Study of Legal Timber Product Demand in Major Markets by Forest Governance Multistakeholder Forestry Programme

Study of Legal Timber

Products Demand In Major Markets

ÂŠ 2011 Forest Governance and Multistakeholder Forestry Programme Printed by MFP

Bintang C. H. Simangunsong, 2011, Study of Legal Timber Products Demand In Major Markets

Photo credits : M Syukur Cover design : Basuki Design and layout : M Syukur

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Contents Page Introduction Kata pengantar

vii x

1. 2.

Introduction World forest products production, imports, exports, and consumptions 2.1. Plywood 2.2. Veneer Sheets 2.3. Particleboard 2.4. Fiberboard 2.5. Woodpulp 2.6. Paper and Paperboard

1 5 7 11 15 19 23 27

Indonesia forest product production, imports, exports, and consumptions 3.1. Plywood 3.2. Veneer Sheets 3.3. Particleboard 3.4. Fiberboard 3.5. Woodpulp 3.6. Paper and Paperboard

31 33 35 37 38 40 41

Shares of forest product imports from Indonesia to total imports as reported by major importer countries 4.1. Plywood 4.2. Veneer Sheets 4.3. Particleboard 4.4. Fiberboard 4.5. Woodpulp 4.6. Paper and Paperboard

45 47 48 49 50 51 52

Drivers and principal policies affecting forest products markets 5.1. Drivers 5.2. Principal policies

55 57 60

Indonesiaâ&#x20AC;&#x2122;s Forest Industry Revitalization

Conclusions References

71 75

iii

List of Tables

Page

Table 1.

World World production, imports, and exports of plywood in 2002-2009

Table 2.

Apparent consumption and net export of plywood in Major consumer countries, 2002-2009

Table 3.

World World production, imports, and exports of veneer Sheets in 2002-2009

Table 4.

Apparent consumption and net export of veneer sheets In major consumer countries, 2002-2009

Table 5.

World production, imports, and exports of particleboard in 2002-2009

Table 6.

Apparent consumption and net export of particleboard in major consumer countries, 2002-2009

Table 7.

World production, imports, and exports of fiberboard in 2002-2009

Table 8.

Apparent consumption and net export of fiberboard In major consumer countries, 2002-2009

Table 9.

World World production, imports, and exports of Woodpulp in 2002-2009

Table 10.

Apparent consumption and net export of woodpulp In major consumer countries, 2002-2009

Table 11.

World production, imports, and exports of paper and paperboard in 2002-2009

Table 12.

Apparent consumption and net export of paper and paperboard in major consumer countries, 2002-2009

Table 13.

Production, imports, and exports of Indonesia plywood in 2003-2008 (MOF 2008-2009)

Table 14.

Production, imports, and exports of Indonesia plywood in 2002-2009 (FAO 2010)

Table 15.

Production, imports, and exports of Indonesia veneer Sheets in 2003-2008 (MOF 2008-2009)

Table 16.

Production, imports, and exports of Indonesia veneer Sheets in 2002-2009 (FAO 2010)

Table 17.

Production, imports, and exports of Indonesia Particleboard in 2003-2008 (MOF 2008-2009)

Table 18.

Production, imports, and exports of Indonesia Particleboard in 2002-200 (FAO 2010)

Table 19.

Production, imports, and exports of Indonesia Fiberboard in 2003-2008 (MOF 2008-2009)

Table 20.

Production, imports, and exports of Indonesia Fiberboard in 2002-2009 (FAO 2010)

Table 21.

Production, imports, and exports of Indonesia woodpulp in 2003-2008 (MOF 2008-2009)

Table 22.

Production, imports, and exports of Indonesia woodpulp in 2002-2009 (FAO 2010)

Table 23.

Production, imports, and exports of Indonesia paper and paperboard in 2003-2008 (MOF 2008-2009)

Table 24.

Production, imports, and exports of Indonesia fibreboard in 2002-2009 (FAO 2010)

Table 25.

Shares of plywood imports from Indonesia to total imports as reported by major importer countries over the period 2002-2008 47

Table 26.

Shares of veneer sheets imports from Indonesia to total imports as reported by major importer countries over the period 2002-2008

Shares of particleboard imports from Indonesia to total imports as reported by major importer countries over the period 2002-2008

Shares of fibreboard imports from Indonesia to total imports as reported by major importer countries over the period 2002-2008

Table 27.

Table 28.

Table 29. Table 30.

Shares of woodpulp imports from Indonesia to total imports as reported by major importer countries over the period 2002-2008 Shares of paper and paperboard imports from Indonesia to total imports as reported by major importer countries over the period 2002-2008 v

52 53

List of Figures Figure 1.

Plywood production, export, and import and their trends by major world producers, exporters, and importers in the period 2002-2009

Page 9

Figure 2.

Veneer sheets production, export, and import and their trends by major world producers, exporters, and importers in the period 2002-2009 13

Figure 3.

Particleboard production, export, and import and their trends by major world producers, exporters, and importers in the period 2002-2009

Fiberboard production, export, and import and their trends by major world producers, exporters, and importers in the period 2002-2009

Woodpulp production, export, and import and their trends by major world producers, exporters, and importers in the period 2002-2009

Paper and paperboard production, export, and import and their trends by major world producers, exporters, and importers in the period 2002-2009

Figure 7.

Major importers of Indonesia's plywood over the period 2003-2008

Figure 8.

Major importers of Indonesia's veneer sheets over the period 2003-2008

Figure 9.

Major importers of Indonesia's particleboard over the period 2003-2008

Figure 10.

Major importers of Indonesia's fiberboard over the period 2003-2008

Figure 11.

Major importers of Indonesia's woodpulp over the period 2003-2008

Figure 12.

Major importers of Indonesia's paper and paperboard over the period 2003-2008

Figure 4.

Figure 5.

Figure 6.

Introduction

FOREST GOVERNANCE and Multistakeholder Forestruy Program (MFP II â&#x20AC;&#x201C; Kehati) is a program that supports good forestry governance through SVLK and promotes commitment of Indonesia in ensuring the world that the timber of Indonesia is legal and accountable for its source. One of the activities conducted by MFP II was doing a Study of Legal Timber Products Demand in Major Markets as a part of MFP goals to support SVLK acceptance in the International market. This book is based on the Study of Legal Timber Products Demand in Major Market report. The study analysed the insight view and tends of the legal timber trade and consumption as well as legal market scope in main markets such as Europe, US, Japan , China and Korea. In the last 10 years, the progress of timber market in those countries has shown a dinamic change. One of the progresses is the demand of legal timber. Previously the demand was only related to the price, quality, and delivery order. Presently consumers also require legal timber of sustainable forest and the timber is safe for the users and the company, as the forest management or as the timber management industry is required to complete the CSR. At the same time, more organizations in develop countries, both government and private sectors have applied the policy of new procurement, that is a requirement of legal timber from sustainable forest. It has led us into a new era of legal and sustainable timber trade.

vii

Some of tropical exporters countries, including Indonesia have shown serious and intens concern on this progress, as the legal and sustainable timber trade scheme can fix the environment and good governance. It is also potential to hampere illegal exportersâ&#x20AC;&#x2122; access to the fair trade. However, some have seen that the requirement for legal and sustainable timber and forest products is a new form of trade restriction. And it can be an obstacle for non tariff trading. The Government of Indonesia has taken important steps to response it by issuing the Rule of Ministry of Forestry No. 38/2009 on Standard and Guidelines on Assessment of Performance in Sustainable Production Forest Management and Timber Legality Verification on the permit owner or on the Right Forest. The Government of Indonesia has also issued the Rule of Director General of Forestry Unit Management No. 6/2009 on Standard and Guidelines on PHPL Performance and Timber Legality Verification. Those two rules are as a Government commitment and persistency to institutionalize the legal and sustainable timber trade and market. This progress will also restrict expansion and timber products and furniture diversification in the international market. In specific, the concern and the attention seem to be given to the community forest, small scale enterpreneur and informal sector which might be less in ability to complete the new requirement of legal and sustainable timber trade scheme. They are easily taken out of the export trading for markets which require the sustainability and legality. In 2007 export structure of Indonesia forestry products based on the value has shown that 33% of the exports goes to EU-27 market, 23 % to Japan, 18 % to US, 4 % to Korea, 4 % to China, 3 % to Taiwan, 1 % to Malaysia, 14 % to other countries. This has shown that there is a change in the quality of consumer requirement, especially in Europe, Japan and US on the forestry products, including legal and sustainable timber which implies seriously to the economy, trade and good governance. Indonesia Forestry Multistakeholder is also required to be able fit in the rules and the legal and sustainable market and trade requirement.

viii

This condition has impacts on the economy, trade, domestic timber market and good governance. Therefore,

it is needed to map it to the public to be

understood clearly. We thank very much to Mr. Bintang C. H. Simangunsong, PhD. Of the Forest Economist, Faculty of Forestry, Institute Pertanian Bogor which has conducted the study, the Ministry of Forestry, the Ministry of Trade and Ministry of Foreign Affairs Republic of Indonesia and also to all parties that have given inputs and reviews on this report. Hopefully this book is usefull for you. Happy reading.

Diah Raharjo

Program Director

Kata Pengantar

Forest Governance and Multitakeholder Forestry Program (MFP II-Kehati) merupakan program yang mendorong tata keloal kehutanan yang baik melalui Sistem Verifikasi Legalitas Kayu (SVLK), serta mempromosikan kimtimen Indonesia dalam meyakinkan dunia bahwa kayu yang keluar dari Indonesia adalah legal dan dapat dipertanggungjawabkan sumbernya. Salah satu yang akan dilakukan oleh MFP II dalam kerangka kerja ini adalah melakukan Study Of Legal Timber Products Demand In Major Markets capaian MFP II untuk

sebagai bagian dari

mendorong keberterimaan SVLK oleh pasar

internasional. Buku yang Anda pegang ini bersumber dari laporan Study Of Legal Timber Products Demand In Major Markets tersebut. Study ini memberikan analisis proyeksi dan kecenderungan perdagangan dan konsumsi kayu legal dan pangsa pasar kayu legal di pasar-pasar utama seperti Eropa, Amerika, Jepang, China dan Korea.

