 374,514
17 Bali 0 0
18 West Nusa 0 0
 Tenggara
19 East Nusa 0 0
 Tenggara
20 West Kalimantan 381,610 301,208
21 Central 161,188 190,533
 Kalimantan
22 South Kalimantan 395,196 341,902
23 East Kalimantan 668,056 613,911
24 North Sulawesi 0 0
25 Gorontalo 0 0
26 Centra Sulawesi 0 0
27 Siutheast Sulawesi 0 0
28 South Sulawesi 138,180 146,751
29 West Sulawesi 0 0
30 Maluku 11,763 0
31 North Maluku 0 0
32 Papua 164,658 191,163
33 West Papua 27,816 3,219

Sources : Directorate of BPPHH, Directorate
general of BPK, Forestry Ministry's

Table--3
Exports of processed timber, 2005-2009
(Tons)

Products 2005 2006 2007

Sawn wood 9,999 43,771 63,721
Plywood 2,214,771 1,979,110 1,774,271
Veneer 3,733 10,984 11,027
Particle board 30,175 11,673 146,626
Fiber boards 234,788 204,948 214,902
Chip wood 138 114 486
Pulp 2,546,293 2,812,624 2,437,375
Total 5,039,899 5,063,226 4,648,408

Products 2008 2009

Sawn wood 50,919 38,969
Plywood 1,250,949 1,572,119
Veneer 11,482 8,409
Particle board 4,244 10,838
Fiber boards 179,857 185,268
Chip wood 95,024 512,231
Pulp 2,436,869 2,470,053
Total 4,029,344 4,797,888

Sources : Directorate of BPPHH, Directorate
general of BPK, Forestry Ministry

Table--4
Value of plywood exports, 2005-2009

Year 2005 2006 2007

Exports (US$ 000) 1,374,670 1,506,681 1,565,457
Growth (%) -- 9,60 3,90

Year 2008 2009

Exports (US$ 000) 2,055,526 1,314,802
Growth (%) 31,31 -36,04

Sources : Directorate of BPPHH, Directorate
general of BPK, Forestry Ministry

Table--5
Exports of plywood by countries of destination, 2005-2009
(Tons)

No. Negara 2005 2006 2007

1 Japan 887,645 831,039 679,154
2 Taiwan 142,377 97,674 153,885
3 America 193,188 151,634 119,278
4 S. Korea 138,256 159,298 114,418
5 Arab Saudi 101,745 141,898 79,460
6 China 173,612 138,973 125,168
7 UAE 98,054 119,046 104,648
8 Jordan 46,323 32,707 33,810
9 Germany 52,043 38,047 39,852
10 Belgium 40,643 32,833 35,651
11 Singapore 28,903 23,743 18,252
12 Oman 2,108 10,348 8,502
13 Netherlands 36,354 21,013 21,576
14 Kuwait 30,502 20,842 20,803
15 Australia 19,221 24,947 21,222
 Total 2,214,771 1,979110 1,774,271

No. Negara 2008 2009

1 Japan 163,640 573,698
2 Taiwan 126,606 146,540
3 America 87,799 98,219
4 S. Korea 103,567 97,927
5 Arab Saudi 97,752 89,528
6 China 121,022 82,960
7 UAE 114,011 62,647
8 Jordan 38,054 48,219
9 Germany 46,054 35,008
10 Belgium 43,025 34,347
11 Singapore 29,451 30,046
12 Oman 8,342 23,711
13 Netherlands 20,640 18,191
14 Kuwait 19,205 16,846
15 Australia 21,347 16,614
 Total 1,250,949 1,572,119

Sources : Directorate of BPPHH, Directorate
general of BPK, Forestry Ministry

Table--6
Imports of processed products of timber 2005-2009
(Tons)

No. Products 2005 2006 2007

1 Logs 88,916 49,760 55,326
2 Sawn wood 137,809 179,623 175,226
3 Plywood 20,751 58,543 54,482
4 Veneer 10,193 17,059 50,846
5 Particle boards 39,028 84,435 151,563
6 Fiber board 64,761 63,211 62,512
7 Pulp 877,100 900,453 892,959
 Total 1,238,558 1,353,086 1,442,913

