The government is mulling over a number of policies to improve the performance of the domestic timber and furniture industries, which it identifies as key industries that could seize the momentum amid an ongoing trade war between the United States and China.
In a meeting with industry players in the State Palace on Tuesday, President Joko “Jokowi” Widodo said that Indonesia’s timber and furniture products were among the key products that could achieve positive momentum amid the trade war, which has driven down global trade volumes, citing information from the World Bank.
“I believe the chances are huge [for us] to fill in the [wood and furniture] market that used to be held by China, but then it left [the market] because of the trade war. This could be our chance,” said President Jokowi.
Among the proposed policies being considered by the government were value-added tax (VAT) exemptions for logs and a partial relaxation of the timber legality assurance system (SVLK), a licensing requirement for each step in the wood supply chain in order for the industry’s end product be accepted in selected countries.
“The business players suggested that if the destination country does not require them to obtain an SVLK [license], then the government should not enforce the SVLK regulation,” said Coordinating Economic Minister Darmin Nasution after the meeting. Currently only the European Union, Canada, Australia and the United Kingdom require timber and furniture exporters to have SVLKs. “The suggestion makes sense but we need to review the trade minister’s regulation.”
Darmin added that President Jokowi also urged the industry to partner with foreign businesses that have technical expertise and good marketing networks, saying that the government would lay the groundwork in a bid to invite more investors into the timber and furniture industries.
Indonesia’s export of timber and its derivative products was worth US$2.2 billion between January and July this year, according to Trade Ministry data, down by 13.47 percent compared to the $2.55 billion recorded over the same period last year.
Furniture exports, meanwhile, rose 9.41 percent year-on-year (yoy) to $1.12 billion in the first seven months of this year.