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Indonesia Aims To Boost Wood Products Exports to the US Market

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The Indonesian government and business actors are determined to boost exports of wood products and their derivatives to the US market. Together, solutions will be sought for various existing challenges so that the market share of Indonesian wood products in the “Uncle Sam” market can continue to increase.

“We must be optimistic that we can expand the market in the United States because there is ample room for further growth and expansion,” said the Director General of American and European Affairs at the Ministry of Foreign Affairs, Umar Hadi at the opening of the webinar entitled “Unlocking Wood Product Business Opportunities in The US Market: Why Indonesian Wood Products are Your Ideal Choice”, Thursday, February 16, 2023.

He added, through this webinar it is hoped that there will be a great opportunity to explore partnerships between potential business players of the two countries.

The meeting was organized by the Directorate General of American and European Affairs of the Ministry of Foreign Affairs in collaboration with the The Forum of  Indonesian Forestry Communities (FKMPI), the Indonesian Embassy in Washington DC and the Indonesian Consulate General in Los Angeles, Chicago, Houston, San Francisco and New York. The event was attended by 100 participants consisting of wood industry entrepreneurs both in Indonesia and in various regions in the United States.

Also present were the Indonesian Ambassador to the United States, Rosan P. Roeslani and the Indonesian Consuls General in Los Angeles, Chicago, Houston, San Francisco and New York.

Present as panelists were Abdul Sobur, Chairman of the Presidium of the Indonesian Furniture and Handicraft Association (HIMKI); Bambang Soepijanto, Chairman of the Indonesian Wood Panel Association (Apkindo); Halim Rusli, President Director of Integra Indocabinet and Group; Henry Limarta, CEO of New Pacific Direct Northern California; Wayne Forrest, Executive Director of the American Indonesian Chamber of Commerce; Betty Jones and Gary Jones, owners of Be-Hu Line LLC-Importer & Logistics.

Indonesian Ambassador to the US Rosan P Roeslani revealed that Indonesian wood product producers must work seriously on the US market because of its great potential. Rosan said the demand for Indonesian wood products in the US continued to grow, supported by furniture products for housing and office needs.

“In the next few years, it is projected that demand for furniture products will continue to increase in line with changes in tastes for environmentally friendly lifestyle products,” he said.

The Director General of Sustainable Forest Management at the Ministry of Environment and Forestry (KLHK) Agus Justianto explained that Indonesia has now added a number of verifiers related to sustainability aspects so that the SVLK has now transformed into a Legality and Sustainability Verification System (SVLK) which guarantees the legality and sustainability of exported wood products.

Based on KLHK data, in 2022, exports of Indonesian wood products were recorded at US$14.51 billion, an increase of 7% year on year (yoy) when in 2021 exports were recorded at US$13.5 billion.

The US is the second largest export destination after China with a value of US$2.23 billion. Products that are in demand by US consumers are wood furniture, plywood (wood panels), and paper.

Chairman of Apkindo Bambang Soepijanto revealed, one of the products that are in demand in the US market is thin plywood with a thickness of 2.7 mm which is used to manufacture caravan cars.

Promotion

Chairman of FKMPI who is also chairman of APHI Indroyono Soesilo stated that Indonesia has the opportunity to continue to increase exports. One of the reasons is that the US imposes high import duties on products from China, which is the largest exporter of wood products there.

Indonesia also received a Generalized System of Preferences (GSP) facility from the US so that several timber products were imported duty-free. “If our market share can be increased 100% from the current US$2 billion, it will only be around US$4 billion. It’s still small compared to its potential of US$63 billion,” said Indroyono.

He said, intensive and joint promotions need to be carried out so that consumers in the US can increasingly accept Indonesian wood products. Indroyono also agreed on the need to build a permanent display center in the US as proposed by HIMKIand preparation warehouse.

Abdul Sobur, Chairman of HIMKI, stated that the US market needs to be worked on seriously because furniture ranks first in Indonesia’s forest product exports to the US. This is also in line with President Joko Widodo’s (Jokowi) instructions to achieve a furniture export target worth US$5 billion by 2024.

“The competitive value of furniture products needs to be increased, including in terms of design and logistical support because most of the HIMKI members are small and medium enterprises,” said Sobur.

Sobur stated, the experience and success of the Indonesian diaspora from Be-Hu Line LLC in partnering with SMEs to enter the US furniture market, can be a reference and learning.

Halim Rusli, President Director of Integra Group, an integrated wood product producer that regularly exports to the US, agreed on the need to take advantage of the current US fiscal policy which imposes high import duties on products from China. “Support and regulations from the Indonesian government are needed so that Indonesian wood products can be stronger in the US market, including those related to import duties that are favorable for Indonesian entrepreneurs, as well as strengthening the wider diaspora network of Indonesian entrepreneurs,” said Halim.

Executive Director of the American Indonesian Chamber of Commerce Wayne Forrest emphasized the importance of understanding the provisions for importing wood products in the US which are regulated through the Lacey Act. This provision requires that imported products are not only legal but also must be sustainable.

Forrest also agreed on the need for more massive promotion, the need for design improvements for Indonesian wood products, and educating consumers about the source of raw materials for wood products.

As a follow-up to this meeting, business matching will be carried out with US importers in March 2023. ***

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