Perkembangan pasar kayu di negara-negara tersebut memang

dalam satu dasawarsa terakhir memperlihatkan perkembangan yang dinamis. Salah satu perkembangan itu adalah berubahnya sifat permintaan konsumen terhadap kayu. Dimana sebelumnya

permintaan terhadap kayu hanya

berkaiatan dengan harga, kualitas, dan pengiriman (delivery order). Saat ini ditengarai, konsumen juga menginginkan kayu yang legal dan berasal dari hutan lestari, kayu yang dipakai tidak membahayakan keamanan dan keselamatan pemakaiannya, perusahaannya (baik pengelola hutan maupun industri pengolahan kayu ) memenuhi tanggung jawab sosial perusahaan, dan lain-lain. Paralel dengan itu, berbagai lembaga di negara-negara maju, baik lembaga pemerintah maupun swasta, sudah mulai menerapkan kebijakan pengadaan x

barang (procurement) baru, yaitu

mensyaratkan supaya kayu yang

dipakai/dibutuhkan juga harus legal dan berasal dari hutan yang dikelola secara lestari. Perkembangan ini mendorong lahirnya babak baru pasar dan perdagangan kayu; yaitu munculnya rejim perdagangan kayu yang legal dan lestari. Beberapa negara tropis pengekspor kayu, termasuk Indonesia,

menunjukan

keprihatinan yang serius dan mendalam terhadap perkembangan ini. Sebab skema perdagangan kayu yang legal dan lestari ini selain potensial memperbaiki lingkungan dan tata kelola kehutanan. Juga

potensial

menghambat akses mereka pada pasar yang adil. Ada yang menilai persyaratan legal dan lestari atas kayu dan produk-produk kehutanan merupakan bentuk baru restriksi perdagangan. Hal ini dapat menjadi hambatan perdagangan non tarif. Pemerintah Indonesia sendiri sudah mengambil langkah-langkah penting merespon perkembangan ini diantaranya dengan mengeluarkan Permenhut No .38/2009 tentang Standar dan Pedoman Penilaian Kinerja Pengelolaah Hutan Produksi Lestari dan Verifikasi Legalitas Kayu pada pada Pemegang Izin atau Pada Hutan Hak, Standar dan Pedoman Penilaian Pengelolaan Hutan Produksi Lestari dan verifikasi legalitas kayu. Serta Peraturan Dirjen BPK No 6/2009 tentang Standar dan Pedoman Penilaian Kerja PHPL dan Verifikasi Legalitas Kayu. Kedua peraturan ini merupakan tekad dan komitmen pemerintah untuk melembagakan perdagangan dan pasar kayu legal dan lestari. Dinilai juga perkembangan ini akan membatasi perluasan, diversifikasi produkproduk kayu dan furniture di pasar internasional. Secara spesifik keprihatinan dan perhatian kelihatannya harus diberikan kepada kehutanan masyarakat, usaha kecil dan sektor informal yang mungkin kurang kemampuannya dalam memenuhi persyaratan baru dari skema perdagangan kayu legal dan lestari. Mereka

riskan terusir dari perdagangan ekspor untuk pasar-pasar yang

mensyaratkan legalitas dan lestari. Pada 2007 struktur ekspor produk-produk kehutanan Indonesia berdasarkan nilai menunjukkan bahwa sekitar 33 % diantaranya di eskpor ke pasar EU-27, 23 % ke Jepang, 18 % ke USA, 4 % ke Korea, 4% ke Cina, 3 % ke Taiwan, 1 % ke Malaysia, dan 14 % ke negara-negara yang lainnya. Ini menunjukkan bahwa xi

terjadinya perubahan kualitas permintaan konsumen-konsumen di negaranegara khususnya Eropa, Jepang dan Amerika terhadap produk produk kehutanan, termasuk kayu legal dan lestari, akan punya implikasi serius terhadap ekonomi, perdagangan dan tata kelola kehutanan. Multi stakeholder kehutanan Indonesia dituntut harus mampu menyesuaikan diri dengan aturan dan persyaratan pasar dan perdagangan kayu legal dan lestari. Perkembangan

ini

akan

memiliki

implikasi

terhadap

peekonomian

perekonomian, perdagangan dan pasar kayu domestik dan tata kelola kehutanan sehingga diperlukan pemetaan

kepada publik dan

dipahami

dengan baik. Kami mengucapkan terima kasih kepada Bintang C.H. Simangunsong, Ph.D. dari Forest Economist Fakultas Kehutanan Institut Pertanian Bogor yang telah melakukan study ini. Kementerian Kehutanan RI, Kementerian Perdagangan RI, dan Kementarian Luar Negeri RI serta kepada semua pihak yang telah memberikan masukan dan mereview terhadap laporan study ini. Kami berharap buku ini dapat bermanfaat bagi pembaca. Selamat membaca.

Diah Raharjo Direktur Program

xii

1 Introduction

THIS PAPER reviews market data and examine trends to understand what forest products are sold today and where are they sold with emphasis to Indonesia’ forest products. The potential for future market growth for forest products were also reviewed. The review and analysis are focused plywood, veneer sheets, particleboard, fiberboard, woodpulp and paper and paperboard.

These are known

commodities and have been proven in the marketplace. Industrial roundwood and sawnwood were not analyzed in this paper. This was is due to log export ban policy for the former and due to prohibited export tax policy for the latter. Engineered wood products such as glued-laminated timber, laminated veneer lumber and parallel strand lumber that represent emerging markets for tropical timber were also not analyzed due to the lack of data on production and trade for those products, In the case of Indonesia, plywood product includes block board and “laminated veneer lumber” and particleboard includes oriented strand board (OSB) product. Moreover, as Indonesia’s forest products industry facing a wood raw materials deficit and government policy and industry push for innovation and value addition to resources, utilization of small-diameter logs from plantations, logging waste, community forests, and rubber estates by this industry continues to rise. The analysis is based on statistics from the FAOSTAT database (FAO 2010), the latest summary of global forest statistics available. For each product, year and country, apparent consumption was estimated by production + imports exports. The data on production, imports and exports were obtained from the 3

FAOSTAT database (FAO 2010).

Similar data reported in Forest Products

Annual Market Review published by United Nations Economic Commission for Europe (UNECE) and in Annual Review and Assessment of the World Timber Situation published by ITTO was also considered.

In addition, data on

production and trade provided by Ministry of Forestry of Indonesia (MOF) and related agencies such as Central Bureau of Statistics of Indonesia (BPS) and Indonesia Wood Based Panel Association (APKINDO) were also used. Further, description of the drivers and principal policies affecting forest products markets in the future was based on Forest Products Annual Market Review published by UNECE and on Annual Review and Assessment of the World Timber Situation published by ITTO. There are few data on domestic prices of forest products, and those that are reported are often export or import prices.

For countries that have both

import/export and domestic price, the two are usually highly correlated, as they should be in competitive markets. Therefore, for this study, the unit values of imports or exports were used to build the price index. Quantities and values, in current United States dollars, of imports and exports have been obtained from the FAOSTAT database. The nominal price in each country, in current United States dollars, was estimated as the weighted arithmetic average of the unit value of imports and exports. The paper first review productions, exports, imports, consumptions, and trade of forest products for the world and Indonesia. Then, drivers and principal policies that are likely to affect the global and regional markets for forest products were described. Finally, the need for Indonesia to restructure and revitalize its forest products industry was explained.

2 Word forest product production, imports, exports, and consumptions

2.1. Plywood DURING the period 2002-2009, world’s plywood production increased from 59.25 millions m3 in year 2002 to 78.20 millions m3 in year 2009, a 32% increase (Table 1).

Table 1 also shows world’s plywood export quantity,

import quantity, and price increased by 16%, 1%, and 41% over the period 2002-2009, respectively. Table 1. World production, imports, and exports of plywood in 2002-2009 Item Production Quantity Imports Quantity Imports Value Exports Quantity Exports Value Price

Unit Million M3 Million M3 US$ Million Million M3 US$ Million US$/M3

Source: FAO (2010)

Year

2002

2003

2004

2005

2006

2007

2008

2009

59.27 20.85 7.35 20.75 6.69 338

68.79 21.96 7.88 21.49 7.42 352

68.64 24.56 10.02 24.45 9.30 394

73.24 24.56 10.31 25.30 10.25 412

73.75 26.47 11.91 28.64 12.06 435

84.46 25.45 12.02 28.44 13.56 475

81.10 22.21 11.89 24.99 13.27 533

78.20 21.07 9.57 23.98 11.85 475

Growth (%) Periodic Annual 32% 4% 1% 0% 30% 4% 16% 2% 77% 9% 41% 5%

Major world’s producers were China, United States of America (USA), Indonesia, Malaysia, Brazil and Japan, which together accounted for 78% of world’s production (Figure 1a). The production increase has occurred mainly in China followed by Malaysia, Brazil and Japan.

In Indonesia and USA,

production decreased (Figure 1b) Major world’s exporters were China, Malaysia, Indonesia, Brazil, and Russian Federation, which together accounted for 72% of world’s export (Figure 1c). The export increase has occurred mainly in China, Malaysia and Russian Federation, while production decreased in Indonesia (Figure 1d). In order of importance, major world’s importers were United States of America (USA), Japan, China, United Kingdom, the Republic of Korea, and Germany, which together accounted for 61% of world’s import (Figure 1e). 7

The import slightly decreased in those major world’s importers, except Germany (Figure 1f). Although China, United States of America and Japan were three of the largest world’s producers, which together accounted for 59% of world’s production, they were also importers, which together accounted for 45% of world’s import. During the period 2002-2009, world’s plywood consumption significantly increased from 59.3 millions m3 in year 2002 to 78.2 millions m3 in year 2009, a 32% increase (Table 2). Over this period, about 491.4 million m3 of plywood were consumed by only 16 countries, which accounted for 84% of world’s plywood consumption. Three largest consumers were China, United States of America and Japan, which together accounted for 65% of world’s plywood consumption. Other important consumers were Canada, India and the Republic of Korea. Total consumption all European countries was about 57.5 millions m3 (or 9.8%), mainly consumed by United Kingdom, Germany, Italy, French, Netherlands, Denmark and Spain. Although consumption in Malaysia (524%) and China (156%) were among the fastest, not only these countries were net exporters but also major world exporters.

Meanwhile, although consumption decreased in United States of

America (-41%), the Republic of Korea (-33%), Japan (-21%) and United Kingdom (-11%), but these countries were net and major world importers, which together accounted for 38% of world’s plywood consumptions (Table 2).

