The Indonesian Plywood Industry: A Study of the Statistical Base, the Value-Added Effects and the Forest Impact 9789814345743

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THE INDONESIAN PLYWOOD INDUSTRY

The Institute of Southeast Asian Studies (ISEAS) was established as an autonomous organization in 1968. It is a regional research centre for scholars and other specialists concerned with modem Southeast Asia, particularly the many-faceted problems of stability and security, economic development, and political and social change. The Institute's research programmes are the Regional Economic Studies Programme (RES), Regional Strategic and Political Studies Programme (RSPS), Regional Social and Cultural Studies Programme (RSCS), and the Indochina Programme (ICP). The Institute is governed by a twenty-two-member Board of Trustees comprising nominees from the Singapore Government, the National University of Singapore, the various Chambers of Commerce, and professional and civic organizations. A ten-man Executive Committee oversees day-to-day operations; it is chaired by the Director, the Institute's chief academic and administrative officer.

THE INDONESIAN PLYWOOD INDUSTRY A Study of the Statistical Base, the Value-Added Effects and the Forest Impact

ROBERT FENTON

Field Report Series No. 29 INSTITUTE OF SOUTHEAST ASIAN STUDIES 1996

Published by Institute of Southeast Asian Studies Heng Mui Keng Terrace Pasir Panjang Singapore I 19596 Internet e-mail: [email protected] WWW: http://merlion.iseas.ac.sg/pub.htrnl All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the Institute of Southeast Asian Studies.

© 1996 Institute of Southeast Asian Studies, Singapore The responsibility for facts and opinions expressed in this publication rests exclusively with the author, and his interpretations do not necessarily reflect the views or the policy of the Institute.

Cataloguing in Publication Data Fenton, Robert The Indonesian plywood industry: a study of the statistical base, the value-added effects, and the forest impact. (Field report I Institute of Southeast Asian Studies; no. 29) I. Plywood industry - Indonesia. I. Title. II. Series: Field report series (Institute of Southeast Asian Studies); no. 29. DS501 1594 no. 29 1996 sls96-27862 ISBN 981-3055-22-7 ISSN 0217-7099 Typeset in Singapore by International Typesetters Pte. Ltd. Printed in Singapore by Prime Packaging Industries Pte. Ltd.

CONTENTS

List of Tables List of Plates Acknowledgements Abbreviations I

INTRODUCTION Terminology The Dipterocarps The Export Trade in Dipterocarps Value-added Utilization Plants Background to the World Plywood Trade

viii X Xl

xii I I

2 2 3

4 5

8 8

THE INDONESIAN PLYWOOD INDUSTRY Limitations in the Statistical Base Number and Location of the Plywood Plants Employment Plywood Production Log Consumption, and Veneer Plywood Recovery Factors

21

ill

THE INDONESIAN DOMESTIC MARKET

24

IV

PLYWOOD EXPORTS Classification of Products Units of Quantity Exports Indonesian Plywood: Importing Countries Currency and Price Points for Values Quota System for Indonesian Exports Data Sources for Exports FAO Yearbook; the FAO Jakarta Project; and Allied Publications

27 27 28 28

II

9 11

13

31

32 32 33 33

vi

..

Contents

Ministry of Forestry (MoF) Data (Indonesian) Biro Pusat Statistik (BPS), and Bank of Indonesia Data APK.INDO Data Blackboard Exports Plywood Export Data Sources Compared Importing Countries Imports of Indonesian Plywood by Japan

37 40 42 42 42 46 49

v

DISCUSSION OF THE STATISTICAL BASE Overall Quality of the Data Log Consumption Recovery Rate Plywood Production Trade Statistics Price Point for Exports

VI

DEVELOPMENT AND SIZE OF THE PLYWOOD INDUSTRY 64 The Export Log Ban 64 Plywood Prices 65 Wood Waste 66 Research 67

52 52 53 54 54 56 56

VII SAWNWOOD

68

VIII VALUE ADDED: CALCULATION, AND DISCUSSION Background Methodology of Finding Value-added Logging Cost including Log Transport Log Grade/Species Recovery Percentage Processing Cost Base Year Share of Domestic Market Grade and Type of Product Values Calculations Calculated Profit Before Log Cost for Plywood, 1991 Calculated Value-added for Plywood, 1993 Results for Sawnwood Price Trends and Future Prospects

70 70 71 71 72 72

73 74 74 75 75 75 76 77 78 78

Contents

vii

IX

GOVERNMENT SHARE OF RESIDUAL STUMPAGE Terminology Economic rent Future Methodology and Work

80 80 81 84

X

DISCUSSION OF THE FOREST POSffiON Roading Silviculture Area of Forest Affected Forest Management Sustainability Sustrined Production Effec.t s of an International Spread of Sustainability, and Appropriate Stumpages

85 85 86 87 89 90 90 92

OU1LOOK FOR THE PLYWOOD INDUSTRY, AND CONCLUSIONS Conclusions

94 94

XI

Appendix l: FAO Yearbook Definition of "Plywood"

96

Appendix 2: Trade and Other Classifications for Wood-based Panels

97

Appendix 3: APKINDO Divisions of Plywood

99

Appendix 4: Details of Value-added Calculations

100

References

l 03

The Author

l 08

LIST OF TABLES

Table 1

Number, Year of Construction and New Capacity of Indonesian Plymills

10

Indonesian Annual Plywood Capacity and Production, by Region, 1992

11

Indonesian Plywood Log Input and Types of Recovery, 1985-87

15

Indonesian Plywood Production (from FAO and allied sources)

16

Indonesian Plywood Production (from APKINDO and allied sources

18

Indonesian Plywood Production (from Ministry of Forestry and allied sources)

20

Table 7

Indonesian Apparent Domestic Plywood Consumption

25

Table 8

Indonesian Plywood Exports (from FAO sources)

34

Table 9

Indonesian Veneer and Chipwood Exports, 1985-90

36

Table 10

Indonesian Plywood Exports (from Ministry of Forestry sources)

38

Indonesian Plywood Exports (BPS, Bank Indonesia, and Capricorn data)

41

Indonesian Plywood Exports (APKINDO data with values on a c&f basis)

43

Table 2

Table 3

Table 4

Table 5

Table 6

Table 11

Table 12

List of Tables

ix

Indonesian Plywood Exports, 1980-93 (APKINDO sources; 1987- 92 World Bank sources)

44

Table 14

Indonesian Blockboard Exports, 1984-91

45

Table 15

Indonesian Plywood Exports from Four Data Sources; 1980-93

47

Table 16

Indonesian Plywood Exports by Major Country of Destination, 1981- 93

48

Table 17

Indonesian Plywood Exports by Country, 1988 (year to 31112)

50

World Average Plywood Prices, 1977-92 (FAO Yearbook data)

58

Table 19

Indonesian Plywood Exports, Unit Values

59

Table 20

Japan: Dipterocarp Plylog and Common Plywood Wholesale Price Trends, 1970-93

60

Japan: 1988 Plywood Imports from Indonesia, Y.E. 31/12

62

Table 13

Table 18

Table 21

LIST OF PLATES

Plate 1: Large diameter dipterocarp logs, Kalimantan

6

Plate 2: Small diameter logs of mixed species, for plywood cores, Sumatra

7

Plate 3: Veneer sorting, Java. There are many female workers in the mills

12

ACKNOWLEDGEMENTS

This study originated when the author was working for a British Overseas Development Assistance Project in Indonesia. Much of the work was done while he was on a Research Fellowship at the Institute of Southeast Asian Studies, Singapore. in 1994. The assistance of the Institute's staff is gratefully acknowledged. I am also grateful to George H. Croy of Safan Publications, Timo Kurik.ka of Raute Ltd, R. Kampur and H. Gloede of Siempelkamp Gmbh and Co. and Dr G. Wallin of Sunds Defibrator. all of Singapore. for their considerable help and encouragement. Professor Motoak.i Okuma of the Department of Forest Products, University of Tokyo. provided most useful data. Last but not least, the tolerance and good nature of Professor Tom Nguyen of Griffith University, Queensland. and Professor To Duy Hop of the National Centre for Social Sciences of Vietnam in putting up with such a diffic ult room-mate is highly appreciated.

ABBREVIATIONS

ADB APKINDO BPS

c

c &f c.i.f. em c.o.p. cum CCCN d.a.b. FAO f.o.b . GAIT ha HCDCS

HPH HS ITIO JFA MDF MC mm

Asian Development Bank Asosiasi Panel Kayu Indonesia [Indonesian Wood-panel Association] Biro Pusat Statistik [Indonesian Central Bureau of Statistics] conifers = softwoods = Gymnosperm plants. cost and freight cost, insurance and freight centimetre cost of production cubic metre Customs Co-operation Council Nomenclature. diameter above buttress Food and Agricultural Organization free on board General Agreement on Tariffs and Trade hectare Harmonised Coding Description and Coding System Hak Pengusahaan Hutan [Forest Concession Areas] Harmoni zed Sy stem International Tropical Timber Organization Japan Forestry Agency medium density fibreboard moisture content millimetre

Abbre1·iations

MoF mt NC NIPPINDO o.b. PEB PNW REPPPROT SITC sp. g. sq m u.b. U.N. USDA WAHLI

Y.E.

xiii

(Indonesian) Minjstry of Forestry metric ton Non-conifer = hardwood = broadleaf = Angiosperm plants. Nippon Indonesia Plywood outside bark Pemberitahuan Ekspor Barang [Notification of Export of Goods] Pacific North West Regional Physical Planning Programme for Transmigration Standard International Trade Classification specific gravity square metres under bark United Nations United States Department of Agriculture Wahana Linkungan Hidup Indonesia [Literally -Achieving a living environment Indonesia] year ending

I INTRODUCTION

The Indonesian plywood industry is the dominant exporter of plywood in the world. It is also the greatest user of industrial logs from tropical rainforest, and so bas close attention from conservation interests. The industry was developed to add value to raw-material ; to help industrialization; and to provide employment. The forest which supplies it is supposed to be under sustained production from the year 2000. Its development and the degree of success in attaining these ends are examined in this study. The industry has also been the subject of considerable analysis, and the methodology and factual bases of some of these studies are re-examined here. In the course of the work, it was found that both the statistical base and the methodology for evaluating economic rent were deeply flawed, and attempts to correct this occupy much of the study.

Terminology Plywood in this paper refers to the aggregate product, as defined by the FAO (as given in Appendix 1). Plywood unfortunately is both a specific panel product, called "raw" plywood in Indonesia and usually common or plain plywood elsewhere; and a collective noun applied to several panel categories which include some common plywood in the final product. The confusion demonstrated by the data below is partly a result of including only some of the products and in most cases failing to define the products concerned. This basic problem bas been stressed (Johnson 1991). Where a

2

The Indonesian Plywood Industry

. -------------------------------------------------------specific product, such as common, or decorative, plywood, is discussed in this study, it is qualified as such; otherwise plywood means the aggregate product. Other terminology also follows the Yearbook (for example, FAO 1994) definitions. Values are current, unless specifically corrected for inflation, when they are called real. Any italic or bold print emphasis has been added in this study, and is not in the original references.

