Perhutani Favors Lifting Ban on Teak Exports

The Jakarta Globe, Arti Ekawati, February 1, 2009

State-owned forestry company PT Perhutani said it supported the government’s plan to lift the ban on teak log exports so it could export its excess supply due to weak domestic demand. 

“We can export 90,000 to 100,000 square meters of teak logs,” said Upiek Rosalina Wasrin, chief executive of Perhutani. “I hope Perhutahi can [start] exporting it this year.” 

Upiek said that exporting high quality teak logs was urgent because the domestic market can only absorb a small number of good quality teak due to its high price. High class teak logs sell for Rp 20 million ($1,760) per square meter in the international market. 

Perhutani produced 300,000 square meters of high-quality teak wood in 2008. The domestic market can only absorb about 10,000-15,000 square meters for the furniture industry. The demand could further decline this year due to the economic slowdown. 

“Perhutani would gladly welcome the move, should the government open licenses to export logs since we can sell it to the international market,” Upiek said. 

Taking its high price into consideration, Upiek is targeting the high-end furniture industry overseas as consumers. 

Upiek also emphasized that the company would only export premium-quality teak logs and retain medium-quality teak for the domestic market. 

Earlier, Forestry Minister M.S. Kaban said the government could lift the ban on log exports from industrial forests in anticipation of a decrease in demand in the domestic market because of the global crisis. One reason why exports of teak logs was banned was to control illegal logging. 

Meanwhile, Elfian Effendi, executive director of Greenomics, a nongovernmental organization, said the government should lift the ban on log exports only to Japan. The exports, he said, should only be allowed if Japan intended to erase Indonesian debt. 

“If Japan agrees to use log exports as a form of compensation to erase Indonesia’s debt, then log exports can be allowed,” Elfian said in December. 

According to Elfian, more than 70 percent of Indonesia’s foreign debt is with Japan. In addition, Japan always asks Indonesia to open teak log exports to the country.