Plywood production by Major Producer in the period 2002-2009

Major World Producers of Plywood over the period 2002-2009 90.0

Others

80.0

Others 22%

Million M3

China 37% Japan 4% Brazil 4% Indonesia 6% Malaysia 9%

70.0

Japan

60.0

Brazil

50.0 Indonesia

40.0 30.0

Malaysia

20.0

USA

10.0

USA 18%

China

0.0 2002

2003

2004

(a)

2005 2006 Year

2007

2008

2009

(b) Plywood export by Major Exporter in the period 2002-2009

Major World Exporters of Plywood over the period 2002-2009 35.0

Others

Others 28%

30.0

China 24% Million M3

Malaysia 18%

Russian Federation 5%

Russian Federation

25.0

Brazil

20.0 15.0

Indonesia

10.0

Malaysia

5.0

Brazil 10%

Indonesia 15%

0.0 2002

China

2003

2004

2005 2006 Year

2007

2008

2009

(d)

(c)

Plywood import by Major Importer in the period 2002-2009

Major World Importers of Plywood over the period 2002-2009 30.0

Others

USA 19%

25.0

Japan 19%

Million M3

Germany

Others 39%

20.0

Korea, Rep.

15.0

United Kingdom China

10.0

Japan

5.0

Germany 5% Korea, Rep. 5%

United Kingdom 6%

USA

China 7%

0.0 2002

2003

2004

2005 2006 Year

2007

2008

2009

(f)

(e)

Figure 1. Plywood production, export, and import and their trends by major world producers, exporters, and importers in the period 2002-2009

Table 2. Apparent consumption and net export of plywood in major consumer countries, 2002-2009 Major Consumers China United States of Japa Canad Indi Korea, Republic United Germany Malaysia Indonesi Italy France Netherlands Denmark Saudi Arabia Spain Others European Union World Production

2002

2003

2004

2005

11.7 18.7 7.8 1.6 1.6 2.2 1.2 1.0 0.7 1.7 0.9 0.6 0.5 0.2 0.3 0.4 8.0 6.4 59.3

21.3 18.6 7.2 1.7 1.7 2.3 1.2 1.1 0.8 1.0 0.9 0.6 0.5 0.3 0.4 0.4 8.7 6.5 68.8

19.0 20.2 8.3 1.7 1.9 1.9 1.4 1.2 0.4 0.5 0.9 0.6 0.5 0.3 0.3 0.4 9.2 6.9 68.6

21.7 20.1 7.9 1.9 2.1 1.9 1.3 1.1 0.5 1.2 0.8 0.6 0.5 0.3 0.4 0.6 10.3 6.9 73.2

Apparent consumption (million m3) Change 2002-2009 2007 2008 2009 % Cum.% annual 2002-2009 Amount 21.0 28.7 30.0 30.0 183.6 31% 31% 14% 156% 19.6 16.4 12.9 10.9 137.4 23% 55% -7% -41% 8.3 7.1 6.2 6.2 59.1 10% 65% -3% -21% 2.0 3.5 3.5 2.7 18.6 3% 68% 8% 67% 2.1 2.1 2.2 2.2 15.9 3% 71% 4% 34% 1.8 1.9 1.5 1.5 14.9 3% 73% -6% -33% 1.4 1.6 1.4 1.1 10.6 2% 75% -2% -11% 1.2 1.4 1.2 1.0 9.2 2% 76% -1% -6% 0.6 0.8 0.2 4.6 8.7 1% 78% 30% 524% 0.8 0.8 0.9 0.9 7.8 1% 79% -9% -50% 0.7 0.7 0.8 0.6 6.1 1% 80% -5% -31% 0.7 0.6 0.6 1.0 5.3 1% 81% 7% 58% 0.5 0.6 0.6 0.4 4.0 1% 82% -4% -24% 0.3 0.3 0.1 2.2 4.0 1% 83% 41% 990% 0.4 0.4 0.5 0.5 3.1 1% 83% 6% 50% 0.5 0.5 0.1 0.2 3.1 1% 84% -10% -52% 11.9 17.0 18.6 12.4 96.1 16% 100% 6% 55% 7.6 8.1 7.0 8.1 57.5 10% 3% 26% 73.7 84.5 81.1 78.2 587.5 100% 4% 32%

2006

Source: FAO (2010)

Net Export = Export - Import (million m3) 2002

2003

2004

2005

2006

2007

2008

2009

0.4 -3.4 -5.1 0.6 0.0 -1.3 -1.2 -0.7 3.6 5.8 -0.4 -0.2 -0.5 -0.2 -0.3 0.0

0.5 -3.7 -4.2 0.5 0.0 -1.4 -1.2 -0.9 3.9 5.1 -0.3 -0.2 -0.5 -0.3 -0.4 0.0

2.8 -5.4 -5.1 0.7 0.0 -1.1 -1.4 -0.9 4.3 4.0 -0.4 -0.2 -0.5 -0.3 -0.3 0.0

4.2 -5.7 -4.7 0.4 0.0 -1.2 -1.3 -0.9 4.5 3.4 -0.4 -0.2 -0.5 -0.3 -0.4 0.0

7.1 -5.9 -5.0 0.3 0.0 -1.3 -1.4 -1.0 4.9 3.0 -0.3 -0.2 -0.5 -0.3 -0.4 0.0

7.7 -4.0 -4.1 -0.9 0.0 -1.2 -1.6 -1.1 4.8 2.7 -0.3 -0.2 -0.6 -0.3 -0.4 -0.1

6.2 -2.6 -3.6 -1.3 0.0 -0.8 -1.4 -1.0 5.4 2.5 -0.3 -0.3 -0.6 -0.1 -0.5 0.1

6.2 -2.1 -3.6 -0.6 0.0 -0.8 -1.1 -0.8 4.6 2.5 -0.3 -0.6 -0.4 -2.2 -0.5 0.1

-2.2

-2.4

-2.6

-3.1

-3.6

-3.0

-4.7

2.2. Veneer sheets During the period 2002-2009, world’s veneer sheets production increased from 8.49 millions m3 in year 2002 to 12.06 millions m3 in year 2009, a 42% increase (Table 3).

World’s veneer sheets export and import quantities

decreased by 36% and 39%, respectively, whereas price sharply increased by 76% during the period 2002-2009. Table 3. World production, imports, and exports of veneer sheets in 2002-2009 Item

Unit

Production Quantity Million M3 Imports Quantity Million M3 Imports Value US$ Million Exports Quantity Million M3 Exports Value US$ Million Price US$/M3

Source: FAO (2010)

Year

Growth (%) Annual 42% 5% -39% -7% 10% 1% -36% -6% 10% 1% 76% 8%

2002

2003

2004

2005

2006

2007

2008

2009 Periodic

8.49 4.22 2.60 4.22 2.48 602

11.04 4.08 2.90 4.06 2.70 688

11.50 4.56 3.34 4.56 3.19 716

12.37 3.53 3.44 3.98 3.37 906

11.82 3.39 3.81 3.83 3.47 1,008

11.98 3.96 4.08 3.74 3.67 1,006

12.23 3.73 3.58 3.05 3.38 1,028

12.06 2.58 2.86 2.71 2.72 1,056

Major world’s producers were China, Malaysia, Canada, Brazil, New Zealand, the Republic of Korea, and Indonesia, which together accounted for 56% of world’s production (Figure 2a). The production increase has occurred mainly in China and Malaysia. In the Republic of Korea, Canada and New Zealand production decreased (Figure 2b). Major world’s exporters were Canada, United States of America, Malaysia, Brazil, Côte d'Ivoire, China, and New Zealand, which together accounted for 65% of world’s export (Figure 2c). The export increase has occurred mainly in Canada, Brazil and New Zealand, while production decreased sharply in United States of America and Malaysia (Figure 2d). In order of importance, major world’s importers were United States of America (USA), China, the Republic of Korea, Canada, and Italy, which together accounted for 50% of world’s import (Figure 2e). The import decrease has occurred mainly in United States of America (USA) followed by China, the Republic of Korea and Canada (Figure 2f). Although China, Canada and the Republic of Korea among the largest world’s producers, which together accounted for 36% of world’s production, they were also importers, which together accounted for 23% of world’s import. On 11

the other hand, although, United States of America’s import significantly decreased, it was still the largest single importer country. During

the

period

2002-2009,

world’s

veneer

sheets

consumption

significantly increased from 8.5 millions m3 in year 2002 to 12.1 millions m3 in year 2009, a 42% increase (Table 4). Over this period, about 62.6 million m3 of veneer sheets were consumed by only 16 countries, which accounted for 68% of world’s veneer sheets consumption. The largest single consumer was China (26%). Other important consumers were the Republic of Korea (7%), Italy (5%), United States of America (5%), and New Zealand (4%). Total consumption all European countries was about 16.7 millions m3 (or 18%), mainly consumed by Italy, Germany, French, Spain, Denmark and Poland. Consumption grew fastest in Indonesia (742%) followed by Malaysia (216%), China (182%), and Canada (73%). However, Malaysia and Canada were net and major world exporters, whereas China was a net and one of major world importers. Although consumption decreased in United States of America and the Republic of Korea, these countries were still net and major world importers.

Veneer Sheets production by Major Producer in the period 2002-2009

Major World Producers of Veneer Sheets over the period 2002-2009 14.0

Others

China 25%

12.0 Korea, Rep.

Indonesia 3% Canada 6%

Million M3

10.0

Others 44%

Malaysia

8.0

Brazil

6.0

New Zealand Canada

4.0

Korea, Rep. 5%

New Zealand 5%

Brazil 5%

Malaysia 7%

Indonesia

2.0 China

0.0 2002

2003

2004

(a)

2005 2006 Year

2007

2008

2009

(b)

Major World Exporters of Veneer Sheets over the period 2002-2009

Veneer Sheets export by Major Exporter in the period 2002-2009 5.0

Canada 21%

New Zealand 4% China 5% C么te d'Ivoire 3%

Brazil 4%

Million M3

Others 35%

USA 17%

Others

4.5

Malaysia 11%

4.0

New Zealand

3.5

China

3.0

C么te d'Ivoire

2.5 Brazil

2.0 1.5

Malaysia

1.0

USA

0.5

Canada

0.0 2002

2003

2004

2005 2006 Year

2007

2008

2009

(d)

Veneer Sheets import by Major Importer in the period 2002-2009 5.0

China 9%

Others

4.5 4.0

Others 50%

Canada 7% Italy 6%

Italy

3.5 Million M3

USA 21%

3.0

Korea, Rep.