The Dipterocarps

The lowland rain-forests of Sumatra, and Kalimantan (Indonesian Borneo) in Indonesia are dominated by trees of, the .family Dipterocarpaceae (dipterocarps). This is a Family of NC(non-conifer =hardwood= broadleaf = Angiosperm) plants. The common names of the species vary throughout the region; in the importing countries they are generally grouped as lauan; and are loosely called merantis in Indonesia. As meranti is also used for a particular group of species of the Family, the collective "dipterocarp" is used here. They have characteristics which are unusual in other tropical rain-forests as many species of the Family can be grouped in utilization classes, and the problem of hundreds of heterogen~.ous species within a region are reduced. Furthermore, their wood is rei~J.iVely uniform and yields good quality rotary plywood, and finishing quality, but' not decorative, sawnwood. The logs from previously uncut fo~st- are of large diameter, straight and relatively defect-free. · Dipterocarps also flower gregariously, at interv_als of several years, which affects their silviculture (ability to regenerate). There are few species of this family to the east of Wallace's line, one of the earth's great natural frontiers. (This line runs between Borneo and Sulawesi, and south between Bali and Lombok; it marks the boundaries between two distinctive floras and faunas which evolved on different geological plates). Thus, industrial development reflects biology and is concentrated in the western islands (and on logs shipped mainly to Java and Maluku, and increasingly to Sumatra).

The Export Trade in Dipterocarps

Dipterocarps have been utilized on a large scale in the Philippines and Peninsular Malaysia, and Japan and East Asia only since the 1950s. Their

Introduction

3

qualities have been technically evaluated. and proven in the markets. From 1950. a growing export trade of dipterocarp logs developed from the Philippines and Eastern Malaysia. primarily to Japan. reaching over 24 million cubic metres annually by I 970. Indonesian exports entered this log trade in the 1960s and supplied 4~5 per cent of Japan's tropical log imports by the 1970s. These logs were used to build up what became the world's second biggest plywood industry in Japan, which was, and is, 95 per cent reliant on imported logs. Conifers (C) are unimportant. Both Taiwan and South Korea also built up substantial plywood industries based on dipterocarp log imports . Peninsular Malaysia built up a major trade in sawnwood. and also some plywood exports from the 1960s; Eastern Malaysian exports of processed dipterocarps on any scale have been more recent. There are. of course. many other families and species. including decorative woods (for both plywood and sawnwood}. in the forests but trade has been overwhelmingly of dipterocarps. One consequence of the dipterocarp base has been the relati ve neglect of other familie s and genera. Some of these. such as Planchonella. Palaquium. and Calophyllwn have species which can produce decorative veneer. But some high-grade, but restricted stands of conifers (Aj!athis) were being used for both rotary and sliced decorative veneer in 1991 . Species of A~arhis occur throughout Indonesia, including West Irian.

Value-added Bam on log exports. usually beginning with specific categories, spread from Peninsular Malaysia and Thailand (which had never been a big exporter) to the Philippines. In 1980 Indonesia announced a phased ban, to operate completely from 1985. The log-export bans have been generally successful in preventing log export~. The intention has been to build up forest products processing in Indonesia. on the lines of the long-established Pe ninsular Malaysian plywood and sawnwood industries. These would be resourcebased industries. the aim being to add value to the raw mate rial - the log. The po licy is developed by then banning export of primary processec.l products, such as sawnwood or presumably common plywood to stimulate. or provoke, further processing. While thi s de j itcto ban has been applied to sawnwood in lndonesia, it has not happened to the plywood industry. No doubt there are pubJjcations in the 1970s on the anticipated protitability of this process, and the relati ve merits of plywood and sawnwood, although none have been found.

' 4

The Indonesian Plywood Industry

It is important to recognize that the plywood industry as such did not initiate the logging of the dipterocarp forest resource; this was done by the log trade from 1967. Nor did total log production change much, as the banning of log exports reduced that particular drain on the forests.

Utilization Plants

The utilization plants established from 1980 included both sawmills and plymills, and were usually based on logs from the same concession. While there are over 540 logging concessions, many are controlled by the same companies and the number of big, new utilization plants is much less than the number of concessions. The size and number of the plywood mills and the sawmills, as was intended, generated a productive capacity above the level of the domestic market. While it was clear at the beginning of this industrialization that the export market was a major target, it was apparently to take about 55 per cent of the plywood production. The present preponderance of plymills was probably not anticipated in 1980, when the log export ban was announced; the industry appears to be about twice the size of that envisaged in 1980 (Takeuchi 1983; Ginoga and Abdurachman 1988). The Coordinating Team for Forest Products Industry 1982 gave projected targets of production of 5.9 million cubic metres of plywood, of which 2.945 million cubic metres were to be consumed domestically; and a total of 11 million cubic metres of sawn wood (APKINDO 1985). Planning in Indonesia is given in Repelita documents, and Repelita V, for example, shows a consistently greater share of logs to be sawn than peeled for plywood from 1980 to 1994 (REPPPROT 1990). This proportion never applied, and was overwhelmingly fixed in favour of plywood by an overnight government decree in 1989 which imposed Draconian levels of export taxes on a range of wood products other than plywood. By May 1993 these had reached US$1000 per cubic metre even on species such as pine (Pinus merkusii) and sengor (Paraserianthes falcataria), and as much as US$2400 on Agathis (USDA 1994). Sawnwood exports which had reached about 2.9 million cubic metres annually by 1988 have now (1994) practically stopped. The other main features of the forest products industry in Indonesia include the absence of export wood-chips on any scale; their export tax situation is obscure. There is also relatively little use of the wood in reconstituted wood-based panels, yet the total volume of was~e at least equals the probable annual industrial log harvest of around 35 million cubic metres. This volume has been ignored in any planning process and in residual stumpage exercises.

lnrrnductirm

5

Background to the World Plywood Trade Only 12-15 per cent of the world production of plywood was traded in 1977. This had risen to 30 per cent by 1990. with nearly all the extra plywood coming from Indonesia. The industry was. and still is. dominated by the U.S. production. though exports are less than I 0 per cent of production. The mature Pacific North West (PNW) plywood industry was hard hit by the 1973 oil shock and produc tion began to decline before the secon d oil shock of 1980. The more recent decl ine is also a result of internal conservationist pressures . The average PNW ply-log size has decreased steadily from 39 em to 30 e m diameter. The gap has been tilled by the rapid and sustained growth of the Southern pine (Pinus) industry. with two inte rruptions from the oil shock aftermaths. Rising productio n from the South overtook the falling PNW production in 1980. Log sizes used in the Southern pine industry have decreased considerably from 30 e m to 13 em diameter in the last fifteen years. The growth rate of the Southern pine industry is almost exactly parallel to that of the Indonesian industry but started in 1964 rather than 1980. These twn U.S. industries are C-hased and produce largely structural plywood cdata fro m the American Plywood Association. and the Umted States Forest Service. personal communication ). Production from the United States NC plywnod industry (which incorporates up to 40 per cent C veneer in its pl ywood ! has remained static around a million c ubic metre~ per ye.ar for a decade: exports are modest, though of high unit value. One outstanding feat ure of Indo nesian productio n and exports was that they showed no decrease in volume fro m the aftermath of the 1980 oil shock. Bo th ex panded rap1dly. and the market was developed under unfavourable external co ndition ~ . Analy ~e ~ of the return~ and forest rent ba ed on these early yean ~h ould acknowledge the~e c ircumstances. In East Asia. South Korea and Taiwan replaced Japan as important exporters of plywood by the late I 960s. Exports were always important to these two countries' industrie!>. Japan's exports have fa llen to insignificant levels. and are of specialist pl ywoods . Singapore ha~ been an impo rtant reprocessing centre . espec ially of cheap Malay!lia n exports. These fo ur countries aJI produce and export no n-structural plywood. largely ba!>ed o n dipterocarp!>. Plywood is unimportant in Europe and the o nl y significant exporter is Fi nland whose export!> have the hjghest unit value!>, up to three times higher than tho~>e of Indo nesia. according to FAO Yearbook ligures. (The average Fi nish log diameter as also 23 em and the industry uses considerable C wood with generally NC face veneer of high quality) . Prices of Brazi lian pl ywood- largely of decoratjve ~>pecies- are also h1g her than Indonesia's.

6

The Indonesian Plywood Industry

The basis of Indonesian export prices is suspect and this is analysed in this study. Plywood competes with the recently developed wood-based panels, which are much more widely produced. Many countries export particle board. The recently developed MDF (medium-density fibreboard) and OSB (oriented strand board) industries are active in seeking export markets and compete directly with plywood . OSB is almost entirely a North American product, and is a structural panel. A feature of the production trends of different panels and of different countries is their similarity over time. For example, the post-war development of fibreboard in the developed countries and the United States Pacific North West plywood industry followed similar _ trends. The U.S. industry grew at 10 per cent annually for a decade. The parallel between the American South and Indonesia ·s production has already been noted. Particle board production in the world had a similar and longer period of spectacular growth. Now MDF and OSB are both developing at these fast rates. The decrease in the plywood industry log size in the United States was, and is. accompanied by adaptation of new technologies. But the fundamental advantage of big diameter logs for plywood has largely gone. This has undoubtedly favoured development of alternative panels. The implications for Indonesia are clear; the basic comparative advantage is declining with the end of the previously uncut forest and its large diameter logs. Plate l shows typical large dipterocarp logs. and Plate 2. the next generation supply of smaller logs, of mixed species.

Plate I: Large diameter dipterocarp logs. Kalimantan.

lntroductinn

Plate 2: Smaller dlnmctcr lo~' nf nm.ed sre~ICS. for rl ywood ~:orcs. Sumatra.

