Indonesia: Raw material prices undermining competitiveness

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Indonesia has vast forest resources and an active wood processing sector but struggles to make a real contribution to national economic growth. This is because the price of raw materials is too high which undermines competitiveness in the domestic market and international markets according to the Executive Board of the Indonesian Furniture and Craft Industry Association (DPP HIMKI).

This issue was discussed at a recent webinar facilitated by the Indonesian Furniture and Craft Industry Association. The webinar was attended by government officials, timber sector experts and business executives from the national timber industry. The point was made that downstream SMEs cannot afford to purchase top quality raw materials so must process low quality wood raw materials.

The problem of raw material supply was raised recently by Purwadi Soeprihanto, Executive Director of the Association of Indonesian Forest Concession Holders (APHI), who said the problem of raw material supply is one of the reasons that Indonesia's furniture export performance is still behind that of Vietnam. He said furniture products from natural wood tend not to be competitive in the global market.

Purwadi also said Vietnamese manufacturers are better in terms of design so one way to raise the competitiveness of Indonesian furniture products is to accelerate the development of plantation forests.

In related news, Abdul Sobur, Chairman of the Presidium of the Indonesian Furniture and Craft Industry Association (HIMKI), said rattan furniture and craft entrepreneurs are having big problems securing raw material and that some companies have been forced to stop production.

The scarcity of rattan raw materials became extreme in Cirebon, Jakarta, Bogor, Depok, Tangerang, Bekasi, Sukoharjo, Jepara and Surabaya.

The HIMKI has asked the government to find a solution to the scarcity of rattan raw materials and to prohibit the export of raw rattan.

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