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Tropical Timber Market in Indonesia (1st–15th May 2020)

Indonesia’s timber legality system remains in force butsubject to revision

The Indonesian Minister of Environment and Forestry, SitiNurbaya, has confirmed that,after a series of meetingswith relevant ministries following the Ministry of Trade suspension ofthe SVLK Regulation,the Ministry of Trade will withdraw that suspension until revisions of the SVLK are agreed.In a written statement Siti said the SVLK (Sistem Verifikasi Legalit as Kayu/Timber Legality AssuranceSystem) continues to be applied. At the same time she announced increased financial support for export-oriented,timber SMEs.It was further announced that the process of revising the Ministry of Trade regulation would involve the Ministry of Environment and Forestry as well as the Ministry ofForeignAffairs.

Interest free loans sought for SMEs

The Secretary General of the Indonesian Furniture and Handicraft Industry Association (Himki), Abdul Sobur,has announced that existing orders held by furniture manufacturers are only sufficient for them to sustainproduction for about 8 weeks from 10 May. This is because overseas buyers have delayed placing new orders.He said companies with limited cash reserves will only be able to pay wages for a short time and as a result the onlyoption at present is for companies to lay off employees.He estimated that if 70%of furniture manufacturers whoare members of the Association have to lay off workersaround 280,000 wage earners could be affected directlyand thousands indirectly affected.

In related news,the Deputy Chairman of the Small andMedium Industries in Himki, Regina Kindangen, said many SME furniture and handicraft makers stopped workin mid-March as orders ran out. She pointed out thatfurniture and craft manufacture is dominated by SMEswho are not well equipped to survive financially. TheHimki noted the national furniture industry workforce isaround 2 million.The Director General of Small and Medium and Various Industries att heMinistry of Industry,Gati Wibawaningsih, has written to the Coordinating Ministryfor Economic Affairs proposing an interest free loan scheme for SMEs.The Ministry of Industry has identified 10 industrialsectors, including the timber sector, badly affected bythelack of orders and lack of capital reserves to maintain the workforce.

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