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Indonesia’s Forestry Sector Achievements Remain Positive in February 2022

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Indonesia’s forestry sector continues to show an increasing trend in February 2022 when compared to the same period last year (year on year/YoY)

There is an upward trend in upstream with increasing timber production.
The same situation also occurs on the downstream side where the export of wood products is showing an increase.

Meanwhile, The global situation related to the Russia-Ukraine crisis could have an impact on the export performance of one of Indonesia’s leading commodities in the future.

The positive achievements of the Indonesian forestry sector in February 2022 are shown by data from the Ministry of Environment and Forestry (KLHK) as compiled by the Indonesian Forestry Community Communication Forum (FKMPI), Monday 7 March 2022.

Upstream, natural forest timber production in February 2022 was recorded at 486,434 m3, an increase of 22.3% year on year (YoY) from 397,663 m3 in 2021.

For timber plantations, production in February 2022 was recorded at 7.06 million m3, an increase of 5.9% YoY from 6.67 million m3 in 2021.

Meanwhile, wood production from Perum Perhutani was 155,084 m3 an increase of 66.6% YoY from 93,090 m3 in 2021.

Downstream, the export value of forestry industry products reached US$2.4 billion in February 2022 an increase of 23.1% YoY from US$1.9 billion in February 2021

The three biggest contributors to exports in February 2022 were paper products with (US$670.4 million), then wood panels (US$592.3 million) and pulp (US$521,481 million).

The positive trend in exports of forestry industry products in February 2022 was supported by positive exports in main destination countries.

Exports to China rose 3% YoY to US$517.7 million, to Japan rose 25% YoY to US$254.3 million, and to the United States of America rose 50% YoY to US$488.8 million.

Exports also recorded an increasing trend in the European Union and UK markets. In February 2022 exports were recorded at US$210.3 million, an increase of 26.3% YoY from US$166.5 million.

What needs to be considered is the symptom of a decline if export performance is compared on a monthly basis (month to month).

In December 2021, Indonesia’s wood product exports were recorded at US$1.3 billion, then decreased to US$1.23 billion in January 2022, and to US$1.17 billion in February 2022.

The decrease was influenced by the scarcity of containers and the scarcity of container ships which made logistics costs increase.

The Central Statistics Agency (BPS) has stated that the decline in exports at the beginning of the year is a seasonal pattern that occurs in almost all of Indonesia’s leading commodities.

Meanwhile, the conflict between Russia and Ukraine could also affect Indonesia’s exports in the future.

Andri Hadi, the Ambassador of the Republic of Indonesia to the Kingdom of Belgium, the Grand Duchy of Luxembourg, explained that the conflict of Russia and Ukraine has caused the gas prices increased, which means that many countries need alternative fuels.

Meanwhile, Russia has also announced to stop exporting the raw timber which is impacted to the wood processing industries in the EU.

“The reduced supply of wood from Russia is an opportunity to be filled with Indonesian wood products,” he said in a virtual discussion with FKMPI held on Friday, 25 February 2022. ***

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