Indonesia: Investors in oil palm have to wait for revised regulations on plantations

ITTO's Tropical Timber Market Report
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Reports indicate that the Indonesian government has decided to delay the implementation of a regulation governing industrial forest plantations that would permit planters, particularly those in the oil palm industry, to cultivate areas reserved for timber and other sources of raw material supply for local industries.

The reason cited for the delay is to ensure that the proposed regulation operates in tandem and consistently with previous federal decrees. The government has said it will issue revised regulations.

In classifying oil palm plantations as industrial forests, investors in the Indonesian oil palm industry will be able to obtain land permits from the government to developed and convert certain forest land into oil palm plantations. The Forestry Ministry is quoted as saying that the industrial forest concept has been implemented successfully for the paper and pulp industry as well a, the plywood industry so it intend to apply a similar approach in the oil palm sector.

Analysts point out that only around 30% of Indonesia’s timber production is now derived from natural forests whereas 70% is from industrial plantation forests.

Euro-zone and US financial crises bite into furniture exports
Exports of Indonesian furniture have declined by more than 30% as the euro-zone and US debt crises bite into trade. Political unrest in the Middle-East also added to the toll on the Indonesian furniture industry according to the Indonesian Furniture Entrepreneurs Association (Asmindo).

The net value of Indonesian furniture exports for the first half of 2011 stood at US$1.15 billion, a decline of 21% against levels in the first half of 2010 when exports were valued at US$1.46 billion.

Exports of rattan furniture also declined sharply by 26% to US$60.32 million in the first half of the year. Exports of rattan furniture have been sliding ever since the global economic crisis in 2008. The depreciation of the US dollar against the Indonesian rupiah as a result of both the European and US debt crises contributed to the decline in the exports of Indonesian furniture. Competition from other low cost producers like Vietnam and China compounded the problem further.

Indonesia Log Prices Indonesia Log Prices
Indonesia logs, domestic prices US$ per m³
Plywood logs Face Logs 222-265
Core logs 210-239
Sawlogs (Meranti)
Falcata logs
Mahoni (plantation mahogany)

Indonesia Sawnwood Prices
Indonesia, construction material, domestic US$ per m³
Kampar (Ex-mill) AD 3x12-15x400cm 209-228
KD 223-258
AD 3x20x400cm 243-266
KD 244-273
Keruing (Ex-mill) AD 3x12-15x400cm 258-272
AD 2x20x400cm 248-266
AD 3x30x400cm 231-250

Indonesia Plywood Prices
Indonesia ply MR BB/CC, FOB
US$ per m³
MR Plywood (Jakarta), domestic

Other Indonesia Panel Prices
Indonesia, Other Panels, FOB
US$ per m³
Particleboard Export     9-18 mm 246-255
Domestic 9 mm 226-238
               12-15mm 221-233
               18mm 217-228
MDF Export     12-18mm 278-293
Domestic 12-18mm 261-273

Indonesia Added Value Product Prices
Indonesia, Mouldings, FOB
US$ per m³
Laminated Boards Falcata wood 328-341
Red Meranti Mouldings 11x68/92mm x 7ft up

Grade A 522-553
Grade B 480-502
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