7

II

THE INDONESIAN PLYWOOD INDUSTRY

Limitations in the Statistical Base The statistical base for the Indonesian forest processing industry has been described thus: " . . . the date ... available is extremely inadequate and frequently contradictory. The ... [results) are: (a) for some sectors not even the number, capacity and production of plants are known. [and] (b ) consequently the ... Government lacks the basis ... for optimum planning. control and political decisions ... ·· (Atlanta 1987). And ·· ... tropical plywood statistics are often unavailable. incomplete. or unreliable ..... (Johnson 1991 ), and that " ... perhaps the highest priority in improving tropical plywood statistics is a clear definition of what exactly constitutes tropical plywood'' . Much of the confusion has been caused by the imprecision of the term "plywood". At the same time" ... review of the available publications shows that rather than a shortage of data the [FAO Jakarta] project's analysts are more likely to be confounded by an abundance of conflicting figures" (Martin 1989b ). This turned out to be an accurate forecast. (This FAO Project ran in Indonesia for several years up to 1990 and generated many papers, six of which are cited here, and is referred to as the 'FAO Jakarta Project' in this study). One aim of this study is to clarify the statistics found and to provide a base for planning and analysis. Priorities can then be identified. Overall data on the industry are inadequate (though there are undoubtedly other sources not located; other known sources were not made available for this study). But as it is such a large industry. and dominates both the world trade

The Indonesian Plywood Industry

9

in plywood and the use of tropical lowland ra inforest. it is necessary to attempt to provide such a base. The accounts of production and exports which follow include the data found and identify errors. so that the sources concerned can be discarded. Then some earlier ana lyses which used uncorroborated. or mi sinterpreted data. are reviewed.

Number and Location of the Plywood Plants The number of ply-mill!' given by different sources varies. A total of " 140odd" was quoted for the early 1980s (Gillis 1988 ? ). Another source (Re petto 1988) says 182 mill s in 1983 . The numbe r of mills (under the definition used in Indonesia ) and the ir productive capacity based on two (e ight to te nhour) production shifts is shown in Table I . by years. The APKJNDO Chairman reported t.hat 132 pl ymills were built by 1991 (Hasan 199lb). APKlNDO ( 1992 ) listed 132 producing compan ies. The consensus of ti gures for the number of mill s tS 11 7. but there is curre ntly a reasonable level of agreeme nt as to the overa ll numbe rs. The most like ly ex pla nation of diffe re nces is that some mills. with a number of produc tion lines on one site and even under one roof. can belong to several different fim1s . The lines are then counted a~ separate mills (World Bank 1993). This appears to be the base of the statisttcs m the Ministry annuals (Indonesian Ministry of Forestry I MoF] 1991 a: 1994 J. if " unit" means company. and not plan t. The weighted age of the mill s in 1994 is twelve years (counting those o perating by 1980 as fourteen years old l. But if the data in Table I are correct. there was a fi nal spurt when ~eve n mills were built but with 29 per cent of the total capacity of the industry. The average mill capacity as shown in the table is large. at about 71 .000 cubic me tres of ply wood per year in 1992. and is far greater than in the older established mills of Pe ninsular Malay sia a nd the Ph i lippi ne~ . But thi~ capa probabl y wrong. per null.

... 12

The Indonesian Plywood Industry

Jayabhanu and Rolin-Hymans (1989) discuss employment and say that there are probably 750 people employed on two shifts in a Sumatra mill with a productive capacity of 90,000 cubic metres per year; and 87 per cent of workers on the production fl oor " ... provides much higher employment when compared to international standards ... [this] does not affect the cost of production as ... wage levels are still low in Indonesia ... " (Plate 3 shows the relatively high number of workers in the sorting section of a large Javanese mill). They report that 118,000 people were employed in 1984 on p. 86, while an estimate of 135,000 is given for 1985 on p. 85. On p. 153 a figure of 112,600 is given for estimated employment in 1988, by province, and cites APKINDO as the source. Tbe anticipated employment io 1992 was to be 135,000. It is, of course, possible that all these figures are correct and that employment rose 17,000 from 1984 to 1985, then fell by 22,000 by 1988. But this is not likely, given the pattern of mill establishment, design, and production, so that the figures can only be used for the scale of employment, not for fo llowing changes in productivity. They say this is manpower, but womanpower would be more accurate as 50 - 70 per cent of the labour in the mills seen by the author were women, usually under thirty years of age. The employment figure of 750 to I ,000 people per mill checks out with the mills seen, and so the total employment is probably around 120,000. In contrast to these figures, 150,000 jobs were estimated "by 1988" (Repetto

Plate 3: Veneer sorting, Java. There are many female workers in tbe mills.

The Indonesian Plywood Industry

13

1988). A trade journal reported that over 600,000 were employed in 1991 in 113 ply-mills (Anon 1992). Few other data sources mentioned labour, although there are some remarkable claims made for the industry. Understandably, there were many expatriates employed in the formative stages. These included Filipinos and Koreans, some from plywood plants which had closed in their own countries. Jayabhanu and Rolin-Hymans (1989) say that almost all mills employ expatriates mainly as management and technical personnel (in 1988). There was a surcharge on the employment of expatriates in the mid-1980s; and their employment in logging has officially stopped. Those still employed are called consultants, which is a minor source of error in labour statistics. The employment multiplier, that is, the number of other jobs generated by the industry elsewhere in the economy is stated as around 1.5 for tropical countries (Bourke 1991). No references or other data are given for this figure, nor is the base year. Assuming this is correct in the tropics in general, for Indonesian plywood, the multiplier must be much lower as over 80 per cent is directly exported. Hence, the figure for an additional 600,000 to 800,000 jobs for all downstream forest industry employment (Bourke 1991) is considered too high even for 1987. With the closure of much of the modem sawmilling industry since 1989, the trauma of unemployment must be a cost to be attributed to the indusLry which benefits from the additional

flow of logs -the ply industry. The further argument favouring employment because of the dependents involved (Bourke 1991) is only of consequence if there is some form of benefit in the particular dependents, otherwise the benefits apply to any primary employment. For example, one large reforestation project's nursery in the Philippines employs mainly workers who have been injured in logging accidents; meritorious though this is, it graphically underlines one of the costs of forest industries, particularly in the wet tropics, where logging is even more dangerous than elsewhere. (Logging is the most dangerous of all industries when measured by the economic severity index, that is, the age of the worker concerned and the severity of the injury [Fenton and Terlesk 1971]). To claim a few unsubstantiated labour benefits and not to mention costs is not a proper method of appraisal of employment effects.

Plywood Production Annual production rose rapidly from around one million cubic metres in 1980 to probably ten million cubic metres by 1990; and perhaps 12 million by 1992 and now appears to be fluctuating around this level. It should be

14

The Indonesian Plywood Industry

stressed that quality standards were achieved rapidly in the plants; exports would not have been possible otherwise. The standards have continued to improve and " .. . reportedly 24 Indonesian plywood companies presently bold the Japanese Agricultural Standard certification .. .'' (USDA 1994). Three main groups of production data have been identifie.d for a period of a decade or longer; those based on FAO; on APKINDO (which was founded about 1983 and so did not have earlier data; and on the (Indonesian)

MoF. The central source of world forest products statistics is the UN FAO Yearbook of Forest Products, referred to as the FAO Yearbook in this study. Though there are difficulties in both compiling and accepting these data, they remain one of the two international sources of comparative data. (The statistics produced by ITTO are restricted to their member countries, and the organization has a smaller base than the long-established FAO Yearbook ). It is the duty of all engaged in the forest industry to supply and correct these central data. The FAO Yearbook data for Indonesia are given in Table 4. The production figures for Indonesia have been revised. generally upwards, in the 1990 and 1992 editions. As these data are revised with each edition, the variation shown in some of the data from the other U.N. sources is the result of using earlier editions. An unacceptable simplification of the data, when used by all the other agencies cited in this study, is the omission of the qualification "estimate" which is given to some entries in the FAO Yearbook. Data from an ADB (Asian Development Bank) report show identical numbers but these are in (unspecified) "tons". The FAO figure of 0.65 for specific gravity (sp g) of plywood is a general one (not only tropical, and not only NC). This will be discussed later. If the ADB figures are correct and this constant is applicable (as discussed later under ''Trade") the volumes given by other sources are about 50 per cent too low. As the other sources do not show anywhere near this level of production, it is likely that the unit used by the ADB is wrong. The FAO Jakarta Project papers which give production figures are included in Table 4. Data from another paper (Grayson and Coto 1989) generated by this Jakarta-based project are not given in Table 4, but use the FAO Yearbook figures (for alternate years). The data given by Kir (1989) are for "wood-based panels" and, as such, would include particle and fibreboard, which are excluded from the FAO definition of plywood in the Yearbook. As the numerical levels for plywood in the Yearbook (FAO 1992) are identical with the figures given by Kir for all wood panels, either the data given by FAO are an overestimate for plywood, or Kir's statement on "all wood panels" is incorrect. It is known that there was production of non-

TABLE 3 Indonesian Plywood Log Input and Types of Recovery, 1985-87 (In thousand cubic metres)

Production Calculated recovery %

Log input

Plywood

Block board

Veneer

Decorative plywood

1985

10473

4713

167

125

6

363

47.8

51.3

1986

12188

5078

331

160

12

467

45.8

49.6

1987

15568

7181

514

196

21

659

50.8

55.1

Year

Y.E. 31/12*

*probably Y.E. 31/12 Sources: Biro Pusat Statistik ( 1987); (I 988); ( 1989).

Sawn wood

All ply

Ply+ sawn

TABLE 4 Indonesian Plywood Production (from FAO and allied sources)

(In thousand cubic metres)

Year Y.E. 31112 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992

FAO (1991) FAO (1994) e279 424 624 e1011 e1552 2487 3138 3600 4615 5750 6400 e7733 e8784 F8250 e9600 el0100

ADB (1989) "tons"

s s s s s s s s s

5322 7780

Bernas (1991)

s s s s s s s

7200 8200 9500 10500

Kir

(1989)

s s s s s s s

4524 5054

Ref. 1 Table 8.4 Cal. years

Ref. 1 Table 8.5 Financial yrs

Ref. 1 App. 6

s s s s s

2140 2943 3820 4983 5302

s

6560

F = FAO estimate e = unofficial figure S =same figure as in FAO (1991); (1994) NA = Not Available Sources: FAO and allied sources. Ref. 1: Jayabhanu and Rolin-Hymans ( 1989}, Tables 8.4; H.5 and Appendix 6.