2.5 Canada

2.0 1.5

USA

1.0

Korea, Rep. 7%

0.5 0.0 2002

(e)

China

2003

2004

2005 2006 Year

2007

2008

2009

(f)

Figure 2. Veneer sheets production, export, and import and their trends by major world producers, exporters, and importers in the period 2002-2009

Table 4. Apparent consumption and net export of veneer sheets in major consumer countries, 2002-2009 Major Consumers China Korea, Republic of Italy United States of America New Zealand Germany Malaysia Indonesia India France Canada Japan Spain Denmark Poland Viet Nam Others European Union World Production

2002

2003

2004

2005

1.1 1.1 0.6 0.7 0.5 0.4 0.2 0.0 0.2 0.2 0.1 0.2 0.1 0.1 0.1 0.0 2.8 2.0 8.5

3.3 1.0 0.6 0.6 0.5 0.4 0.3 0.3 0.2 0.2 0.1 0.2 0.1 0.1 0.1 0.0 2.9 1.9 11.0

3.3 0.9 0.6 0.9 0.5 0.4 0.3 0.1 0.3 0.2 0.1 0.2 0.2 0.1 0.1 0.0 3.3 2.1 11.5

3.3 0.9 0.6 0.6 0.5 0.4 0.3 1.0 0.3 0.2 0.1 0.2 0.2 0.1 0.1 0.1 3.5 2.2 12.4

Apparent consumption (million m3) 2002-2009 Change (%) 2007 2008 2009 % Cum.% annual 2002-2009 Amount 3.2 3.2 3.2 3.2 23.9 26% 26% 16% 182% 0.8 0.7 0.6 0.6 6.6 7% 33% -8% -46% 0.6 0.8 0.6 0.5 5.0 5% 39% -4% -24% 0.5 0.4 0.4 0.4 4.5 5% 44% -8% -44% 0.5 0.6 0.4 0.4 3.9 4% 48% -3% -20% 0.4 0.5 0.5 0.4 3.6 4% 52% 0% 3% 0.3 0.4 0.5 0.7 3.1 3% 55% 18% 216% 0.2 0.3 0.4 0.4 2.7 3% 58% 36% 742% 0.3 0.3 0.3 0.3 2.1 2% 60% 2% 15% 0.2 0.2 0.2 0.1 1.4 1% 62% -9% -50% 0.2 0.2 0.2 0.2 1.3 1% 63% 8% 73% 0.2 0.1 0.1 0.1 1.2 1% 65% -3% -18% 0.2 0.2 0.1 0.1 1.2 1% 66% -5% -28% 0.1 0.1 0.1 0.1 0.8 1% 67% 5% 45% 0.1 0.1 0.1 0.1 0.8 1% 68% 1% 7% 0.1 0.1 0.1 0.1 0.7 1% 68% -255% -2289% 3.8 3.8 4.5 4.4 28.9 32% 100% 6% 54% 2.2 2.4 2.1 1.7 16.7 18% -2% -15% 11.8 12.0 12.2 12.1 91.5 100% 5% 42%

2006

Source: FAO (2010)

Net Export = Export - Import (million m3) 2002

2003

2004

2005

2006

2007

2008

2009

-0.3 -0.4 -0.2 -0.3 0.1 0.0 0.4 0.0 0.0 -0.1 0.6 -0.1 -0.1 -0.1 0.0 0.0

-0.2 -0.3 -0.2 -0.2 0.1 0.0 0.3 0.0 0.0 -0.1 0.6 -0.1 -0.1 -0.1 0.0 0.0

-0.2 -0.3 -0.2 -0.5 0.1 0.0 0.3 0.1 0.0 -0.1 0.8 -0.1 -0.1 -0.1 0.0 0.0

-0.2 -0.3 -0.2 -0.2 0.1 -0.1 0.4 0.0 0.0 -0.1 0.8 -0.1 -0.1 -0.1 0.0 0.0

-0.1 -0.3 -0.2 -0.1 0.1 -0.1 0.3 0.0 0.0 -0.1 0.7 -0.1 -0.1 -0.1 0.0 0.0

-0.1 -0.3 -0.3 0.0 0.1 -0.1 0.3 0.0 0.0 -0.1 0.4 -0.1 -0.1 -0.1 0.0 0.0

-0.1 -0.2 -0.2 0.0 0.1 -0.1 0.1 0.0 0.0 -0.1 0.3 -0.1 -0.1 0.0 0.0 0.0

-0.1 -0.2 -0.2 0.0 0.1 0.0 0.3 0.0 0.0 0.0 0.2 -0.1 0.0 0.0 0.0 0.0

-0.4

-0.5

-0.6

-0.8

-0.6

-0.3

2.3. Particleboard During the period 2002-2009, world’s particleboard production significantly increased from 85.81 millions m3 in year 2002 to 93.95 millions m3 in year 2009, a 9% increase (Table 5). Table 3 also shows world’s particleboard export quantity and import quantity were decreased by 9% and 11%, respectively, whereas particleboard price increased by 51% over the period 2002-2009, Table 5. World production, imports, and exports of particleboard in 2002-2009 Item Production Quantity Imports Quantity Imports Value Exports Quantity Exports Value Price

Unit Million M3 Million M3 US$ Million Million M3 US$ Million US$/M3

Source: FAO (2010)

Year

2002

2003

2004

2005

2006

2007

2008

2009

85.81 24.11 3.99 24.32 4.16 168

92.08 25.15 5.39 25.48 5.47 214

100.50 28.68 7.22 28.72 7.43 255

102.71 29.28 7.27 29.38 7.36 249

108.68 30.40 7.05 31.71 7.49 234

110.77 28.81 7.29 32.00 10.34 290

103.61 26.00 6.86 26.70 7.50 272

93.95 21.36 5.34 22.24 5.74 254

Growth (%) Periodic Annual 9% 1% -11% -2% 34% 4% -9% -1% 38% 5% 51% 6%

Major world’s producers were United States of America (USA), Canada, Germany, China, and France, which together accounted for 53% of world’s production (Figure 3a). The production increase has occurred mainly in China followed by French and Germany, whereas in United States of America (USA), and Canada, production drastically decreased (Figure 3b). Major world’s exporters were Canada, Germany, Austria, Belgium, and France, which together accounted for 61% of world’s export (Figure 3c). The export decrease has occurred mainly in Canada and France, while production increased in Germany (Figure 3d). The single largest importer country was United States of America followed by Germany, United Kingdom, China, Poland, and the Republic of Korea, which all together accounted for 51% of world’s import (Figure 3e). The import decrease has occurred mainly in United States of America (USA) followed by United Kingdom, Republic of Korea and China. In Germany and Poland, import slightly increased (Figure 3f). Although United States of America, Germany and China were among of the largest world’s producers, which together accounted for 38% of world’s 15

production, they were also importers, which together accounted for 41% of world’s import. During

the

period

2002-2009,

world’s

particleboard

consumption

significantly increased from 85.8 millions m3 in year 2002 to 93.9 millions m3 in year 2009, a 9% increase (Table 6). Over this period, about 588.2 million m3 of particleboard were consumed by only 16 countries, which accounted for 74% of world’s particleboard consumption. The largest single consumer was United States of America (27%). Other important consumers were Germany (9%), and China (8%). Total consumption all European countries was about 292.4 millions m3 (or 37%), mainly consumed by Germany, Poland, Italy, French, United Kingdom and Spain. Consumption grew fastest in Romania (244%), followed by China (159%), Poland (71%), Greece (35%) and Canada (33%). China was a net and major importer, whereas Canada was a net and major exporter.

Although

particleboard consumption in United States of America and United Kingdom were sharply decreased by 41% and 25%, respectively, these two countries were net and major importers in the world. Other important net importers were Japan, the Republic of Korea, and Denmark.

Particleboard production by Major Producer in the period 2002-2009

Major World Producers of Particleboard over the period 2002-2009 120.0

Others

USA 20%

100.0 France

Canada 11%

Million M3

80.0

Others 47%

China

60.0 Germany

40.0 Canada

Germany 10% France 4%

20.0 USA

China 8%

0.0 2002

2003

2004

(a)

2005 2006 Year

2007

2008

2009

(b) Particleboard export by Major Exporter in the period 2002-2009

Major World Exporters of Particleboard over the period 2002-2009 35.0

Others

30.0

Canada 29%

Belgium

25.0 Million M3

Others 39%

Germany 13%

Belgium 6%

20.0

Austria

15.0

France

10.0

Germany

5.0

France 6%

Austria 7%

0.0 2002

Canada

2003

2004

2005 2006 Year

2007

2008

2009

(d)

Particleboard import by Major Importer in the period 2002-2009 35.0 Others

30.0 Korea, Rep.

USA 30%

Germany 8%

Million M3

25.0

Others 49%

Poland

20.0 China

15.0 United Kingdom

10.0 Germany

Korea, Rep. 3%

Poland China 3% 3%

5.0

United Kingdom 4%

USA

0.0 2002

(e)

2003

2004

2005 2006 Year

2007

2008

2009

(f)

Figure 3. Particleboard production, export, and import and their trends by major world producers, exporters, and importers in the period 2002-2009

Table 6. Apparent consumption and net export of particleboard in major consumer countries, 2002-2009 Major Consumers United States of America Germany China Poland Italy France United Kingdom Canada Spain Japan Korea, Republic of Australia Romania Denmark Greece Austria Others European Union World Production

2002

2003

2004

2005

27.2 7.7 4.6 2.9 3.5 3.1 3.7 3.2 3.6 1.6 1.6 1.0 0.4 1.0 0.7 0.9 18.9 33.0 85.8

29.7 31.5 32.4 8.2 9.0 9.1 6.4 7.4 6.7 3.4 4.1 3.9 3.6 3.9 3.8 3.1 3.4 3.4 3.5 3.7 3.5 2.8 1.9 3.1 3.5 3.6 3.5 1.7 1.6 1.6 1.5 1.8 1.6 1.1 1.1 1.0 0.5 0.6 0.7 1.0 1.1 1.2 0.9 0.8 0.8 0.9 0.9 0.9 20.4 24.3 25.4 33.9 36.6 37.0 92.1 100.5 102.7

