The furniture industry is optimistic that exports will grow 10 percent this year

Regarding EUDR regulations, industry players can explore the potential of non-traditional markets outside the European market.

ARSIP KEMENTERIAN KOPERASI DAN UKM

Various furniture and handicraft products were displayed at the 7th National Assembly of the Indonesian Furniture and Handicraft Industries Association (Asmindo) in the Jogja Expo Center, DI Yogyakarta, on Tuesday (23/8/2022).

JAKARTA, KOMPAS — The strengthening of the United States dollar exchange rate makes industrial exporters furniture, furniture, and crafts Indonesia is vibrant. They are optimistic that exports of the furniture, furnishings and crafts industry can grow at least 10 percent compared to export performance in 2023.

The Chairman of the Indonesian Furniture and Handicraft Industry Association (HIMKI), Abdul Sobur, stated on Wednesday (8/5/2024) that currently, the exporters in this industry sector are enthusiastic. One of the reasons is due to the momentum of the strengthening of the US dollar exchange rate. Moreover, the furniture, furnishings, and handicrafts industry in Indonesia uses 80-90 percent domestic raw materials.

In the first quarter of this year, they have held many exhibitions, both domestically and abroad. This has brought in many new prospective buyers, especially in foreign markets.

He is optimistic that the export of furniture, furnishings, and crafts industries can grow by at least 10 percent compared to the export performance in 2023. The value of these industries' exports in 2023 reached 1.8 billion US dollars, down 28 percent compared to 2022's 1.8 billion US dollars.

In line with Sobur, the owner of CV Surya Java Furnindo (Soul Timber), Johan Lesmana, said that the current position of the US dollar exchange rate provides an opportunity for furniture exporters to be more expansive in the export market.

However, according to Johan, at present, they are also faced with challenges in the distribution of export goods. The geopolitical tensions in the Middle East have disrupted the distribution of export goods to Europe and Central Asia.

Also read: Global Economic Slowdown Pressures Furniture and Handicraft Exports

Due to tension in the Middle East, shipping of goods now has to take a longer route through Africa instead of using the Suez Canal as before. This has resulted in an increase of the usual distribution time from 20-35 days to 60 days. As a result, shipping costs have also increased by up to 40 percent.

"The current exchange rate situation does benefit local raw material exporters such as our industry. However, we still face quite a lot of challenges," said Johan.

This CV located in Jepara has been established since 2014. They focus on exporting furniture and home accessories products. The countries that they export their products to are Germany, Italy, Spain, Malaysia, South Korea, and the United Arab Emirates.

KOMPAS/BENEDIKTUS KRISNA YOGATAMA

The owner of CV Surya Java Furnindo (Soul Timber), Johan Lesmana, along with his furniture, fixtures, and crafts products exhibited at the Ministry of Industry, Jakarta, on Friday (3/5/2024).

However, a different approach was chosen by CV Kirana Cipta Lestari, which focuses on the domestic market. One of the owners and Design Director of CV Kirana Cipta Lestari, Rico Kirana, said that the company has been focusing on the domestic market since 2006. Initially, the company was established in 1998 and immediately focused on exports. However, after eight years of being an exporter, he chose to focus on the domestic market.

The current exchange rate conditions are indeed beneficial for exporters of local raw materials such as our industry.

This producer of decorations, souvenirs, and home ornaments supplies their goods to hotels, cafes, and restaurants throughout the country. Additionally, they often supply souvenirs for official national events, such as during the G20 or ministry/agency or SOE ceremonies.

"Export may promise opportunities, but it also poses equally big challenges. However, there is also potential market within the country that has not been fully tapped. Therefore, we prefer to focus on the domestic market," said Rico.

KOMPAS/BENEDIKTUS KRISNA YOGATAMA

Furniture and craft products from CV Kirana Cipta Lestari at an exhibition at the Ministry of Industry, Jakarta, Friday (3/5/2024).

One of them is the implementation of the European Union's anti-deforestation law (EUDR). In fact, Europe is one of the traditional markets for the domestic furniture, furnishings and crafts industry. Exports to Europe account for about 25 percent of the industry's total exports.

In principle, this regulation prohibits a number of commodities that come from land that has been deforested after December 31, 2020, from entering the European Union market. These commodities include coffee, palm oil, cattle, soybeans, cocoa, wood, charcoal, and rubber as well as derivative or processed products such as meat, furniture, paper, leather, and chocolate.

According to Sobur, regarding the EUDR regulations, this industry can explore potential non-traditional markets outside of the European market that also have great opportunities. Players in this sector can try to explore non-traditional markets outside of Europe such as South Korea, China, Japan, and Southeast Asia. On the other hand, they also need to improve their business capacity in order to meet the EUDR requirements for exporting to Europe.

Also read: Accelerate Data Collection on Planters to Anticipate European Union Anti-deforestation Regulations