3245 3611 4581 5302 6400 6560

3241 3629 4584 5291 6429 6589

World Bank (1993)

As As As As As As As

s s s s s

for Ref. for Ref. for Ref. for Ref. for Ref. for Ref. for Ref. NA NA 9063 8172

1

1 1

1 1 1

UN

(1993a)

s s s s s s

7233

s

9250

The Indonesian Plywood Industry

17

plywood panels in some of the years concerned, so Kir's data probably refer to plywood and not, as stated, to all wood panels. Jayabhanu and Rolin-Hymans (1989) and the World Bank (1993) give composite origins for their data on production, which include both FAO and APKINDO data, but do not say why APKINDO's data after 1983 are preferred. If, in fact, the FAO Jakarta project had obtained more accurate data (a proper aim of a local project) then it is difficult to see why this has not been incorporated in the central reference, the FAO Yearbook. Alternatively, the central organization has better data and has chosen not to use those locally generated, in which case the latter should be revised. This is a major criticism of the organization of such projects. There are other, lesser problems with the Jayabhanu and Rolin-Hymans (1989) paper. The data shown in Table 5 are reported for calendar years (their Table 8.3). But in their Table 8.4 the same numerical value given for the three financial years 1986/87 to 1988/ 89 is also given for the calendar years 1986 to 1988 respectively. (They do not define financial year; few references seem to. Repetto (1988) and Gillis (1988?) both say that the fiscal year ends on 30 March, which are presumably misprints). So it is uncertain which year's data apply. In their Table 8.1 9 a third set of production data are given, which is as for their Table 8.4, except that for 1986, the figure 5.2 and not 5.3 million cubic metres is given. From their Appendix 6, it is possible to reconstruct production for the calendar years 1983-88 inclusive; this then gives a fourth set of data, in the same reference, which is closer to the FAO Yearbook data than APKINDO's. It is unfortunate that these inconsistencies are found in this paper which is otherwise the only ready source of much necessary data on the industry. The World Bank uses APKINDO figures throughout (once the organization of APKINDO was started in about 1983). Bernas (1991) has the same figures as the FAO until 1987 when he reports increasingly greater production up to 1990; again no comment is made which would help to clarify the production data in either of these sources. The APKINDO figures in Table 5 (APKINDO 1985; 1986; 1990) are the same as those in the FAO Yearbook (FAO 1990) from 1977 to 1981. They vary irregularly from 1982 up to 1986, then cease in the third and fourth editions of their directories. Despite the growth of the industry, and the exposure of its leaders in international forums, no further production data were obtained in Indonesia. Later data from APKINDO had to be obtained in Japan. APKINDO (1990), for example, has few statistics in the directories, and none on production. No figures were made available in Jakarta in November 1992, October 1994 or April 1995. APKINDO (1992) mentions production of 8.2 million cubic metres of wood-based panels in 1988, and says about 84 per cent was exported, and that is the total statistical coverage. (Even this is useful, as it could explain that the high figure shown

TABLE 5

Indonesian Plywood Production (from APKINDO and allied sources) (In thousand cubic metres)

Year Y.E. 31/12 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

Nihon Gohan K.K. 1993

APKINDO 1985

APKINDO 1986

Capricorn 1987; 1993

s s s s s

s s s s s

s s s s s

s

2140 2943 3820 4983 5653 6751 7902 9189 9805 10019 10842

As As As As

for NGK for NGK for NGK for NGK 4640

As As As As

for NGK for NGK for NGK for NGK 5000

ellOOO

e = estimate by the source S = same figure as in FAO (Table 4). Ginoga 1988 = Ginoga and Abdurachman 1988. NGK = Nihon Gohan K.K. Capricorn (1987), data up to 1986; Capricorn (1993) data for 1987-91. Source: APKINDO and allied sources.

Ginoga 1988

s s s s

s As As As As

for NGK for NGK for NGK for NGK 5690 7381 8307 9756 10541 10616+

As As As As

for NGK for NGK for NGK for NGK 5000 7400

Berita APKINDO 1987

s

1140 1943 As for NGK As for NGK 5500

The /ndnne.tian Plywood Industry

19

by Bumas 11991 ]. in Table 4 in this study. is probably for "wood-based panels·· and not for plywood. This is a typical cause of confusion). Hasan ( 1991a) gives general figures of I million and 3.9 mi1Hon cubic metres for 1980 and 1984 respectively. in a paper published in Unasylva, the U.N. international forestry journal. in 1991 . A longer series is published in Japan (Nihon Gohan K.K. 1993). however. which cites APKLNDO (Table 5) but gives no documentary source . The source "Berita APKINDO {1987)" reponed in Table 5 appears to have two probable (typographicaJ ? ) errors in five entries; as it otherwise gives data as for APKJNDO. on which it is stated to be based. The third source of data are the publications of the MoF. some of which are cite.d in Table 6. These data were aJso publi shed in other series and have the same intemaJ consistency. and so are omined here. These data raise three problems. The definition of .. plywood" is not given. It is not uncommon for severaJ seh of data compiled for a commodity to differ. A frequent cause is the mix of components in the aggregate figure . For example. in plywood a series may omit veneer. or hlockboard . A problem with the MoF data is that for one year. 1987. the figures are tltt' .m me as those in the FAO Yearbook. So it is less likely that the difference has a simple cause such as omitting a product category. Thill also illustrates the second problem in the MoF data : the figure for I 987 is for a financial year but is the same figure of 6,400.000 cubic metres as given in the calendar year of the FAO Yearbook. So the uncenainues re main . The third and major problem with the MoF figures for production is their magnitude - they are generaJly lower than both the FAO Yearbook and the APKJNDO data. and hardJy talJy with the expon data. It is unlike ly that production fell in 1984/85 to 2.400,000 c ubic metres which is about haJf that from other data sources. and against the trend cau!led by the increasing number of ply - mill~. Thi s affects economic rent caJculations based on the data (Repetto 1988: Gillis 1988?). Data in the latest MoF annuaJ st4tistics ( I quite feasible . Bu1 it is assumed that it mean s higher rates for plywood recovery from logs . If su. either "for" should be "from''; or "log·· should be "plywood". But the rate of 43.5 per ce::nt is used in the econolillc rent debate whtch fo llows in the paper. This als{, st resse~ ·· .. .Indonesian plywood mill s have been relatively ineffl = Ginoga and Abdurachman (1988). World Bank cites Mmtstry of Industry. but there is no doc ument.

1160 1200 1250 1500 1550

26

The Indonesian Plywood Industry

appearing for different twelve-month periods detract from the re)jability of this data. In this case. the numbers are identical for three of the seven years, with data from other sources for calendar years. They also show that it had been intended/planned that almost half the production would be for the domestic market from 1981 /82 to 1988/89. Nihon Gohan K.K. ( 1993) cite APKJNDO for domestic consumption. again based on the difference between production and exports (Table 7 ). REPPPROT ( 1990) gave local consumption in 1988 as 1.52 million cubic metres. which is the highest of the figure s found. but in line with the trend shown by Ginoga and Abdurachman ( 1988) up to 1987. In contrast to the fi g ures above. an estimate of only ·• ... about 575.000 cum ..... was made for 1993 (US DA 1994). There are no data on stocks. and these calculated data are for apparent consumption (although none of the sources seen say this). Furthermore, they can only be regarded as approximations in view of the limitations of the basic data. However. they indicate that a range of 15- 19 per cent of production is presumably absorbed by the domestic market. If the 1993 figure is right, the range is from 5-19 per cent. Any value-added calculation has to incorporate this. lt is an integral part of the value-added, or of the government recovery of the surplus-aftercost (economic rent) calculation if the prices for export and for domestic markets differ (which they do). WAHLI (1991 ) does not consider this factor, hence if domestic market prices are lower than export values. then the return per cubic metre of log is lower. This affects value-added, and the net returns to government. This is another amendment which has to be made to the analysis. Local prices are available in the MoF annuals; in the Bank of Indonesia annuals; and in Jayabhanu and Rolin-Hymans ( 1989).

IV

PLYWOOD EXPORTS

Classification of Products The problem of what comprises aggregate "plywood" is worse for trade data than for production. The FAO Yearbook defini tion in Appendix 1 is, of course, used by FAO for their trade data in the standard Yearbook. But it has its difficulties, especially when compiling the "plywood" aggregates from the trade statistics classifications. There is a recurrent problem with blockboard, and whether it is included with plywood in exports (Johnson 1991). The FAO Yearbook gives a definition of "solid core plywood" (Appendix 1) which is, in effect, synonymous with blackboard (FAO 1994, p. xi). The classification of the wood panel products is complex in the trade data bases of most countries, and this has been compounded by changes made in both lndonesia and the importing countries. Some of the numerical codes used are given in Appendix 2. The FAO Yearbook follows the SITC (Standard International Trade Classification) classification for traded products; the classification is given in the Yearbooks and is not repeated here. And " ... since the 1991 edition of the Yearbook, Revision 3 of the SITC has been adopted ... " (FAO 1994). This system, which is used by the United Nations, is also followed by the various U.N. statistical annuals. The export divisions in Indonesia up to 31 December 1988 were simple, with teak-based ply, then other ply, and blackboard clearly differentiated. The classification was based on the Harmonized System (HS), but the BPS annuals also gave the SITC classifications. Although products such as veneer were not included by name, there were not many chances of rnis-

28

The Indonesian Plywood Industry

classification. The basis of trade classification changed to the CCCN (Customs Co-operation Council Nomenclature) code from 1 January 1989; the SITC code numbers are also given, which is helpful. The increase in classes from 1 January 1989 has been into groups which are of little relevance to Indonesia, at least in the way the classification is being used at present. Whereas the Japanese imports use the same CCCN standard classification, and provide copious data on, for example, the thickness of the ply imported. The chance to improve the effectiveness of the data, for example, by including the size classes, or the glue-lines of the ply exports, is being missed, although the sub-divisions for thicknesses are available in the CCCN classifications. The commercial documentation includes the grade, size and other details of the shipments as this is specified and agreed between buyer and seller. Blockboard exports are unidentifiable in the new system and it became evident that it is probably split into several of the new classifications (as the totals are known from other sources but cannot be linked to the trade statistics). So the new trade classification has already decreased precision, yet its potential for appropriate detail has not been exploited. This will have implications for future planning. ~e thickness of the plywood used, for example, has been increasing in Japan in the last decade. Technically, this means that less of the relatively scarce and expensive face-quality veneer is needed per cubic metre of plywood. The increasing shortage of quality logs will have a major, and adverse, effect on face veneer production (Plates 1 and 2). If the statistics are not available, it will complicate the industry's ability to forecast the effect of such market changes. There is another useful initial classification within Indonesia used by APKINDO but this does not describe the composition of some of its divisions, though most can be inferred. This is given in Appendix 3. But the divisions cannot be used for comparison with trade statistics. The Japanese imports are now divided into fifteen groupings for plywood alone, but again they are not directly comparable with the divisions used in Indonesian exports, although the constituent sub-divisions can be aggregated. The conclusion is that the export trade data basis should be expanded to incorporate the thickness classes in the system. Units of Quantity

Exports

The export statistics issued by the BPS and the Bank of Indonesia are in metric tonnes (BPS 1984-92; Bank of Indonesia 1994). So these have to be