Apparent consumption (million m3) 2002-2009 Change (%) 2007 2008 2009 % Cum.% annual 2002-2009 Amount 32.1 27.5 21.4 16.2 218.1 27% 27% -7% -41% 9.2 10.1 9.4 8.1 70.8 9% 36% 1% 5% 9.2 9.0 12.0 12.0 67.3 8% 45% 15% 159% 4.6 5.5 5.4 5.0 34.9 4% 49% 8% 71% 3.8 3.7 3.7 3.0 29.0 4% 53% -2% -15% 3.1 3.7 3.5 4.1 27.4 3% 56% 4% 33% 3.6 3.6 2.7 2.8 27.0 3% 59% -4% -25% 3.6 3.7 2.9 4.2 25.4 3% 63% 4% 33% 3.5 3.5 2.1 1.9 25.2 3% 66% -9% -48% 1.7 1.7 1.5 1.5 12.9 2% 67% -1% -7% 1.7 1.7 1.5 1.5 12.8 2% 69% -1% -9% 1.0 1.0 1.0 1.1 8.3 1% 70% 1% 5% 0.9 1.1 2.0 1.5 7.6 1% 71% 19% 244% 0.6 0.3 1.1 1.1 7.5 1% 72% 3% 20% 1.0 1.0 1.0 1.0 7.2 1% 73% 4% 35% 0.9 0.7 0.7 0.9 6.9 1% 74% 0% 2% 28.0 33.1 31.7 28.0 209.9 26% 100% 6% 48% 37.5 40.4 37.9 36.1 292.4 37% 1% 9% 108.7 110.8 103.6 93.9 798.1 100% 1% 9% 2006

Source: FAO (2010)

Net Export = Export - Import (million m3) 2002

2003

-8.3 1.0 -0.9 0.2 -0.2 0.7 -1.2 8.1 -0.2 -0.4 -0.9 -0.1 -0.3 -0.6 0.0 1.5

-9.0 1.1 -0.9 0.3 -0.2 0.8 -1.0 8.9 -0.3 -0.4 -0.7 0.0 -0.1 -0.6 0.0 1.5

2.9

3.4

2004

2005

2006

2007

2008

2009

-9.7 -10.2 1.6 1.8 -0.8 -0.8 0.0 0.0 -0.2 -0.3 1.0 1.2 -1.0 -1.0 9.4 9.3 -0.3 -0.3 -0.4 -0.4 -0.9 -0.8 0.0 0.0 -0.1 -0.2 -0.8 -0.8 0.0 0.0 1.5 1.5

-9.7 1.6 -0.7 -0.1 -0.1 1.7 -0.9 8.9 -0.2 -0.4 -1.0 0.0 -0.1 -0.1 -0.2 1.5

-6.4 0.8 -0.7 -0.2 -0.1 1.2 -0.9 8.7 -0.2 -0.4 -0.8 -0.1 -0.3 0.0 -0.1 2.0

-3.2 0.8 -0.5 -0.3 -0.4 1.0 -0.7 5.1 0.3 -0.4 -0.5 -0.1 -1.0 -0.8 -0.1 1.8

-2.7 1.2 -0.5 -0.3 -0.3 0.4 -0.4 2.9 0.5 -0.4 -0.5 -0.1 0.2 -0.8 -0.1 1.3

5.4

4.2

3.6

3.2

3.6

3.7

2.4. Fiberboard During the period 2002-2009, world’s fiberboard production increased from 41.00 millions m3 in year 2002 to 71.20 millions m3 in year 2009, a 74% increase (Table 7). Table 4 also shows world’s fiberboard export quantity, import quantity, and price increased by 31%, 9%, and 56% over the period 2002-2009, respectively. Table 7. World production, imports, and exports of fiberboard in 2002-2009 Ite

Uni

Production Imports Imports Exports Exports Pric

Million Million US$ Million US$ US$/M

Year

200

41.0 17.3 4.3 16.8 4.4 25

47.8 18.9 5.3 17.5 5.1 28

56.0 21.5 6.6 19.9 6.4 31

63.1 22.4 7.2 21.6 7.1 32

70.1 23.0 7.8 22.3 8.1 35

74.3 24.7 9.1 27.0 10.5 38

71.6 21.2 8.8 23.6 10.2 42

71.2 18.9 7.6 22.1 8.7 40

Growth Periodi Annu 74 8 9 1 76 8 31 4 98 10 56 7

Source: FAO (2010)

Major world’s producers were China, United States of America (USA), Germany, Poland, Canada, and Brazil, which together accounted for 63% of world’s production (Figure 4a). The production increase was mostly in China followed by Germany, Poland, and Brazil.

In Canada, production decreased

(Figure 4b). Major world’s exporters were Germany, Canada, France, Malaysia, Poland, China, and Spain, which together accounted for 50% of world’s export (Figure 4c).

The export increase has occurred mainly in China, Poland and Spain,

while export decreased in Canada, French, Germany, and Malaysia (Figure 4d). In order of importance, major world’s importers were United States of America (USA), China, Germany, United Kingdom, Belgium, and the Republic of Korea, which together accounted for 37% of world’s import (Figure 4e). The import increase has occurred mainly in United States of America (USA) followed by Belgium. In China, Germany, United Kingdom, and the Republic of Korea, import decreased (Figure 4f). Although United States of America, China and Germany were three of the largest world’s producers, which together accounted for 53% of world’s production, they were also importers, which together accounted for 27% of world’s import. 19

production, they were also importers, which together accounted for 27% of world’s import. During the period 2002-2009, world’s fiberboard consumption significantly increased from 41.0 millions m3 in year 2002 to 71.2 millions m3 in year 2009, a 74% increase (Table 8). Over this period, about 376.2 million m3 of fiberboard were consumed by only 16 countries, which accounted for 76% of world’s fiberboard consumption.

Two largest consumers were China and

United States of America, which together accounted for 48% of world’s fiberboard consumption.

Other important consumers were Germany, the

Republic of Korea, Japan, United Kingdom, Poland, Italy, Malaysia and Canada. Total consumption all European countries was about 105.7 millions m3 (or 21%), mainly consumed by Germany, United Kingdom, Poland and Italy. Although consumption grew fastest in Malaysia (860%) followed by Saudi Arabia (242), French (223%), China (176%) and Poland (75%), in order of importance, major world’s net importers were United States of America (USA), United Kingdom, Japan, Italy, Saudi Arabia and the Republic of Korea.

Fiberboard production by Major Producer in the period 2002-2009

Major World Producers of Fiberboard over the period 2002-2009 80.0

Others

70.0 Others 37%

Million M3

China 33%

USA 11%

Canada 3% Brazil 3%

Canada

50.0

Brazil

40.0

Poland

30.0

Germany

20.0

USA

10.0

Germany 9%

Poland 4%

60.0

0.0 2002

China

2003

2004

(a)

2005 2006 Year

2007

2008

2009

(b) Fiberboard export by Major Exporter in the period 2002-2009

Major World Exporters of Fiberboard over the period 2002-2009

30.0 Others

Germany 16%

25.0

Others 50%

France 5% Canada 6%

Poland 5%

Spain 5%

Spain Poland

20.0 Million M3

China 8%

Malaysia

15.0 Canada

10.0

France China

5.0

Malaysia 5%

Germany

0.0 2002

2003

2004

(c)

2005 2006 Year

2007

2008

2009

(d)

Major World Importers of Fiberboard over the period 2002-2009

Fiberboard import by Major Importer in the period 2002-2009 30.0

USA 13%

Others

25.0 Korea, Rep.

Belgium 4% Others 63%

Germany 5% Korea, Rep. 2%

United Kingdom 4%

Million M3

China 9%

20.0

United Kingdom

15.0

Germany Belgium

10.0

China

5.0 USA

0.0 2002

(e)

2003

2004

2005 2006 Year

2007

2008

2009

(f)

Figure 4. Fiberboard production, export, and import and their trends by major world producers, exporters, and importers in the period 2002-2009

Table 8. Apparent consumption and net export of fiberboard in major consumer countries, 2002-2009 Major Consumers China United States of America Germany Korea, Republic of Japan United Kingdom Poland Italy Malaysia Canada Spain France Belgium Australia Austria Saudi Arabia Others European Union World Production

2002

2003

2004

2005

9.8 8.4 2.5 1.9 1.6 1.6 1.0 1.3 0.2 1.0 0.8 0.5 0.5 0.4 0.4 0.2 8.8 11.0 41.0

13.6 8.9 2.8 1.9 1.5 1.6 1.2 1.3 1.2 0.8 0.9 0.5 0.7 0.4 0.3 0.2 10.0 12.1 47.9

17.4 10.1 2.9 1.8 1.6 1.7 1.1 1.3 1.7 1.2 0.9 0.7 0.8 0.5 0.4 0.2 11.6 12.6 56.0

20.8 10.3 2.9 2.0 1.6 1.5 1.5 1.5 1.5 1.2 1.0 0.7 0.9 0.5 0.5 0.2 14.6 13.3 63.2

Apparent consumption (million m3) 2002-2009 Change (%) 2007 2008 2009 % Cum.% annual 2002-2009 Amount 24.0 25.4 27.1 27.1 165.0 33% 33% 16% 176% 10.4 9.0 7.6 7.0 71.8 14% 48% -2% -16% 3.8 2.9 3.3 2.8 24.0 5% 53% 1% 9% 2.1 2.3 2.0 2.0 16.0 3% 56% 0% 3% 1.6 1.8 1.4 1.4 12.5 3% 58% -1% -9% 1.7 1.6 1.3 1.2 12.3 2% 61% -4% -25% 1.8 1.9 1.8 1.8 12.2 2% 63% 8% 75% 1.5 1.9 1.6 1.6 12.1 2% 66% 3% 21% 1.4 1.4 2.2 2.2 12.0 2% 68% 38% 860% 1.3 1.6 1.7 1.4 10.3 2% 70% 5% 40% 1.4 1.1 0.6 0.5 7.1 1% 72% -8% -43% 0.9 1.0 1.1 1.5 6.9 1% 73% 18% 223% 0.4 0.4 0.3 0.4 4.4 1% 74% -6% -33% 0.5 0.5 0.5 0.3 3.5 1% 75% -6% -37% 0.6 0.3 0.4 0.4 3.3 1% 75% 1% 10% 0.2 0.6 0.7 0.7 2.9 1% 76% 19% 242% 16.5 20.7 18.1 18.9 119.2 24% 100% 12% 116% 15.0 15.2 13.7 12.9 105.7 21% 2% 17% 70.1 74.4 71.7 71.2 495.4 100% 8% 74%

2006

Source: FAO (2010)

