Indonesia’s capital, Jakarta, was brought to a standstill by flooding which peaked on 17 January. Some 10 million people living and working in the city were affected and 20 people are reported to have died in flood related accidents.
The local media reports that more than 40,000 people were displaced and more than 100,000 homes and businesses were under water.
Most of the timber industries located in Jakarta, Banten and West Java had to postpone shipments during the 5 days of floods in Jakarta. Most exporters managed to re-arrange export schedule but some are facing delayed shipment penalties from buyers.
So far, there is no detailed information on the financial loses suffered by timber industries located in Jakarta, Tangerang, bekasi, and Banten. However, estimates put potential losses at around 1 trillion rupiah.
Analysts point out that some industries located in the flood hit pockets such as the Pulogadung industrial area and Tangerang Banten probably suffered financial losses because wood working machinery and raw materials were submerged.
Jakarta is surrounded by mountains and 13 rivers flow through the city to the Java Sea. The government has identified poor drainage in the catchment areas of Bogor-Puncak-Cianjur as contributing to the flooding of the Ciliwung river.
EU a major destination for processed wood products
The Indonesian Ministry of Forestry has reported that the volume of wood products export during the past 12 months totalled 1.01million cu.m for shipments to 94 countries, including EU member states.
The EU is a significant importer of Indonesian timber products.
While the volume of primary product exports to the EU was a modest 169.000 cu.m, or just 11% of the total export volume, exports of processed wood products to the EU were worth US$ 210 million or 22% of the total export value of all processed wood product exports.
Forestry and timber sectors could attract FDI
At the same time as the floods hit Jakarta the Government announced record high levels of foreign investment (FDI) during 2012. Total investments of Rp 313.2 trillion (US$32.5 billion), exceeding the target of Rp 283.5 trillion, were recorded.
Most of the investment was in the mining sector (17 percent of total FDI); followed by the transportation and telecommunication sectors (11 percent) and the pharmaceutical sector (11 percent).
Analysts point out that with the successful introduction of the domestic timber legality assurance scheme, there is a good chance that investment in the forestry and timber sectors will expand.
Indonesian SVLK satisfies EUTR
The Indonesian government has inaugurated a V-Legal/ FLEGT timber license system to boost timber sales globally and especially to meet the requirements of the EUTR.
The Indonesian government has said that when the EUTR enters into force in March this year, Indonesian wood products shipped by exporters with the domestic SVLK certificate will be deemed as satisfying the due diligence requirements of the EUTR It is said that around 1,500 companies nationwide have obtained SVLK certification.
Indonesia is the first Asian country to conclude negotiations of a Voluntary partnership Agreement (VPA) and the Indonesia/EU VPA is expected to be ratified in September this year.
EU importer expresses satisfaction with test shipment
The EU is a major destination for wood products from Indonesia and some EU member states recently participated in a test shipment of verified legal wood products from Indonesia.
The Netherlands Koninglijke Dekker Hout Group, which imports from Indonesia, participated in the test shipment and expressed satisfaction on the results of the test.
Indonesia looks forward to the early ratification of its VPA as this will bring tangible benefits to Indonesian exporters and European importers catering to demands of consumers in the EU.
Small companies offered help with SVLK certification
All wood product manufacturers in Indonesia are required to comply with the domestic timber legality assurance system. This requires that they secure third party verification.
The cost of securing the third party verification is a serious issue for small scale industries and the handicraft makers. Until now these small companies could not obtain financial or technical assistance to meet the new requirements.
The Indonesian government has allocated an initial Rp 3 billion (US$312,000) from the state budget to help subsidise small-scale producers in obtaining SVLK certification.
Domestic Log Prices
|Indonesia logs, domestic prices||US$ per m³|
Face and core logs
|Mahoni (plantation mahogany)||125-396|
Domestic Ex-mill Sawnwood Prices
|Indonesia, construction material, domestic||US$ per m³|
Export Plywood Prices
|Indonesia ply MR BB/CC, export FOB||US$ per m³|
Domestic Plywood Prices
|MR Plywood (Jakarta), domestic||US$ per m³|
Export and Domestic Other Panel Prices
|Indonesia, Other Panels, FOB||US$ per m³|
Export Added Value Product Prices
|Indonesia, Mouldings, FOB||US$ per m³|
|Red Meranti Mouldings 11x68/92mm x 7ft up