Plywood Exports

29

recalculated as volumes to allow for anal ysis. Fortunately. all pl ywood and nearly all its allied products are in a relati vely dry state. The complication of wet weights only becomes serious in the case of "green" veneer; but this has been banned as an export since June 1982 (APK1NDO 1986 ), and was never of much importance in lndonesian exports. (''Dry state'' is a relati ve term. as any plywood shipped would contain some water, even if the moistu re content was as low as 5 per cent) The FAO Yearbook fi gure for the "weight and volume relationship" of plywood is 0.65 or 1.54 cubic metres per metric ton. This is labelled "general '' (that is. for both non-conifer and conjfer. or rru xed plywood). This raises four problems. The first is that the constant has been in the FAO Yearbook for a long time: a full set of FA.O Yea rbooks is not avai lable; but it is possible that thi s factor dates from the days when most of the plywood traded was of tem perate C woods (softwoods) rather than dipterocarps. This problem is compounded by the fac t that Indo nesia now domjnates the trade in thjs produc!. If a general constant has to be used for trade at present. it should be the Indonesian fi gure. if it is available. This may not be a real problem. The mai n exporting countries in the 1970s and 1980s were South Korea. Tai wan (called China in the later Yearbooks) and Singapore (FAO 1992). all of whose industries would also have been largely based on (imported ) rupterocarp logs in any case. The range of specific gravity for trop1cal hardwoods (NC) is wider than for temperate NC woods, but they tend to have the same average. There are abundant data on the specific gravit)' of the species concerned. and for some of the genera traded it can range from 0.4 to 1.0 in any case. This may not be the same problem as an embedded recovery factor, as a longstanding fi gure can be the right one for the specific grav ity of a given species. But in this case it is applied to a given mix of spec ies. This leads immediately to the second problem. Not onl y is this con version for a mix of species, but also for a mix of products under the aggregate " pl ywood". Common plywood will usually be. denser than blackboard. The third problem is how gross weight of exports, wh ich includes their packaging , are accommodated in the constants. For example. until recently, Australian ex port~ were given in gross weights and the effects of this were overlooked in the wood-chip trade. with dire results in derivative analyses . This complication also arises with two of the sources of Indonesian trade data. The fourth problem. if weight is used, is that, although it is not defined , it is implied that the plywood has some assumed moisture content. Dealing with the specific gravity first, Capricorn ( 1994) cite APKlNDO for an equi valent specific gravity of 0 .625, and state ..... other sources say ... 0.555 ... "; and they adopt the compromise of 0 .59. The fi gure of 0.65 is

JO

The Indonesian Plywood Industry

not mentioned. The difference is equivalent to 9.7 per cent more volume per metric ton if 0.59, and not 0.65. is used. The constant in the MoF's statistical annual is 0.65; it is possible that this was adopted from the FAO Yearbook in the past, or it may have originated independently. Analysis given later for BPS/Capricorn data show that blockboard in Indonesia is taken to be 0.59 or 1.7 cubic metres per tonne. Cross-checking the most consistent of the trade data in cubic metres with the BPS (1984-92) export data showed that it is probable that a specific gravity of 0.65 is used in Indonesia to convert cubic metres of plywood to (net) "tons" in the export statistics. and that the FAO Yearbook uses this again to re-convert to cubic metres. As the rate used is the immediate problem in evaluating the trade data, this figure has been retained in this study to convert export tonnes to cubic metres of plywood. It does not imply that the actual specific gravity is necessarily 0.65. Nor can it be. as the amount of blockboard being exported is now substantial and it is about 10 per cent less dense than plywood. The second problem is the effect of a mix of products which have an overall weight per volume. This means a range of ·'common plywood'' thicknesses of from 2.8 mm to over 15 mm. some of which have plastic or other surfaces; and different products such as a sawnwood core blockboard. or even a plastic-foam core blockboard. Clearly, this is most unlikely to be constant over time and any conversion can only be approximate. The third and fourth complications can be combined as they have the same net effect. The Bank of Indonesia ( 1994) state that export weights are gross weights. While the plywood products have a "'low" moisture content. and its effects may be minor, it is possible. or probable. that the gross export weights include the packaging of the export product. Most Indonesian ply is not shipped in containers, (it being usually cheaper to ship in crates of a size to be handled by ordinary fork-lift machines). so that gross weight would include the weight of packaging and the reinforcement required by non-container shipping plus some plastic and other packaging materials. This amount is conjectural. The packaging on the shipments seen generally consisted of reject grade plywood, which would be as dry as the main product; and a framework of sawnwood which would be air-dry at best. and often with plastic liners of varying weights, and minor amounts of metal fasteners. This packaging is calculated below as 5- 10 per cent of the gross weight. This difficulty is compounded as the BPS ( 1984-92) trade annuals give export figures in net weight. It is possible. of course. that both sets are used and this has been tested as far as the uncertainties in the data allow. While the FAO Yearbook data for wood pulp are declared to be in an air-dry condition ( l 0 per cent moisture content or MC%), wood-based panel

Plywood Exporrs

31

data in the Yearbook are in cubic metres. so that the conversion factor MC% should be defined. Indonesia is not the only country to use weight in export statistics: the increasing change to this basis will introduce considerable uncertainty into international trade statistics of many solid-wood products; the confusion will be increased if use of gross weights become widespread. All wood products are hygroscopic and if weight is involved, MC% has to be defined . It is possible that it is assumed to be below 5 per cent and possibly not worth defining? As most of world trade in plywood is now shipped from the wet tropics in ordinary, if plastic lined, crating such an assumption would be questionable. The conclusion is that the constants used for conversion to and from weights and volumes should first be stated and then examined to see if they are appropriate. Indonesian Plywood: Importing Countries There are a variety of units employed in the importing countries for panel products. The country studied here is Japan, as it has become the single largest market. the internal statistics are good, and the trade data readily available. While these were only in surface measure in the trade statistics (Japan Tariff Association. annual December issues) up to I 990, they have been in both ~ urface and volume measures from I 99 I onwards, so that the data of earlier years can be transformed to cubic metres. Checks on the years I 991 - 9 3 show that the number of cubic metres per square metre of plywood in each thickness group varies by up to 2 per cent, so exact conversions are unlikely. The trade associations generally produce quantity data by area but at least on the basis of a constant thickness, usually of 4 mm. Plywood is an example of a product which is difficult to metrify (the metric system countries are relatively unimportant producers or consumers). The U.S. statistics are still given by area on a three-eighths inch standard thickness: the main Japanese data are for a six foot by three foot sheet with the thickne s~ given in mm; ply Jogs are usually cut to standard sizes of 3. 4. 6 or 8 feet. plus allowance for trim. The U.S . trade data require considerable work before they can be safely used, which is unfortunate as it was the largest single buyer for some years. Tariffs and indirect forms of trade discrimination affect exports, but are not a topic of this study. except for the sustainability requirement for tropical forests. Indonesia's own tariffs are much higher on plywood than that of its own customers. This is strange as it is unlikely that any country would seriously try plywood exports on any scale to Indonesia. It would be an appropriate propaganda point to make these tariffs zero.

32

The Indonesian Plywood Industry

Currency and Price Points for Values The value of Indonesian exports is given in U.S. dollars in the Indonesian trade statistics, and in other sources used for exports here. The FAO Yearbook statistics are also in U.S. dollars, and on an f.o.b. (free on board) basis. The Yearbook has also been used as the source of Yen/US$ and other exchange rates. The export statistics are stated to be f.o.b. in the BPS (1984-92) annual issues; and in the Bank of Indonesia (1994) annuals. The Bank (p. 119) gives details on the procedure of export documentation: ·• ... recording is on the basis of customs documents PEB (Pemberitahuan Ekspor Barang Notification of Export of Goods) ... ", and on p. 121 " .. .data processing in international trade is entirely based on PEB [for exports] .. . sent by foreign exchange banks to the Bank of Indonesia ... " and is on an f.o.b. basis. The BPS, however, do not report the same sequence as " .. .statistics are compiled on ... PEB filled out by the exporters approved by the Customs and Excise ... and legalised by the foreign bank ... ". It is customary elsewhere for the exporters to be responsible for the shipping and customs documents, rather than an overseas bank and it appears this is true for Indonesia. Perhaps two sequences, as described, are followed, one for the Bank and another for the BPS. The importance of this point is included in the discussion of value added, as the basis of the value recorded is the point at issue. Jayabhanu and Rolin-Hyrnans (1989) record: 'The Government directed that the export prices must be based on cost and freight (c & t) or cost, insurance and freight (c.i.f.) . ..". This was confirmed by an APKINDO staff member, who said that it was based on a Ministerial decree (not seen) made in 1986 (Ketut Kalir, personal communication, October 1994). The issue is confounded as the price point is usually omitted in the papers found, and if necessary this is discussed below.

Quota System for Indonesian Exports Jayabhanu and Rolin-Hymans (1989) give an account of the origin and development of the quota and, later, control system now exercised by APKINDO. For example, there had been a subsidy for exports to the United States of US$5 per cubic metre; this was increased to US$1 0 in 1986. Even exports to Taiwan had a subsidy; this was replaced by a check-price system in 1985 or 1986. The net effect of the subsidy to Taiwan was that common plywood was imported and then upgraded to specialty plywood and reexported. The floor prices for export are sometimes given in trade and

Plywood Exports

33

popular Japanese sources, and they show that the plywood is, of course, exported under standard grades such as BB, CC, and that the prices used are based on c.i.f. (Anon. 1986) The Japanese source assessed the subsidy on the exports to Japan as US$30 per cubic metre in 1986. This is supported by the difference in unit value for different export markets. A review of these subsidies is in Nihon Gohan Koogyoo K.K. (1993), but a translation was not available for this study; it shows the penalty levels for not'acceding to specific directives on allocations, and to Japan they are as high as US$50 per cubic metre. It is also clear that every export order is vetted by APKINDO which has an unusually good appreciation of the export, and thus the production situation. The export data is available for 1988 and is summarized in Table 17. This contrasts with the latest data published in the four APKINDO directories (1985; 1986; 1990; 1992), which give little data after 1986; this omission is discussed later.

Data Sources for Exports As for production, there are the same three basic sets of data available for exports (FAO Yearbook, the FAO Jakarta Project, and allied publications; Ministry of Forestry [MoF] data; (Indonesian) Biro Pusat Statistik (BPS), and Bank of Indonesia data). In addition, scattered data for a number of years and products are available. There are more data sources for exports than for production, with a corresponding increase in the range of figures for the same item. But it is sometimes easier to track down the sources of error where exports are given by value, as well as quantity. The quantity, value and definition of "plywood" is central to any analysis of value-added. Consequently, all the data found have been checked for this definition. FAO Yearbook; the FAO Jakarta Project; and Allied Publications

The FAO Yearbook data for Indonesia are given in Table 8. Grayson and Coto (1989), and Lindsay (1989) give the same volumes, except the figures for 1985 and 1986 which are from the 1988 FAO Yearbook; these figures have now been amended in later Yearbooks. Martin (1989a) and Ingram, Constantino and Manysur (1989) from the FAO Jakarta Project also give the same volume and value figures for plywood for 1984-88 as for the FAO Yearbook in Table 8 (the figures from these papers have been omitted from Table 8 to avoid repetition).