Net Export = Export - Import (million m3) 2002

2003

2004

2005

2006

2007

2008

2009

-2.2 -2.0 1.7 -0.7 -0.7 -0.8 0.4 0.0 1.0 0.9 0.3 0.6 -0.2 0.3 0.5 -0.2

-2.3 -2.2 1.9 -0.5 -0.7 -0.8 0.5 -0.3 1.0 1.1 0.2 0.7 -0.4 0.4 0.5 -0.2

-1.7 -2.6 2.2 -0.3 -0.7 -0.8 0.8 -0.3 1.0 0.9 0.4 0.6 -0.4 0.3 0.4 -0.2

-0.2 -2.6 2.6 -0.4 -0.8 -0.7 0.8 -0.4 1.0 0.8 0.3 0.6 -0.5 0.4 0.3 -0.2

0.7 -2.5 2.1 -0.4 -0.7 -0.8 0.6 -0.3 1.2 0.6 -0.1 0.5 -0.2 0.3 0.4 -0.2

2.0 -2.0 3.3 -0.5 -0.8 -0.8 0.7 -0.7 1.2 0.4 0.5 0.4 -0.1 0.3 0.5 -0.6

2.0 -0.9 3.3 -0.3 -0.6 -0.7 0.7 -0.7 0.4 0.1 0.6 0.1 -0.1 0.3 0.5 -0.7

2.0 -0.7 2.2 -0.3 -0.6 -0.6 0.8 -0.8 0.4 -0.1 0.7 -0.3 -0.1 0.3 0.5 -0.7

2.4

2.0

2.6

3.0

2.1

3.4

3.1

2.0

2.5. Woodpulp During the period 2002-2009, world’s woodpulp production slightly decreased from 167.91 millions ton in year 2002 to 162.30 millions ton in year 2009, a 3% decrease (Table 9). Table 4 also shows world’ s woodpulp export quantity, import quantity, and price increased by 11%, 8%, and 47% over the period 2002-2009, respectively. Table 9. World production, imports, and exports of woodpulp in 2002-2009 Item

Unit

Production Quantity Million M3 Imports Quantity Million M3 Imports Value US$ Million Exports Quantity Million M3 Exports Value US$ Million Price US$/M3 Source: FAO (2010)

Year

2002

2003

2004

2005

2006

2007

2008

2009

167.91 40.39 17.27 40.04 15.93 413

171.33 40.85 19.33 40.15 17.49 455

175.92 43.86 22.48 42.41 20.32 496

175.11 44.96 23.41 42.57 20.85 506

175.71 45.78 25.84 46.34 23.99 541

180.74 46.70 30.37 47.94 28.62 623

177.15 46.90 33.96 48.91 31.81 686

162.30 43.80 27.87 44.38 25.67 607

Growth (%) Periodic Annual -3% 0% 8% 1% 61% 7% 11% 1% 61% 7% 47% 6%

Major world’s producers were United States of America (USA), Canada, Sweden, Finland, Japan, Indonesia and China, which together accounted for 70% of world’s production (Figure 5a). The production decreased mostly in United States of America (USA) and Canada. In China production increased (Figure 5b). Major world’s exporters were Canada, United States of America (USA), Sweden, Indonesia and Finland, which together accounted for 57% of world’s export (Figure 5c). The export increase has occurred mainly in United States of America (USA), Indonesia, Belgium and Spain, while production decreased in Canada and Finland (Figure 5d). In order of importance, major world’s importers were China, United States of America (USA), Germany, Italy, the Republic of Korea, Japan and France, which together accounted for 65% of world’s import (Figure 5e). The import increase has occurred mainly in China. In United States of America (USA), Italy, Japan and France, import decreased (Figure 5f). Although United States of America, Japan and China were among the largest world’s producers, which together accounted for 40% of world’s production, 23

they were also importers, which together accounted for 37% of world’s import. During the period 2002-2009, world’s woodpulp consumption slightly decreased from 167.9 million tones in year 2002 to 162.3 million tones in year 2009, a 3% decrease (Table 10). Over this period, about 1,143.3 million tones of woodpulp were consumed by only 16 countries, which accounted for 82% of world’s woodpulp consumption.

The single largest consumer was United

States of America, which accounted for 31% of world’s woodpulp consumption. Other important consumers were China, Canada, Japan, Finland, Sweden and Germany, which together accounted for 37% of world’s woodpulp consumption. Consumption grew fastest in China (71%) followed by India (48%) and Spain (15%), Germany (6%) and Austria (6%). However, in order of importance, major world’s net importers were China, Germany, Italy, the Republic of Korea, United Kingdom, India and Austria.

Woodpulp production by Major Producer in the period 2002-2009

Major World Producers of Woodpulp over the period 2002-2009 200.0

Others

180.0 Others 30%

China

160.0

Millions Tonne

United States of America 31%

China 3%

Indonesia 3%

140.0

Indonesia

120.0

Japan

100.0

Canada

20.0 0.0 2002

Sweden 7%

Finland 7%

Sweden

60.0 40.0

Canada 13%

Japan 6%

Finland

80.0

United States of America

2003

2004

(a)

2005 2006 Year

2007

2008

2009

(b) Woodpulp export by Major Exporter in the period 2002-2009

Major World Exporters of Woodpulp over the period 2002-2009 60.0

Canada 24%

Others Spain

50.0

Others 37%

Portugal

Millions Tonnes

40.0

United States of America 14% Spain 2%

Belgium Finland

30.0

Indonesia

20.0

Sweden United States of America Canada

10.0

Portugal 2%

Sweden 8%

Belgium 2%

Finland 5%

0.0 2002

Indonesia 6%

2003

2004

2005 2006 Year

2007

2008

2009

(d)

(c)

Woodpulp import by Major Importer in the period 2002-2009

Major World Importers of Woodpulp over the period 2002-2009 60.0

China 19%

Others 35%

France Japan

Millions Tonnes

40.0

United States of America 13%

France 5% Japan 5%

Others

50.0

Germany 11% Korea, Repu blic of 5%

Korea, Republic of

30.0

Italy

20.0

Germany

10.0

United States of America China

0.0 2002

Italy 7%

2003

2004

2005 2006 Year

2007

2008

2009

(f)

(e)

Figure 5. Woodpulp production, export, and import and their trends by major world producers, exporters, and importers in the period 2002-2009

Table 10. Apparent consumption and net export of woodpulp in major consumer countries, 2002-2009 Major Consumers United States of America China Canada Japan Finland Sweden Germany Franc Italy Indonesia Korea, Republic of India Austria Spain United Kingdom Australia Others European Union World Production

2002 2003 2004 2005 54.5 10.2 13.9 13.0 9.8 8.4 6.1 4.1 3.7 4.1 3.1 1.9 2.0 1.8 2.1 1.6 27.8 44.2 167.9

54.0 10.9 15.2 12.8 9.7 8.7 6.5 4.0 3.7 3.8 3.0 2.1 2.1 1.8 2.0 1.5 29.4 44.9 171.3

54.9 12.1 15.2 13.0 10.5 9.0 6.7 4.1 3.8 4.7 3.1 2.6 2.3 1.9 1.9 1.5 28.4 46.9 175.9

55.1 12.5 15.1 12.9 9.4 9.0 6.9 4.2 4.2 3.9 3.0 2.8 2.4 2.0 2.0 1.5 28.2 47.0 175.1

Apparent consumption (million tones) 2002-2009 Change (%) 2006 2007 2008 2009 % Cum.% annual 2002-2009 Amount 54.0 55.6 51.5 45.5 425.1 31% 31% -3% -17% 14.4 15.6 17.4 17.4 110.6 8% 39% 8% 71% 13.0 12.6 11.1 10.3 106.5 8% 46% -4% -26% 13.0 12.7 12.5 10.4 100.3 7% 54% -3% -20% 10.7 10.7 9.8 8.1 78.7 6% 59% -3% -17% 9.5 9.5 9.2 8.6 71.9 5% 64% 0% 3% 7.2 7.3 7.0 6.4 54.1 4% 68% 1% 6% 4.1 3.7 3.6 3.5 31.4 2% 71% -2% -16% 4.2 3.9 3.7 3.3 30.6 2% 73% -1% -9% 1.6 3.6 3.6 3.6 28.9 2% 75% -2% -11% 2.9 3.0 3.0 2.9 24.0 2% 77% -1% -4% 2.9 2.8 2.8 2.8 20.7 1% 78% 6% 48% 2.4 2.4 2.4 2.1 18.2 1% 79% 1% 6% 2.0 1.9 2.1 2.1 15.5 1% 81% 2% 15% 1.7 1.6 1.5 1.6 14.4 1% 82% -3% -21% 1.5 1.5 1.5 1.6 12.2 1% 82% 0% -3% 30.6 32.2 34.2 32.0 242.9 18% 100% 2% 15% 47.6 47.1 45.5 41.4 364.6 26% -1% -6% 175.7 180.7 177.1 162.3 1386.2 100% 0% -3%

Source: FAO (2010)

Net Export = Export - Import (million tones) 2002 2003 2004 2005 2006 2007 2008 2009 -0.9 -0.8 -0.5 -0.3 -0.3 -6.1 -6.9 -8.1 -8.4 -8.7 11.8 11.0 11.2 10.3 10.6 -2.4 -2.2 -2.3 -2.1 -2.1 2.0 2.2 2.1 1.8 2.4 3.0 3.0 3.1 3.1 2.9 -3.9 -4.1 -4.2 -4.0 -4.2 -1.7 -1.6 -1.6 -1.7 -1.7 -3.2 -3.2 -3.4 -3.7 -3.7 1.4 1.6 0.8 1.6 1.9 -2.5 -2.5 -2.6 -2.5 -2.4 -0.3 -0.3 -0.5 -0.5 -0.6 -0.3 -0.3 -0.4 -0.4 -0.5 -0.1 0.1 0.1 0.1 0.1 -1.6 -1.5 -1.6 -1.6 -1.4 -0.3 -0.3 -0.4 -0.4 -0.3

0.0 1.4 2.2 -9.2 -10.3 -10.3 9.9 9.3 6.9 -1.8 -1.8 -1.8 2.1 1.8 1.1 3.1 3.1 3.0 -4.3 -4.1 -3.5 -1.5 -1.4 -1.2 -3.4 -3.2 -3.0 1.6 1.6 1.6 -2.6 -2.5 -2.5 -0.5 -0.5 -0.5 -0.4 -0.4 -0.3 0.2 -0.1 0.0 -1.4 -1.3 -1.4 -0.3 -0.3 -0.3

-6.8

-5.7

-6.3

-6.9

-8.0

-6.1

-5.7

-5.1

2.6. Paper and Paperboard During the period 2002-2009, world’s paper and paperboard production increased from 331.26 millions ton in year 2002 to 372.91 millions ton in year 2009, a 13% increase (Table 11).

