Indonesian Furniture Exports

Jan 5th, 2006, in Business & Economy, by

Exports of Indonesian furniture continue to stagnate.

Despite increasing demand on the world market, Indonesian furniture exports will continue to stagnate in 2006 as a result of weaknesses in competitiveness, Asmindo, the furniture association body, has predicted.

Indonesian Furniture Industry and Handicrafts Association (Asmindo) executive director Sae Tanangga Karim said that most furniture exporters in Indonesia were still suffering the effects of fuel prices rises and higher minimum wages. He said:

We will be lucky to be able to match the value of last year's exports

Furniture exports saw modest gains in 2005 from $1.55 billion in 2004 to US$1.6 billion. Wood furniture constituted 65% of this total.

However the Ministry of Industry expects the furniture export industry to grow by 3.5 percent in 2006 after achieving steady growth of 4 percent in each of the last five years.

While demand is on the rise, Indonesia only controls 2 percent of the global furniture market, estimated to be worth $66 billion last year. Demand is expected to grow by between 5 and 7 percent this year.

China and Italy are currently the leading global market suppliers with combined exports of $9.3 billion.

Even in Southeast Asia, Indonesia trails behind neighboring countries Malaysia and Vietnam, Tanangga said.

Rising operating costs have eroded our competitiveness as compared to other producer countries

The last fuel price hikes, which averaged 126 percent, pushed operating costs up 25 percent, with a proposed increase in industrial electricity prices likely to increase costs by another 20 percent, he explained.

Not to mention the wage demands from workers

Combined, the rising costs were pushing up end-product prices, and meant that Indonesia was at risk of losing further global market share.

... we can only raise prices by 6 percent at the most.

In 2005 alone, he added, 64 of the 2,016 firms grouped together in Asmindo had closed up shop.

On the domestic front, furniture manufacturers were increasingly losing out to Chinese goods. According to Asmindo figures, total furniture imports increased by 78 percent last year.

Besides increasing costs, the industry had also been badly hit by the lack of timber following the government's decision to lower the logging quota for natural forests from 5.7 million cubic meters in 2004 to 5.4 million cubic meters in 2005.

We hope that this year we will benefit from a bigger supply as the Ministry of Forestry is proposing an increase in the quota.

Minister of Forestry Malam Sambat Kaban said last year that he planned to raise the natural forest logging quota to 8.1 million cubic meters this year. The plan has yet to be approved by the House of Representatives, and has come under attack from environmental groups.

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4 Comments on “Indonesian Furniture Exports”

  1. avatar Chulamas says:

    Do you have the trend/statistics for wood-based furniture/construction market in Indonesia?

    Thank you.

  2. avatar WongKL says:

    Dear Sir

    Please advise where can I obatain Indonesia wooden furniture export statistic.

    Thanks

  3. avatar muhsin says:

    please give factory details of p.u paper and mdf furniture manufactures located in indonasia

  4. avatar Allan Boocock says:

    Please help i am trying to locate high quality indonesian furniture manufacturers that are looking for Uk distribution

    Allan Boocock

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