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Indonesia Turns Into Timber, Furnitures Production Amid Trade War

The Indonesian government is mulling over banking on its timber and furniture industry to seize the momentum amid the ongoing trade war between the United States and China.

Indonesian President Joko Widodo, in a meeting with industry players at the State Palace on Tuesday, said that Indonesia could take advantage of the trade war— which has roiled global markets for more than a year—through promoting timber and furniture products.

Widodo said such products are the “key commodities.”

“I believe the chances are huge (for Indonesia) to fill in the (wood and furniture) market that used to be held by China, but then it left the market because of the trade war,” he said.

“This could be our chance,” he added. The government also crafted policies to support the plan, among which are value-added tax exemptions for logs and a partial relaxation of the timber legality assurance system (SVLK), a licensing requirement for each step in the wood supply chain in order for the industry’s end product be accepted in selected countries.

“The business players suggested that if the destination country does not require them to obtain an SVLK (license), then the government should not enforce the SVLK regulation,” Coordinating Economic Minister Darmin Nasution said after the meeting.

“The suggestion makes sense but we need to review the trade minister’s regulation,” he said.

At present, only the European Union, Canada, Australia and the United Kingdom require timber and furniture exporters to have SVLKs.

Darmin added that Widodo also urged the industry to partner with foreign businesses that have technical expertise and good marketing networks, saying that the government would lay the groundwork in a bid to invite more investors into the timber and furniture industries.

Data from the Trade Ministry showed that Indonesia’s export of timber and its derivative products was worth USD2.2 billion from periods January to July this year, down by 13.47 percent compared to the USD2.55 billion recorded over the same period last year.

Furniture exports, meanwhile, rose 9.41 percent year-on-year to USD1.12 billion in the first seven months of this year.

(ASEAN Economist)

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