Table 4 also shows world’s paper and

paperboard export quantity, import quantity, and price increased by 10%, 9%, and 35% over the period 2002-2009, respectively. Table 11. World production, imports, and exports of paper and paperboard in 20022009 Item Production Quantity Imports Quantity Imports Value Exports Quantity Exports Value Price

Unit Million M3 Million M3 US$ Million Million M3 US$ Million US$/M3

Source: FAO (2010)

Year

2002

2003

2004

2005

2006

2007

2008

2009

331.26 96.92 67.10 97.01 64.42 678

340.34 103.23 76.83 102.65 74.39 735

355.19 109.51 85.12 111.18 84.44 768

364.23 111.88 88.29 113.10 88.27 785

378.70 113.44 92.85 114.91 94.44 820

387.20 119.05 104.96 118.38 103.96 880

389.00 114.71 111.74 115.34 111.39 970

372.91 105.56 97.88 106.50 95.81 913

Growth (%) Periodic Annual 13% 2% 9% 1% 46% 6% 10% 1% 49% 6% 35% 4%

Major world’s producers were United States of America (USA), China, Japan, Germany, Canada, Finland and Sweden, which together accounted for 64% of world’s production (Figure 6a). The production increase was mostly in China followed by Germany, Finland, and Sweden. In United States of America (USA), Canada, and Japan production significantly decreased (Figure 6b). Major world’s exporters were Canada, Germany, Finland, Sweden, United States of America (USA), France, and Austria, which together accounted for 60% of world’s export (Figure 6c).

The export increase has occurred mainly in

United States of America (USA), Germany, and Sweden, while export decreased in Canada, Finland and French (Figure 6d). In order of importance, major world’s importers were United States of America (USA), Germany, United Kingdom, China, French, Italy, and Spain, which together accounted for 50% of world’s import (Figure 6e). The import decreased in all major world’s importers, except in Spain (Figure 6f). Although United States of America (USA), China and Germany were among three of the largest world’s producers, which together accounted for 45% of world’s production, they were also importers, which together accounted for 30% of world’s import. 27

During the period 2002-2009, world’s paper and paperboard consumption significantly increased from 31.341.5 million tones in year 2002 to 372.9 million tones in year 2009, a 13% increase (Table 12). Over this period, about 2,287.8 million tones of paper and paperboard were consumed by only 16 countries, which accounted for 78% of world’s paper and paperboard consumption. Three largest consumers were United States of America, China and Japan, which together accounted for 50% of world’s paper and paperboard consumption. Other important consumers were Germany, United Kingdom, Italy, French, the Republic of Korea, Spain, Canada and India. Consumption grew fastest in India (91%) followed by Malaysia (82%), China (75%), and Poland (59%). These countries were also net importers. Although consumptions in United States of America (USA), Japan, Italy and Netherlands were declined, these countries were net importers.

Paper and Paperboard production by Major Producer in the period 2002-2009

Major World Producers of Paper and Paperboard over the period 2002-2009 500.0

United States of America 22%

China 17%

Sweden 3%

Finland 3%

Canada 5%

Sweden

400.0

Japan 8%

Germany 6%

Others

450.0

Millions Tonnes

Others 36%

350.0

Finland

300.0

Canada

250.0 Germany

200.0 Japan

150.0 100.0

China

50.0 0.0 2002

United States of America

2003

2004

(a)

2009

Paper and Paperboard export by Major Exporter in the period 2002-2009

Finland 11% Sweden 9% United States of America 9%

Others

120.0

Austria

100.0

France

Millions Tonnes

Germany 11% Others 40%

United States of America Sweden

80.0 60.0

Finland

40.0 Germany

20.0 Canada

0.0 2002

2003

2004

(c)

2005 2006 Year

2007

2008

2009

(d) Paper and Paperboard import by Major Importer in the period 2002-2009

Major World Importers of Paper and Paperboard over the period 2002-2009

140.0

United States of America 14% Germany 9%

United Kingdom 7% China 7% Italy 4%

Others

120.0

Spain

100.0

Millions Tonnes

Others 50%

Spain 4%

2008

140.0

Canada 12%

France 4%

2007

(b)

Major World Exporters of Paper and Paperboard over the period 2002-2009

Austria 4%

2005 2006 Year

Italy

80.0

France

60.0

China United Kingdom

40.0

Germany

20.0

France 5%

0.0 2002

(e)

United States of America

2003

2004

2005 2006 Year

2007

2008

2009

(f)

Figure 6. Paper and paperboard production, export, and import and their trends by major world producers, exporters, and importers in the period 2002-2009

Table 12. Apparent consumption and net export of paper and paperboard in major consumer countries, 2002-2009 Major Consumers United States of America China Japan Germany United Kingdom Italy Franc Korea, Republic of Spain Canada India Indonesia Australia Poland Netherlands Malaysia Others European Union World Production

2002 2003 2004 2005 89.6 48.0 31.6 18.2 12.2 11.6 11.0 8.2 7.0 7.7 4.7 4.9 3.3 2.7 3.8 1.8 65.0 83.1 331.3

89.0 53.2 31.6 18.8 12.2 11.8 10.9 8.2 7.2 7.6 4.7 5.2 3.8 2.9 3.6 2.1 67.6 84.5 340.3

90.6 59.7 29.8 19.3 12.4 11.9 11.0 8.2 7.3 8.0 5.2 5.1 3.9 3.3 3.6 2.7 73.1 85.3 355.2

90.8 64.4 29.9 19.7 12.7 11.6 10.8 7.8 7.2 7.8 5.1 4.6 4.1 3.5 3.7 2.9 77.5 86.8 364.2

Apparent consumption (million tones) 2002-2009 Change (%) 2006 2007 2008 2009 % Cum.% annual 2002-2009 Amount 91.2 87.9 81.9 71.3 692.3 24% 24% -3% -20% 71.2 78.0 84.2 84.2 543.0 19% 42% 8% 75% 30.0 29.2 28.3 26.2 236.5 8% 50% -3% -17% 21.4 20.9 20.7 20.1 159.1 5% 56% 1% 10% 12.2 12.1 11.4 11.1 96.4 3% 59% -1% -9% 11.7 11.9 11.1 9.9 91.6 3% 62% -2% -15% 11.0 11.1 10.6 10.5 87.0 3% 65% -1% -4% 8.3 8.7 8.8 8.6 66.9 2% 68% 1% 5% 9.0 9.9 8.2 7.6 63.4 2% 70% 1% 10% 6.9 8.3 7.1 6.0 59.3 2% 72% -4% -22% 5.3 5.3 5.5 9.0 44.7 2% 73% 10% 91% 4.0 4.4 4.6 4.6 37.4 1% 75% -1% -6% 4.0 4.0 3.3 3.3 29.7 1% 76% 0% 0% 4.0 4.3 4.4 4.3 29.3 1% 77% 7% 59% 3.6 3.6 4.0 3.4 29.3 1% 78% -2% -10% 3.3 3.0 2.8 3.3 21.9 1% 78% 9% 82% 81.8 84.6 92.0 89.5 631.0 22% 100% 5% 38% 90.1 92.3 90.1 87.2 699.4 24% 1% 5% 378.7 387.2 389.0 372.9 2918.8 100% 2% 13%

Source: FAO (2010)

Net Export = Export - Import (million tones) 2002 2003 2004 2005 2006 2007 2008 2009 -7.7 -8.3 -8.5 -7.1 -6.9 -6.0 -5.8 -5.6 -4.0 -1.8 -0.9 -1.1 -0.6 -0.6 -0.5 0.3 0.5 1.1 2.0 1.3 -5.7 -5.8 -6.0 -6.5 -6.7 -2.3 -2.3 -2.2 -1.6 -1.7 -1.2 -1.0 -0.8 -0.5 -0.9 1.6 1.9 2.3 2.5 2.4 -1.6 -1.8 -1.8 -1.5 -2.1 12.4 12.4 12.4 11.7 11.3 -0.6 -0.6 -0.8 -0.9 -1.1 2.1 1.8 2.1 2.6 3.2 -0.7 -0.7 -0.8 -0.9 -0.7 -0.4 -0.4 -0.7 -0.8 -1.1 -0.5 -0.2 -0.1 -0.2 -0.2 -1.0 -1.2 -1.7 -2.0 -2.2 7.7

-4.0 0.0 -0.3 2.4 -6.9 -1.8 -1.3 2.2 -3.1 9.1 -1.1 3.3 -0.8 -1.3 -0.4 -2.0

-1.7 -0.5 0.1 2.1 -6.4 -1.6 -1.2 1.9 -1.1 8.6 -1.4 3.2 -0.8 -1.3 -1.0 -1.7

0.8 -0.5 0.1 2.7 -6.2 -1.4 -1.1 1.9 -1.0 6.9 -1.4 3.2 -0.8 -1.0 -0.8 -1.7

8.4 11.9 11.0 11.2 10.4

9.3

9.4

3 Indonesia forest product production, imports, exports, and consumptions

3.1. Plywood MOF (2008a, 2008b, 2009b and 2009a) reported that during the period 20032008, Indonesia’s plywood production sharply decreased from 4.28 millions m3 in year 2003 to 2.35 millions m3 in year 2008, a 45% decrease (Table 13). This was mainly caused by a huge timber deficit, which downsized Indonesia plywood industry capacity utilization. The Indonesian Panel Wood Producers Association (APKINDO) had a recorded membership of 130 companies on 6 October 2006, but only 68 companies were active. Of which only 19 units were producing at normal capacity. Table 13 also shows plywood export was also drastically decreased during the period 2003-2008 from 3.31 millions m3 in year 2003 to 1.67 millions m3 in year 2008, a 50% decrease. On the other hand, in terms of value, plywood export value was only decreased by 8%, indicating an increase in Indonesia’s plywood export price. Meanwhile, despite a sharp increase of import quantity of more than 45 times, plywood consumption decreased from 0.97 million m3 in year 2003 to 0.73 million m3 in year 2008, a 25% decrease. Table 13. Production, imports, and exports of Indonesia plywood in 2003-2008 Item Production Quantity Imports Quantity Imports Value Import s Price Exports Quantity Exports Value Exports Price Consumption