No. Products 2008 2009

1 Logs 55,024 30,835
2 Sawn wood 192,886 130,237
3 Plywood 52,940 36,958
4 Veneer 21,188 14,936
5 Particle boards 230,719 176,543
6 Fiber board 102,228 95,923
7 Pulp 3,244,979 3,366,008
 Total 3,899,365 3,851,441

Sources : Directorate of BPPHH, Directorate
general of BPK, Forestry Ministry

Table--7
Imports of Plywood in value, 2005-2009

Year 2005 2006 2007

Imports of (US$ 000) 8,859,496 23,454,968 23,774,279
Growth (%) -- 164,74 1,36

Year 2008 2009

Imports of (US$ 000) 27,929,352 21,614,882
Growth (%) 17,48 -22,61

Sources : Directorate of BPPHH, Directorate
general of BPK, Forestry Ministry

Table--8
Imports of Plywood by countries of origin, 2005-2009
(Tons)

No. Negara 2005 2006 2007 2008 2009

1 China 12,087 45,708 48,535 38,224 27,000
2 Malaysia 693 4,356 1,252 9,372 5,699
3 Japan 316 184 723 405 963
4 Thailand 0 196 1 3,182 695
5 Vietnam 0 0 0 159 178
6 Filipina 0 0 0 132 138
7 Germany 48 142 335 79 79
8 The United States 128 125 213 186 72
9 Taiwan 0.4 18 47 40 57
10 Canada 11 0 0 100 44
11 Belgium 0,9 0 45 76 43
12 S. Korea 218 181 0 3 34
13 Australia 0 2 1,421 1 30
14 Britain 0 1 1 58 17
15 Italy 14 4 0 0 13
16 Other
 Total 20,751 58,543 54,482 52,940 36,958

Sources : Directorate of BPPHH, Directorate
general of BPK, Forestry Ministry

Table--9
Main producers of plywood in Indonesia

 Workers
Companies Addresses (persons)

PT Plywood Indonesia Kaliwungu, Kendal 8,354

PT Nusantara Plywood Kebomas, Gresik 4,278

PT Daya Sakti Unggul Plywood Tamban , Barito Kuala 4,322

PT Hendratna Plywood Banjar Selatan, Banjarmasin 4,971

PT Artika Optima Inti Kairatu, Central Maluku 5,327

PT Henrison Iriana Sorong, Sorong 4,499

PT Asia Forestama Raya Besitang, Langkat 4,028

PT Tjipta Rimba Djaya Medan Deli, Medan 3,223

PT Surya Dumai Veneer Siak Sri Indrapura, Bengkalis 3,259

PT Putra Sources Utama Timber Batang Hari 3,716

PT Sumatera Timber Utama Tungkal Ulu, Tanjung 3,328
Damai Jabung

PT Benua Indah Sungai Raya, Pontianak 3,430

PT Duta Rendra Mulya Sungai Raya, Pontianak 3,700

PT Erna Djuliawati Sanggau Kapuas, Sanggau 3,659

PT Tanjung Selatan Makmur Alalak, Barito Kuala 3,101
Jaya

PT Basirih Industrial Banjar Selatan, Banjarmasin 3,015
Corporation

PT Balikpapan Forest Industry Penajam, Pasir 1,448

PT International Timber Corp, Penajam, Pasir 3,230

PT Kalimanis Plywood Industri Samarinda Ilir, Samarinda 3,271

PT Intracawood Manufacturing Juata Laut, Tarakan 3,437
Plywood

PT Mangole Timber Producers Taliabu Timur, North Maluku 3,644

PT Korindo Aria Bima Plywood Arut Selatan, Waringin Barat 1,320

PT Kodeco Batu Licin Plywood Batu Licin, Kota Baru 1,237

PT Sumalindo Lestari Jaya Tbk Samarinda, East Kalimantan 2,241

PT Tirta Mahakam Plywood Palaran, Samarinda, 1,497
Industry Tbk East Kalimantan

Source: Forestry Ministry
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Title Annotation:INDUSTRY
Comment:Expansion of plywood industry hampered by scarcity in basic material supply.(INDUSTRY)
Publication:Indonesian Commercial Newsletter
Article Type:Company overview
Geographic Code:9JAPA
Date:Jan 1, 2011
Words:2918
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