TABLE 8 Indonesian Plywood Exports (from FAO sources) (Values are f.o .b.) Anon 1992

Arnold 1990

Kir 1989

Value Volume (000 cu m) (mill. US$)

Value (000 cu m)

Volume (mill. US$)

FAO 1991; 1994 Year Y.E. 3 1/1 2 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992

Volume (000 cum)

Value (mill. US$)

245 760 1232 2106 302 1 3964 4607 5648 6372 8039 e8244 8635 8635

55.7 147.9 282.2 509.7 663.1 1150 1097. 1 1794.3 2122.8 2704.4 2724.9 3230.2 3230.2

S = the same number as given by FAO. e = unofficial figure

s s

s s s s

6000 6900 7900 8500

s s s 720 880

s

1890 2300 26 10 3010

Hyam 1989 Volume (000 cu m)

Value (mill. US$)

s s

2 180 3095 3783 400 1 595 1

(Quanti ty) (OOO'tons')

s s

s 161 270 509 668 825 1002 159 1

ADB 1989

s s

3965

697

582 1

1746

2806 3575 4624 548 1

Plywood Exports

35

But three other papers from the same FAO Jakarta Project give further series of figures. Arnold (1990) gives values which are for plywood, but which vary erratically from the FAO Yearbook data, and are well below for the last three of the seven years. Arnold cites BPS; the data are found to be for the two classifications of plywood and blockboard (categories 44 15 190 and 44 15 200) given in the annual trade statistics (BPS 1984-92) from 1981 to 1986 inclusive, but are below the figures for 1987. Kir (1989) gives volume figures for "wood-based panels" which are identical for 1980-82, but are higher for 1983-84; and then lower for 1985-86, and finally higher in 1987 than the FAO Yearbook figures for plywood. Hyam (1989) in a paper on trade only gives data for two years; the quantities, given as weights in Hyam, are converted to cubic metres here by adding Hyam's figures for plywood and blockboard and by multiplying by 1.54. The figures do not check with the quantities or values, and hence unit values, for the products (BPS, 1984-92), or likely constituent groupings of products for 1988. So both Hyam's and Kir's data are difficult to follow. Jayabhanu and RolinHymans (1989) give export figures for 1987 and 1988 based on APKINDO data. These were found, from the APKINDO 1989 data, to be those for common plywood, not the aggregate. They are invaluable as they give a price point. Martin (1989) gives exports for particle board, and for fibreboard, which are of minor importance, while plywood and blockboard are not separated, though these were differentiated in the trade statistics at that time (BPS 1984-88). This is an odd choice of priorities. Unfortunately, further problems were identified with FAO trade data from the Jakarta Project. In Martin (1989), veneer is grouped with "chipwood" (a product which was dropped from the trade statistics from 1989). "Chipwood" is used in some provinces in Indonesia as the name for woodchip, which has nothing in common with a high value product like veneer. The export data and unit values, given in Table 9 for the 1985- 89 period covered by Martin (1989), show that veneer is worth ten times the unit value of "chipwood". There are consequential effects on the consolidated tables for wood-based panels, and a further table grouping plywood, blockboard, veneer, particle board, and fibreboard also includes chipwood. Hence, the table on veneer, and aggregated wood-based panels cannot be used. Furthermore, the figures for wood-chip exports are also wrong, as "chipwood" is omitted, being mis-classified with veneer. Chipwood was found to be from mangroves, which is important in assessing both the impact of the trade on mangrove (mainly Family Rhizophoraceae, with many species) forests, which is under intense forestry and conservation scrutiny, and, to complete the cycle, in assessing the degree of utilization of the forest and processing waste generated by the plywood industry itself.

TABLE 9 Indonesian Veneer and Chipwood Exports, 1985- 90 (Values f.o.b.) Veneer (CCCT 4414000) Year Y.E. 31/12 1985 1986 1987 1988 1989 1990

Chipwood (CCCT 4409910)

Weight (000 mt)

Value (000 US$)

Unit value (US$/mt)

56.7 39.4 29.9 26.8 55.5 43.6

16213 11566 12194 10373 28834 30150

285.9 293.6 407.8 387.1 519.5 69 1.5

Note: The veneer figures exclude small quantities of Agathis in some years. Source: Biro Pusat Statistik annuals.

Weight (000 mt)

Value (000 US$)

190.2 7936 206.9 7970 447.9 22209 619.4 19549 Not specified after this

Unit value (US$/mt) 27.8 27.2 54.5 50.5

Plywood Exports

37

(Roughly speaking, mangrove chips are saleable but not, unfortunately, dipterocarp chips.) Identical tables were repeated in Ingram, Constantino and Manysur (1989) and so have to be rejected. (The unit values for veneer are considerably above those of plywood. The conversion rate of veneer from metric ton to cubic metres is not known, but is probably around 1.4 cubic metres per metric ton, the veneer is not compressed at this stage, and so is less dense than the corresponding plywood. The actual trade classification for veneer has varied in the BPS annuals, and it was not named as "veneer" until 1989 when three categories were introduced). So, to summarize the Jakarta FAO Project figures on plywood exports: four papers use the FAO Yearbook data; two use BPS data; and two use APKINDO data. The Project was based in the MoF but neither used its data nor apparently amended it. Yet, all deal with the same problem. The consolidated data on all wood-based panels, and wood-chips, are demonstrably incorrect. A recent trade journal (1992) gives identical plywood export volume figures to the FAO Yearbook for 198Cr88 but moderately different, if rounded, figures for 1987-90. These figures are used in Bernas (1991) and further confuse the situation. The ADB (1989) figures for quantity given in Table 8 are much the same as that of the FAO in the same table, apart from minor differences, for 1985-87. They are, however, given as "tons". A check on the unit values, whose general magnitude is well known, shows that "tons" is probably wrong and that presumably cubic metres is meant. Ministry of Forestry (MoF) Data

The MoF data are given in Table 10. They are derived both from two annual series and a number of special publications. One of the annual series is a single, but detailed, annual sheet which includes long-time series for plywood volumes and values (Indonesian MoF, 1990, issued by Directorate of Forest Products Marketing, 198Cr89). These figures are consistent in successive issues. They are also the same as those in the annual book of statistics (Indonesian MoF 199la) apart from presumed misprints. Table ll 2.2.4. of Indonesian MoF (199la) gives a different volume for 1989, but the column is added incorrectly, or there is a misprint. Tables within these series have minor differences for values in 1987 and volumes in 1989, but these are probably misprints too. So, whatever the basis for the Ministry's two annuals, they were consistent where years ending 31 December are concerned, apart from presumed misprints. But they give no indication of what comprises

TABLE 10 Indonesian Plywood Exports (from Ministry of Forestry sources)

(Value point not defined)

MoF 1994 Year Y.E. 31/12 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992

Volume (000 cu m)

(mill. US$)

Value

245 772 1232 2023 3021 3784 4618 5951 6951 8047 8513 8959 9697

56 150 282 480 663 811 1102 1892 2289 2707 3024 3161 3540

MoF l99la' Volume (000 cu m)

(mill. US$)

Value

245* 772* 1232* 2106 3046 3603 4210 6045 6860 8010

56* 150* 282* 510 658 777 1004 1975 2298 2694

MoF l99la1 Volume (000 cu m)

42 10 6045 6960 #8102

*Data same as in tbe 1994 reference. 1 MoF 199la Table Jl.2.2. 1. The same data are given in MoF (1990) and earlier issues. 2 MoF 199la Table 11.2.2.4 (and an earlier year). #The column total is added incorrectly &/or there are misprinls in the values.

Value

MoF 199lb

(mill. US$)

Volume (000 cu m)

(mill. US$)

Value

1004 1755 2298 2694

282 764 1250 2023* 3021* 3784* 4618* 595 1* 6902 8039

60 170 287 480* 663* 811* 1102* 1892* 23 11 2704

Plywood Exports

39

plywood: nor is the price point clear. These data are cited by Repetto ( 1988 ). and Gillis ( 1988?) in an identical table (Table 11.A.2 in Repetto: Table 2. 16 in Gilli s) for 1979-83 and the data are given by them as f.o.b. The data avai lable for the current paper has no indication of a price point in MoF publications. and the 1984 reference is not available. The annual Statistik Kehutanan Indonesia for 19~4185 give data for exports covering 198 1- 84 and. as found by thi s author for all other MoF sou rces seen. no pri ce point is given. The Indonesian MoF ( 1991 a) 1994 series also provide a second source of export data in the tabl e~ showing. for three years, the country of destination. Unfortunately. up to 1989. the totals differed from those in the tables showing the annual exports for the decade. The data are given in Table 8. The latest issue of the statistics (Indonesian MoF 1994) gives consistent totals for the two origins. For the first time. also. it declares amended data for earlier years. and these are taken a~ the latest MoF data on the trade. The Indones ian MoF ( 199 1a) 1994 series also contain unit price data (price point unspecitied l on the monthly shipments of: " raw plywood": blockboard: veneer !for example. in Table 11.2.2.9 of the 1991 issue); and "special item". " new produc t" a nd other panels (in Table 11.2.2.6 of the 1991 issue). These classifications are not used in the trade statistics (BPS, 1984-921. but are unique APKINDO classifications (Appendix 3). It is inferred the refore that the APKJNDO data are avai lable to the Ministry. though the source is given as the Director-Gene ral of Forest Utilisation. It would be more useful to have the yearly volumes and values of these six groups, rather than monthl y prices whic h cannot be related to volumes and which vary by over I00 per cent in a given year. and thus. cannot even be used for price trends. A major Ministry publication 1indonesian MoF 1~~I b) gives slightly diffe rent annual fi gure:,. The problem again is the almost random way in which volumes or val ue~ differ. so that whatever they are based on must vary in several. and not one. respect to that of the MoF statistical annual s. The differences have a maximum of 9 .6 per cent in volume in 1986. and 13 per cent in val ue in 19ts I . Overall. both sets give average values whi ch are relatively close to the FAO data for most years; but the variable set of inputs inevitably reduce confidence in any conclusions. They do not darify the price point used. Simi larly. no definition of plywood, or of the price point is given in another major volume (indonesian MoF 1988). T his gives data for four years up to I ~85 . While they are the same numerical val ues as in the annual series. they are labelled for split (presumably financial) years. This raises the possibility that all the other series are also for financial years. The e ntry

40

The Indonesian Plywood Industry

for 1985 varies from that in the statistical annuals. but the doubts over the years reduce the value of the data again. (A number of scattered figures included in papers presented to various oversea~ conferences have been found. but were considered not worth including: for example. over ten different, undefined figures were found for exports for 1986.) (Indon esian) Biro Pu.rat Statistik ( BPSJ. and Bank of Indonesia Data

