Indonesia: Furniture and handicraft exports to US and EU beat expectations

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Indonesia continues to see growth in wood product exports to the US despite the impact of the global pandemic. The Minister of Environment and Forestry has indicated that exports to the US rose around 16% year on year in the period January to October 2020.

The good performance of Indonesia’s wood products sector is not confined to exports to the US as January to October exports to the EU were also higher by around 10% year on year.

Indroyono Soesilo, Chairman of APHI (Asosiasi Pengusaha Hutan Indonesia), applauded the changes in tax and non-tax regulations introduced by the government in order to contribute to increasing exports.

For example the government has lowered the export duty on exports of from 15% to 5%. In addition to relaxing tariffs, the government has adjusted regulation and duties on processed merbau, white meranti and yellow meranti.

The Furniture and Handicraft Association has indicated that output from the furniture sector is recovering despite the ongoing impact on demand of the pandemic. This is in contrast to the situation in the first quarter of the year when orders collapsed.

Regina Kindangen from HIMKI said that the Association members appreciated the stimulus measures provided by the government to SMEs in the home decor and furniture sectors.

Regina continued saying SMEs are currently experiencing better times even though Indonesia is experiencing economic recession as it sees consumers in the importing countries have a high degree of willingness to spend on furniture and handicrafts. The domestic sector should get a boost from adoption of the Omnibus Law through which the government intends to reduce imports of goods that can be made domestically.

In related news, the Ministry of Trade has set a benchmark export price for processed meranti wood products. This determination was made after the Ministry of Finance amended export duties for certain dimensions of meranti. Details are in Ministry of Trade Regulation Number 86 of 2020.

Panel sector hard hit by pandemic

The Indonesian Wood Panel Association (Apkindo) has said the Indonesian wood panel industry has been is hard hit by the impact of the pandemic and forecasts that production this year will be down by nearly a quarter.

Panel production in the first nine months of the fell 24% to 2.35 million cubic metres. Adding to the concern of Apkindo is the decline in export prices.

Gunawan Salim, speaking for Apkindo, noted the pandemic and heavy rains which disrupted harvesting and log transport drove down production levels. He suggested the pandemic will continue to impact production and demand throughout the second half of this year. Demand for wood panels, especially in the traditional Japanese market, has been trending down.

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