JAKARTA, KOMPAS — The government will bring the topic of the declining furniture industry to a limited Cabinet meeting. This move has been taken because there are many inter ministerial and institutional policies that affect the fate and performance of the furniture industry.
“We want the issue to be taken to a limited meeting because it concerns inter ministerial and institutional policies,” Acting Industry Ministry secretary-general Haris Munandar said on Tuesday (28/3).
Haris said the import of raw materials for wooden furniture, which did not grow in Indonesia, would relate to the quarantine policy. Sometimes, obtaining an Import Tax Waiver for Materials for Export Oriented Goods (KITE) requires a recommendation from the Environment and Forestry Ministry. It takes time and an elongated process creates problems for the furniture industry.
High bank interest also causes the furniture industry to lack competiveness. The Industry Ministry has pushed to lower the interest so that the domestic industry player could have a competitive advantage. “But the financing interest follows banking regulations. That is beyond our authority,” Haris said.
He added that the furniture industry should not depend on the banking sector. There is another financing scheme, such as from the Indonesia Export Financing Institute (LPEI), which the furniture industry – mainly export-oriented companies– could make use of. “There will be meeting at LPEI on March 30 relating to special assignment. We will include the financing issue on that occasion,” Haris said.
Haris said the Industry Ministry would map out companies, export destination countries and the scale and scheme of financing needed by the furniture industry. The government will also push for the use of domestic furniture product and crafts.
It is like what happened in 2012 when the government pushed private companies or state-owned firms to channel their corporate social responsibility funds in the form of rattan chairs and tables to elementary schools near the companies.
SVLK burdens SMEs
Amid the difficulties in accessing raw materials among furniture craftsmen in Jepara regency, Central Java, there is another policy that creates problems for industry players, mainly small and medium enterprises (SMEs). They feel the burden from the fees for the issuance of Timber Legality Assurance System (SVLK) documents. A craftsman needs to spend up to tens of million of rupiah to obtain the certificate. Without the guarantee of easy access to raw materials, chairman of the Jepara chapter of the Indonesia Furniture Industry and Crafts, Masykur Zaenuri, said the competitiveness of the national furniture industry in the ASEAN market would decline.
The policy stipulated in Trade Ministerial Regulation No. 25/2016 on the export of forestry industry products is seen as contributing to the weakening of the furniture industry.
“The burden to process SVLK documents reaches Rp 80 billion for medium industry. For the small and medium industry, this is too burdensome,” he said.
Based on the regulation, all shipping of furniture products overseas needs requires V-Legal documents. Each shipment costs Rp 100,000.
The implementation of the SVLK regulation in the downstream industry is seen as irrelevant. The SVLK regulation should be implemented in the upstream industry, the companies that supply the timber. The SVLK policy aims to prevent illegal logging and conserve forests.
If the export destination country does not require the SVLK, the government would surely give ease to the downstream industry to export its products without SVLK. “Why not follow Vietnam? They do not bother with SVLK. They import timber from their export destinations,” said Zaenuri, who owns CV Aulia Jati Indofurni, Jepara.
Vietnam imports timber from Laos, New Zealand and the United States. Vietnam is the main competitor of the Indonesian furniture industry, especially in the export market. The Vietnamese furniture industry in 2011 was valued at around US$1.8 billion. Now, it is $6 billion.
Meanwhile in Cirebon, West Java, industry players and rattan craftsmen are developing new rattan product designs and not depending on the designs of foreign buyers. The innovation in rattan design will be a strategy to survive amid declining furniture exports.
“One of the causes of the declining rattan industry in recent years is not only the lack of raw materials but also the minimum design development,” HIMKI deputy chairman for innovation and design, Satori, said in Cirebon.
Satori said a company that produces rattan products generally only works on the design from the foreign buyers. The company only offers production services, while the design belongs to the buyers. In the rattan production center in Cirebon, there are at least 150,000 people unemployed. About 43 percent or 220 rattan furniture factories in Cirebon have gone bankrupt.
That is different from the companies that develop their own designs. “If a company has its own designs, the customers will not move to another company because the specific design belongs to that company,” he added.
Meanwhile, rattan suppliers in Kalimantan are suffering as well because unprocessed rattan has not been permitted for export for the last seven years, while domestic demand remains low. On the other side, the domestic rattan industry lacks raw materials.
Farmers, Traders and Rattan Industry Union in Kalimantan secretary-general Muhammad Irwan Riadi said in Banjarmasin, South Kalimantan that the market share of Kalimantan rattan had decreased since the issuance of Trade Ministerial Regulation No. 35/2011.
(WHO/KRN/GRE/IKI/CAS)