Export weights. converted to cubic metres at I .54 cubic metres per ton. (0.65 specific gravity) are given in BPS (1994). in Table II for 1981- 92. The annual data in Table I I were checked against the detailed categories in the export annuals of BPS for 1984-92 inclusive. The agreement was complete for 1984-88 inclusive. when the two plywood categories. and blockboard (specified in Appendix 2) were added. The agreement was close (any differences were trivial) when the ten plywood categories given in Appendix 2 were added for 1989-92. So the summarized figures in the BPS ( 1994) are a quick source for official trade data if totals are required. This check with the annual trade statistics. which are clearly stated to be f.o.b .. was continued for two other sources· price points. BPS ( 1992) has identical data for 1988-90. and reasonably close figures for the next three years, and the price point is stated to be f.o.b. Nihon Gohan KK ( 1993) give identical values for 1981 -82. which are labelled f.o.b. and cited as "Central Bureau of Statistics". The Bank of Indonesia data are given in Table 11. They are for f.o.b. values, and for gross weights. The two sets. net and gross. of weight data still present difficulties. While the yearly values are much the same. none of them are identical. The gross weights are all above the net weights, except for 1992: while the figure of over 6.5 million tons for 1989 is far above the net weight, and this figure is repeated in successive issues of the publication series. Presumably it is an error. When the weight of packaging and water is calculated as a percentage of the net weight, the range of figures is from 3.4 to over 10 per cent in only five years. and this omits the anomalous years 1989 and 1992. This big range does not give much reassurance on the reliability of the figures. A further set of export data for unspecified plywood is given in Table II from Capricorn ( 1993 ). Blockboard is tabulated separately, so it is probable that the data are for plywood categories without blockboard. The price point is not given. The differences in cubic metres may be due to the use of a different conversion rate from tons to cubic metres, though the specific gravity, if the same weights are involved, would vary around 0.61 . When the blockboard data are added to the plywood data. the totals are

TABLE 11 Indonesian Plywood Exports (BPS, Bank Indonesia and Capricorn data)

Biro Pusat Statistik, May 1994 Year Y.E. 31/12 198 1 1982 1983 1984 1985 1986 1987 1988 1989 1990 199 1 1992 1993

Quantity (NET mt) (000)

Volume (000 cum)

Value (mill US$) (No price pt.)**

434.2 677 1253.4 1763.2 2231.7 2582.1 3560.1 4037.1 4606.5 5027.2 5296.3 5607.5 5774.1

669 1043 1930 27 15 3437 3976 5483 62 17 7094 7742 8156 8636 8892

161.4 269.9 509.4 667.9 824.7 1002.4 1759.3 2073.7 2350.9 2725.5 2871 3230.2 4257

Biro Pusat Statistik 1992 Quantity (NET mt)

s s s

5289 5575

Bank Indonesia 1990, 1994

Value

Value

Value (mill. US$) (f.o.b.)

Quantity (GROSS mt) (000)

(mill. US$)

s s s

275 1 3682 4283 6530 5240 5834 5584

1004 1707 2093 2325 2690 2772 32 19

2865 3 150

Capricorn 1994

(f.o.b.)

*Product is called "plywood & similar laminated wood products". **Nihon Goban K.K. (p. 86) gives the same values for 1981- 92, citing "Central Bureau Statistics" and says it is f.o.b. #Cites Central Bureau of Statistics and says it is plywood; blackboard is given separately.

(mill. US$)

Volume (000 cum)

(No price pt)#

5780 6569 7528 8260 8594

1694.1 2004.6 2273.9 2636.4 2766.5

42

The Indonesian Plywood Industry

slightly above the BPS figures. The data show that blackboard is taken to be 1.7 cubic metres per ton, which is reasonable in relation to plywood, as the sawnwood or other core would be of lighter material. A PKINDO Data

The export figures from APKINDO and derivative sources are given in Table 12 for specific items. The figures, though discontinuous, are invaluable as they can be used to identify which categories are being referred to in some other sources. Furthermore, they are specifically for values which are declared to be "c & f ' (cost and freight) in line with the Ministerial decree of 1986. Further data of this type or other types were not made available in Jakarta in either November 1992, October 1994, or in April 1995. When it does become public, many of the problems in the present analysis will be clarified. The APKINDO and allied data for plywood for 1980-92 are given in Table 13. The World Bank figure for 1991 looks too low, though the data are given for eleven countries; when checked against Japanese imports in 1991 they are well below. The individual countries' totals do not fit earlier years. Blockboard Exports

The figures for blackboard are given in Table 14 for 1984-88. The reclassification of exports from 1989 has resulted in the elimination of a specific class for blackboard (Appendix 2). Supplementary data are available from Capricorn (1994) for 1989-91 which is included in Table 14. No price point is given. The ratio of weights in BPS data, and the cubic metres given by Capricorn for 1984-88 are reasonably constant at l.7 cubic metres of blackboard per ton. Capricorn gives the BPS and (their own?) collection as the source; the numbers do not correspond with any single plywood export classification (Appendix 2); so it is inferred that blackboard may now be included in several of these classes. REPPPROT (1990) stated that blackboard exports were virtually nil, but this is incorrect; it is probable that the absence of a specific export classification from 1989 caused this mistake. Plywood Export Data Sources Compared

The unit price data given on the basis of APKINDO's definitions of types of plywood are taken as evidence that the MoP is using these data for their trade information. This is reinforced by the close agreement shown by the

TABLE 12

Indonesian Plywood Exports (APKINDO data with values on a c&f basis) (Volumes in thousand cubic metres; values in million US$) Common or ordinary plywood Year

Ref. I

APKINDO

Blockboard APKINDO

Veneer [V) APKINDO

1985 Volume

3517

154

112

1986 1986 1987 1987 1988 1988

4031 964.1

217 44.7

101 18.9

5246 1814.7

387 97.8

45 12.4

Volume Value Volume Value Volume Value

1993 Volume 1993 Value

5203 1658.8 5247 1815.4

5960 2826

Not mentioned

Sources: Ref I: Jayabhanu and Rolin-Hymans (1989), Tables 8.25 & 8.26. 1985 data: APKINDO (1986), Table 4. 1986 & 1987 data: APKINDO (1987), Table 6. 1988 data: APKINDO (1989). 1986: The price point is not specified. 1993 data: APKINDO (1994b).

Special itern APKINDO

New product APKINDO

Other panels [OP] APKINDO

TOTAL excluding [V & OP) 367 1

238 67.8

925 248 1891 817

4516 1102.1

30 9.6

280 133.8 '

992 627

9 1.4 855 265

6838 2294.4 9598 4534

TABLE 13 Indonesian Plywood Exports, 1980-93 (APKINDO sources; 1987-92 World Bank sources) APKINDO 1995 Volume Year Value Y.E. 31/12 (000 cu m) (mill. US$) 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994

3420 3873 5951 6902 8051 8513 8969 9761 9724 8852

651.2 865.2 1892.4 2310.8 2709.1 3023.8 3165.1 3549.7 4594 4046.9

Nihon Gohan APKINDO K.K. 1993 1986 Volume (000 cum)

APKINDO Table 12

World Bank 1993

Volume Volume Value Volume Value Volume Value (000 cu m) (000 cu m) (mill. US$) (000 cu m) (mill. US$) (000 cu m) (mill. US$) 263 774 1250 2000 3010 3783 4000

6803 7981 8431 8719 9541 9596

APKINDO 1990

3783 4618 5951 6897 8038

811 1102 1892 2309 2610

APKJNDO ( 1986) for 1981-85 volume; says these include veneer. APKJNDO (1995): No price point specified, but said to be c & f. Nihon Gohan K.K. (1984): Values are c & f. No definitions of plywood arc given, presumably aggregates. APKJNDO (1986): 1990 no price points given. World Bank Y.E. 31112: Price point c & f; cites APKJNDO. World Bank Y.E. 31/3: Cites Ministry of Industry. Sources: APKINDO and World Bank (1987-92). 1994 data: personal communication in 1995.

3671 4616

1102

6838

2294

6465 9598

4534

2296

World Bank 1993 Y.E. 31/3 Volume (000 cu ml

5000 5740 5826 6058 6622

TABLE 14 Indonesian Blockboard Exports, 1984-91 Biro Pusat Statistik annuals 1984B1ockboard etc (CCCT 4415200) Year Y.E. 31/12 1984 1985 1986 1987 1988 1989 1990 1991

Weight (000 MT)

Value (million US$)

Unit value (US$/cu m)

75.7 92.0 134.7 189.8 199.7

25 28 45 77 79

193.3 177.2 196.7 239.9 234.1

Note: Assumes 1.7 cu m/mt Source: APKINDO {1986), p. 51.

Capricorn 1993

APKINDO 1987; 1989

Volume (000 cum)

Value (million US$)

Unit value (US$/cu m)

229 322 339 397 358 443

45 77 79 107 119 138

196.7 239.8 234.5 269. 1 331.0 310.7

Volume (000 cu m)

Value (million US$)

154 217

45

387

98

46 The Indonesian Plywood Industry

two sets of volume and value data in Table 15, though they are only identical in 1987 and 1990. It is stressed that no price point was found in the available MoF export data which ranged from 1979 to 1993. The APKINDO data are probably the best available as their income derives from a levy on exports, and the organization exerts a monopoly control over export sales. Even so, there are differences between different sets of APKINDO figures, and some imprecision in countries, price points (sometimes not given, but otherwise always c & f) and whether the "new products" are plywood; and whether "other panels" really are non-plywood panels. It is possible that in tum the FAO Yearbook is based on these data, the information going from APKINDO to the MoF and then to FAO, rather than the direct trade data (BPS 1984-92; Bank of Indonesia 1994) being used. But the data found are inconclusive. If it is correct, the vital price-point is changed in name in the process. It can then be assumed that this would be the exporters' entry on the export document PEB (Chapter Vl). There are some odd agreements. shown in italics, between different sets of data in Table 15. The Bank of Indonesia and the FAO Yearbook data agree at odd points and for 1992 are identical for both volume and value. Their values are the same for 1990, but the figure in the FAO volume. which is an estimate, is 6.5 per cent higher. While APK.INDO data show generally higher total values, this is no support for them being on a different price basis as their volumes are also higher. The average values are given and discussed in the following section.

