JAKARTA: Wood exporters are targeting a significant increase in plywood shipments to European and British markets next year as they delivered products with a license certifying their products as legally sourced for the first time on Tuesday.
The value of domestic plywood exports to the major markets is expected to climb by at least 20 percent from this year’s figures thanks to the newly introduced license, according to Indonesian Wood Panel Association (Apkindo).
The Forest Law Enforcement, Governance and Trade (FLEGT) license, which supplements the national timber legality assurance system (SVLK) applied earlier, will exempt Indonesian timber products, including plywood, from European scrutiny over illegal logging.
The FLEGT certificate will bring fresh air to the forestry sector as Indonesian wood products have been stigmatized as being sourced from irregular logging practices, according to Apkindo board member of marketing and foreign affairs division Gunawan Salim.
“With the FLEGT license, we’ll have the chance to export our products not only to Europe but also to other countries because developed countries are concerned with legality. Our sales in the European market will increase,” Gunawan said during an event to mark the initial shipment of the licensed-plywood. Due to tighter competition in the European market, Indonesian plywood sales to the bloc have dwindled.
In 2015, Indonesian shipments of plywood and other wood panel products to the bloc declined by 3.8 percent to US$129 million, according to data from Trade Map. Apkindo provides neither export data nor estimates.
With the license, the forestry industry products will no longer be subject to lengthy due diligence to comply with the EU Timber Regulation (EUTR) that has been implemented since March 2013. This means significant reduction in business costs.
In anticipation of the rule, local stakeholders have developed SVLK. After nine years of negotiation with the bloc, it declared that Indonesia had achieved full implementation of its SLVK and therefore, could secure a FLEGT license.
Indonesia, which has the world’s third-largest tropical rain forest area and was once notorious for rampant illegal logging, is the sole country to obtain the certificate that has been officially effective since Nov. 15.
Soon after the license came into force, four companies – Korindo Ariabima Sari, Kayu Lapis Indonesia, Kutai Timber Indonesia and Mujur Timber – shipped 23 containers of plywood to several European countries and to the UK from Tanjung Priok Port in North Jakarta.
Mujur Timber president director Yansen Ali said he expected to deliver 40 containers to Europe each month with a value of up to $2 million. On that day, the firm shipped 23 containers.
“With the license, we expect the price to climb up to 10 percent […] because it reflects our high-quality product,” Yansen said, adding that his company is optimistic that its market share could grow by 30 percent next year.