Importing Countries This topic is only summarized here. From the beginning of expanded production in 1980 Indonesia has exported to a considerable range of countries, but the overall pattern has been fairly constant. Summarized volume figures, of unchecked accuracy, from mainly APK.INDO sources, are given in Table 16, for exports to the main groups from 1980 to 1993. A few countries buy 85 per cent of the plywood. The big buyers were originally Hong Kong and China, and large scale buying still continues. Singapore was the biggest importer in 1981 and still bought more than the United States in 1982, but its imports declined from 1987. In 1983 and 1984 the United States was the major market; in 1985 Hong Kong and China were the biggest; then the United States again in 1986. Substantial volumes are still exported to the United States. Until 1985 Japan had imported only minor quantities. This changed from 1986 and exports to Japan were pushed

TABLE 15 Indonesian Plywood Exports from Four Data Sources, 1980-93

FAO. in Table 8 Year Y.E. 31112 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994

Volume (000 cu m)

Value (mill. US$) tf.o.b.)

245 760 1232 2106 3021 3964 4607 5648 6372 8039 e8244 8635 8635

56 148 282 510 663 1150 1097 1794 2123 2704 2725 3230 3230

BPS. in Table II Volume (000 cu m)

Value (mill. US$) (f.o.b.)

669 1043 1930 27 15 3437 3976 5483 6217 7094 7742 8156 8636 8892

161 270 509 668 825 1002 1759 2074 2351 2725 2871 3230 4257

MoF. in Table I0

APKfNDO in Table I3

Volume (000 cu m)

Value (mill. US$) not stated

Volume (()()() cu m)

245 772 1232 2023 3021 3784 4618 5951 6951 8047 8513 8959 9697

56 150 282 480 663 81 1 1102 1892 2289 2707 3024 3161 3580

2&3 774 1250 2000 3010 3783 4618 5951 6902 8051 8513 8969 9761 9724 8852

e = unofficial figure. Note: It is likely that the FAO (1992) data are estimates. although this is not stated.

Value (mill. US$) (c & f)

1892 2311 2709 3024 3165 3550 4594 4047

APKINDO in Table 12 Volume (000 cu m)

Value (mill. US$) (c & f)

3671 4618

I 102

6838

2294

9598

4534

TABLE 16 Indonesian Plywood Exports by Major Country of Destination, 1981-93.* (Values probably c & f) USA

JAPAN

SINGAPORE

CHINNHONG KONG

Year Volume Value Unit val. Volume Value Unit val. Volume Value Unit val. Volume Value Unit val. Y.E. 31/12 (000 cum) (mill. US$) (US$/cu m) (000 cum) (mill. US$) (US$/cu m) (000 cum) (mill. US$) (US$/cu m) (000 cum) (mill. US$) (US$/cu m) 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

94 230 599 822 1008 1092 1250 1000

1010 1048 876 1024 886

242 304 432 378 389 424 365 443

485

270 379 385 405 417 433 547

31 50 64 145 311 581

136

2025 2646 2789 2519 3543

1!79 849 1739

234

127 271 247 669 979 851

199

234

407

87

~14

580

286

1328

~76

358

.298

76

255

844

319 315 337 491

1304

617

473

65

3.:!

492

-·--·- - -

•Note: This Table is based on heterogeneous sources: figures are indicative only. For 1980-85: APKINDO 11986). Table 3 (Figure$ include veneer). For 1986: APKINDO (1986); Table 6. USA= USA + Clll1ada. For 1988: APKINDO (1989). Singapore data from BPS 119'.12). For 1989-92: Biro Pusat Stalistik, 19 tons ronvened 10 cubic metres @ I.S4 cubic metres/ton. For 1985-93: APKJNDO (1995). USA= USA + Cartada.

Sour~es:

Plywood Exports 49

bard with the aim of ending the Japanese plywood industry, whose vulnerability increased with the tightening of export log bans, while it continued to rely for 95 per cent of its log supply on imported dipterocarp logs. (The Japanese industry's efforts to diversify to conifer logs has not been very successful to date; it was able to import veneer from Sabah until the5e supplies too were curtailed by bans). Japan became the biggest importer from 1987, and continues to be the biggest market. South Korea and Taiwan have been relatively consistent buyers. Europe and the Middle East import up to 10 per cent of the volume; and the remaining importing countries, though numerous. buy less than 5 per cent of the export volume. A summary of the detailed statistics available from APKINDO ( 1989), and the corresponding BPS export data for 1988 is given in Table 17. Whether the price point is correct or not, the average values show the lower unit value of the exports to Japan then. Table 16 shows that this had changed by 1993. 'The high value for the relatively small volume of exports to the United Kingdom are not conclusive evidence that the values being used are c & f; they may reflect a di.fferenc.e in quality or commodity.

Imports of Indonesian Plywood by Japan Japan has been the major importer of Indonesian plywood since 1987. There were considerable financial pressures applied within the Indonesian industry to support this, and the commercial measures included setting up an Indonesian Company, NIPPINDO (Nippon Indonesia Plywood) to handle all sales in Jap~ thereby selling directly to the market, rather than dealing through the large trading companies (Sogo Sosha). The detailed breakdown of imports in Japan is divided into fifteen or more categories (Appendix 2). The publication of both the area and the volume of imports from 1991 enables reasonable estimates of volumes in earlier years by thickness classes to be calculated, although some imprecision is inevitable. Although imports are by HS classes, the fmal sub-class does not co rrespond with any of those adopted in Indonesia. The latter continues to yield no information o n thicknesses exported, which then has to be extracted from the importing countries' figures. So the information can be obtained, but laboriously. Direct comparisons of the detailed data are still not possible and the total annual volumes and values are the only appropriate comparisons available, with an increase in imprecision from using the aggregates. Even so, the figures are necessary to help test if the Indonesian export values are based on a c & f or f.o.b. baais from 1986.

TABLE 17 Indonesian Plywood Exports by Country, 1988 (year to 31112) APKINDO 1989# Destination

BPS 1992*

Capricorn 1994

indonesian MoP

Volume Value Value Volume Unit value Volume Unit value Value Unit value Volume Value Unit value (000 cum) (mill. US$) (US$/cu m) (000 cum) (mill. US$) (US$/cu m) (000 cu m) (mill. USSJ (US$/cu m) (000 cum) (mill. US$) (USS/cu m) (c & f) (f.o.b.) (no price pt)

Japan United States P.R. China Hong Kong Singapore United Kingdom

2025 987 912 421 234 300

580 374 339 139 73 124

Total (including others)

6839

2294

413

1854 816 817 389 298 248

518 309 312 125 96 104

335

6217

2074

286

379 312 330 312

#for common plywood; blackboard; new and special items. *"tons" c.onverted to cubic metres @ 1.54 cubic metres/tun. NS =Not specified USA =Includes Canada U.K. = Includes Ireland

279 382 321 322 419

2047 899 895 351 262 260

516 309 310 108 101

346 308 313 388

3~

6570

1005

305

379

82

:!52

344

2037 962 1328

582 364 476

286 378 358

233 300

12 124

309 -'13

6860

2298

335

Plyll'ood Exports

51

The figures in Table 16 show that the unit values of exports to Japan are consistently below those to other countries. The conclusion is that Indonesian plywood is being dumped to penetrate the market. There are also detailed accounts (in Japanese) of the levy system adopted to force sellers to export to Japan umbre. with mcreasi ng log costs for poorer rd '>' material : a decltnc 10 veneer qualtty and recovery; tncreasi ng l:Om[Xtlllon from other wood-ba))ed panel s: long-te nn pnce tre nds against it: anJ inc n:al>i ng e1w1ronme ntal pres)ure::. on e xport sales. It IS possible that its profll abillly t:> already marg1nal.

Conclus ions The statil>tic!'> and their use: I. Priori ty should be given to examining the admittedly inadequa te data to

2. 3.

4. 5. 6.

ee where logical decisions on changes have to be made before doing analysis. Competent editing will sa ve much wasted time and distortions in the lite rature. The basic data for Indonesia and elsewhere must be examined before further analysis is made. Neglecting this step has only resulted in figures that are unacceptable with consequent inaccuracies in the literature. Defining plywood is essential if a meaningful discussion is anempted. The industry, which is well-financed, should provide the level of statistics appropriate to its importance. The export values mus t revert, or be reasserted to be, on an f.o.b. basis.

Outlook fo r the Pl\wood l11dustry. a11d Co11clusi(m s

95

The plywood industry: I. The scale of exports has been so great that it has affected world prices which have generally declined in real tem1s. whe n based o n FAO statistics. 2. The original choice, and subseque nt priority given to plywood production on such a scale unduly re tric tlo market opportunities for other forest products . It is like ly that the industry i!> twice its inte nded size. 3. The industry is resource-based . labour-intensive. and perhaps 80-85 per cent export-orie nted . 4. The ready availability of cheap pl ywood domestically has probably retarded the o therwise logical develo pme nt of recon tituted wood panels to utilize 20 to 40 million cubtc metres of logging and manufacturing waste generated annually. Value-added and residual siUmpages: I. The value-added i de pendent on export prices and cost of production: in 1991 the value-added per cubic metre under bark of log was about US$70. This was achJeved at abo ut the cost of production with no profit: the fig ures are indicative o nly. 2. The data found for sawaUlling were too inadequate. and too distorted by ,the domestic market. to make a valid compari so n. The forests :

1. The recently agreed concept of permane nt sustajnability of existing fore st should be re-eumined. 2. An area of about 28 million hectares would be: required to sustain the current industry. The statistJcal findings: I. Any analysis of forest trade data wiU ha ve to be preceeded by similar examination of the basic data before further e laboration is made.

APPENDIX 1: FAO YEARBOOK DEFINITION OF " PLYWOOD"

P1yv.uod. \e,oec:r plywood, core plywood. includang veneered wood. block· boud. IAnuoboard and batteaboard. Other plywood. such as ceUular board .md '-OfnPOStk plywood.

Vmur plywood as plywood manufactured by bonding together more ~hcets. The gr.Uo of alternate veneer sheets is crosted, gC'atn.lly dl n ghr angle&. Core plywood is plywood whose core (that is, n·ntral layc:r. groeraJJy thJck.er than the other plies) 111 solid and consists of I:WTOW bocud.s, blocks or strips of wood placed side by 'iide, which may or m.J) oot be glued togethet". (l'b.is item uw:ludes veneered wood in sbeeU or p.taeb w wtucb a dun veneer of wood is affixed to a base. usually of Ullmor wood. by glwog under pressure). Celluklr board •• a plywood witb & uxt of c~Uular construction. wtule cumpo31l~ plywood is plywood with tht core or certalJI layers made of mattnaJ olher than solid wood or vencen ( a llllK~ w tht ongaoal ). ~ FAO (1988). The defirubOo 18 lhe same as an FAO (1994). 'The srrc code ,., 634.314 Plywood. tha.a rwo veneer

APPENDIX 2: TRADE, AND OTHER CLASSIFICATIONS FOR \\'OOD-B ASEO PASt:LS

CCCN = Customs Co-operation Counctl Nomenclature HCDCS = Hannonized Coding DescriptJon and Codmg S)l>lenl HS = Hll11llonized System SITC = Standard International Trade Cl