Unit Million ton Million ton US$ Million US$/ton Million ton US$ Million US$/ton Million ton

Year 2003 2004 2005 2006 2007 2008 4.28 3.16 3.17 2.67 2.42 2.35 0.00 0.01 0.02 0.06 0.05 0.05 0.98 3.72 8.87 23.53 23.77 28.03 842.30 567.12 427.04 401.39 436.37 528.53 3.31 2.60 2.21 1.98 1.60 1.67 1,662.91 1,576.87 1,374.67 1,506.68 1,402.02 1,533.46 502.93 605.78 620.68 761.29 876.37 919.15 0.97 0.56 0.98 0.75 0.87 0.73

Sources: MOF (2008a, 2008b, 2009a and 2009b)

Growth (%) Periodic Annual -45% -11% 4471% 115% 2768% 96% -37% -9% -50% -13% -8% -2% 83% 13% -25% -6%

FAO (2010) also reported that Indonesia’s plywood production sharply decreased during the period 2002-2009. That is from 7.55 millions m3 in year 33

2002 to 3.35 millions m3 in year 2009, a 56% decrease (Table 14). Moreover, plywood export was also sharply decreased during the period 20022009. On the other hand, in terms of value, plywood export value was only decreased by 12%, indicating a sharply increase in Indonesia’s plywood export price. These FAO’s production and export figures were much higher than those production figures reported by MOF (2008a, 2008b, 2009b and 2009a). Table 14. Production, imports, and exports of Indonesia plywood in 2002-2009 Item Production Quantity Imports Quantity Imports Value Imports Price Exports Quantity Exports Value Exports Price Consumption

Year

Unit Million M3 Million M3 US$ Million US$/M3 Million M3 US$ Million US$/M3 Million M3

2002

2003

2004

2005

2006

2007

2008

2009

7.55 0.00 1.54 324.32 5.83 1748.31 300.09 1.73

6.11 0.00 0.93 535.55 5.09 1662.91 326.58 1.02

4.51 0.01 3.72 368.67 4.00 1576.90 393.77 0.52

4.53 0.03 20.77 652.08 3.41 1374.67 403.60 1.16

3.81 0.09 23.53 257.19 3.09 1506.68 488.07 0.82

3.45 0.11 32.38 282.76 2.77 1543.78 557.56 0.80

3.35 0.08 28.03 343.12 2.57 1533.46 596.86 0.87

Growth (%) Periodic Annual -56% -11% 1626% 50% 1726% 51% 6% 1% -56% -11% -12% -2% 99% 10% -50% -9%

Source: FAO (2010)

MOF (2008b and 2009b) reported over the period 2003-2008, major importer countries were Japan, United States of America, China, The Republic of Korea and Taiwan, which together accounted for 68% of Indonesia’s plywood exports (Figure 7). Total exports to all European countries were about 8%. Moreover, during that period Indonesia’s plywood exports to those countries were also declining. Major importers of Indonesia's plywood over the period 2003-2008 Other Countries 24% Japan 38%

Europe 8%

Taiwan, Province of China 7% Korea, Republic of 7%

China 8%

United States 8%

Figure 7. Major importers of Indonesia's plywood over the period 2003-2008

3.2. Veneer sheets

Over the period 2003-2008, MOF (2008a and 2009a) reported that Indonesia’s veneer sheets production significantly increased from 0.20 millions m3 in year 2003 to 0.30 millions m3 in year 2008, a 48% increase (Table 15). Most veneer sheets production were consumed domestically as indicated by a consumption increase of 51% over that period. Table 15 also shows import quantity increased by 191% during the period 2003-2008, but import value only increased by 125%, indicating a decrease in Indonesia’s veneer sheet import price.

Meanwhile, veneer sheet export

quantity increased by 113% during that period, but veneer sheet export value increased by 923%, indicating an increase in Indonesia’s veneer sheet export price. Although import veneer sheets price as well as plywood production decreased, veneer sheet exports were doubled over that period. Given that veneer sheets price were much higher than plywood price (Compare Table 15 with Table 13), this indicated that it would have still been more profitable to sell veneer sheets than to process it into plywood and then sold it. Table 15. Production, imports, and exports of Indonesia veneer sheets in 20032008 Year 2003 2004 2005 2006 2007 2008 Production Quantity Million ton 0.20 0.11 0.71 0.18 0.21 0.30 Imports Quantity Million ton 0.01 0.01 0.01 0.02 0.01 0.02 Imports Value US$ Million 14.24 19.33 19.59 25.52 7.42 31.99 Import s Price US$/ton 1,954.13 1,987.34 1,921.96 1,496.08 979.88 1,510.08 Exports Quantity Million ton 0.01 0.06 0.00 0.01 0.00 0.01 Exports Value US$ Million 2.94 33.10 9.32 19.95 6.48 30.11 Exports Price US$/ton 544.94 601.16 2,339.86 2,518.93 2,068.58 2,611.09 Consumption Million ton 0.20 0.06 0.71 0.19 0.21 0.31 Sources: MOF (2008a, 2008b, 2009a and 2009b) Item

Meanwhile,

Unit

over

the

period

2002-2009,

FAO

(2010)

Growth (%) Periodic Annual 48% 8% 191% 24% 125% 18% -23% -5% 113% 16% 923% 59% 379% 37% 51% 9%

reported

that

Indonesia’s veneer sheets production drastically increased from 0.05 millions m3 in year 2002 to 0.43 millions m3 in year 2009 (Table 16). Most veneer sheets production were consumed domestically as indicated by a consumption increase of more than seven times over that period. Table 16 also shows import quantity increased almost three times during the period 2002-2006, but import value only increased by 1.33 times, indicating a 35

decrease in Indonesia’s veneer sheet import price. Meanwhile, veneer sheet export quantity increased by 1036% during that period, but veneer sheet export value increased by 1724%, indicating an increase in Indonesia’s veneer sheet export price.

As in plywood product, these FAO’s veneer sheets

production and export figures were much higher than those production figures reported by MOF (2008a, 2008b, 2009b and 2009a). Table 16. Production, imports, and exports of Indonesia veneer sheets in 20022009 Item Production Quantity Imports Quantity Imports Value Imports Price Exports Quantity Exports Value Exports Price Consumption

Year

Unit Million M3 Million M3 US$ Million US$/M3 Million M3 US$ Million US$/M3 Million M3

Source: FAO (2010)

2002

2003

2004

2005

2006

2007

2008

2009

0.05 0.01 13.73 1830.13 0.00 1.65 375.23 0.05

0.29 0.01 14.23 1469.89 0.01 2.94 408.78 0.29

0.16 0.01 19.33 1400.00 0.07 33.05 450.19 0.10

1.01 0.01 19.59 1440.37 0.05 30.41 642.86 0.98

0.26 0.02 25.52 1104.85 0.03 19.95 600.96 0.25

0.30 0.03 27.76 1028.19 0.05 29.98 599.60 0.28

0.43 0.03 31.99 1134.47 0.05 30.11 602.24 0.41

Growth (%) Periodic Annual 849% 38% 276% 21% 133% 13% -38% -7% 1036% 42% 1724% 51% 61% 7% 742% 36%

During that period exports to those major importer

countries increased, except to Taiwan. Total exports to all European countries were about 19% and were also increased during that period. Major importers of Indonesia's veneer sheets over the period 2003-2008 Other Countries 14% Japan 35%

Europe 19%

Taiwan, Province of China 3% Korea, Republic of 6%

China 8%

United States 15%

Figure 8. Major importers of Indonesia's veneer sheets over the period 2003-2008

3.3. Particleboard

Table 17 shows during the period 2003-2008 Indonesiaâ&#x20AC;&#x2122;s particleboard production sharply decreased from 0.07 millions m3 in year 2003 to 0.03 millions m3 in year 2006 (MOF 2008a). Particleboard export was even decreased more sharply during that period, from 0.13 million m3 in ear 2003 to 0.01 million m3 in year 2007 (MOF 2008b). On the other hand, particleboard import was increased by more than nineteen times over that period. Furthermore, Indonesia import price were decreased by 20%, whereas export prices increased by 32%. Table 17. Production, imports, and exports of Indonesia particleboard in 2003-2008 Item

Unit

Production Quantity Imports Quantity Imports Value Import s Price Exports Quantity Exports Value Exports Price Consumption

Million ton Million ton US$ Million US$/ton Million ton US$ Million US$/ton Million ton

2003 0.07 0.01 3.91 344.71 0.13 25.84 203.97

2004 0.17 0.02 8.28 335.16 0.05 11.63 241.63

Year 2005 0.09 0.04 10.46 268.01 0.03 5.38 178.16

2006 0.03 0.08 20.62 244.25 0.01 4.62 395.79

2007 NA 0.15 35.41 233.61 0.01 2.43 431.99

2008 NA 0.23 63.97 277.28 0.00 1.14 268.84

Growth (%) Periodic Annual 1934% 1536% -20% -97% -96% 32%

83% 75% -4% -49% -46% 6%

Sources: MOF (2008a, 2008b, 2009a and 2009b)

Meanwhile, during the period 2002-2009, FAO (2010) reported that Indonesiaâ&#x20AC;&#x2122;s particleboard production sharply decreased from 0.30 millions m3 in year 2002 to 0.13 millions m3 in year 2009, a 58% decrease (Table 18). Particleboard export was even decreased more sharply during that period, from 0.17 million m3 in ear 2002 to 0.01 million m3 in year 2009. Given that consumption was increased by more than two times, particleboard import was then almost double over that period. Furthermore, Indonesia import price was decreased by 7%, while export price was increased by 24%. Table 18. Production, imports, and exports of Indonesia particleboard in 2002-2009 Item Production Quantity Imports Quantity Imports Value Imports Price Exports Quantity Exports Value Exports Price Consumption

Unit Million M3 Million M3 US$ Million US$/M3 Million M3 US$ Million US$/M3 Million M3

Source: FAO (2010)

Year

2002

2003

2004

2005

2006

2007

2008

2009

0.30 0.02 3.96 192.65 0.17 24.12 141.23 0.15

0.30 0.02 3.91 224.05 0.19 25.84 133.29 0.12

0.30 0.04 8.28 217.84 0.09 11.63 134.17 0.25

0.13 0.06 10.46 174.32 0.05 5.38 116.48 0.14

0.13 0.13 20.62 158.64 0.05 10.92 226.46 0.21

0.13 0.23 35.41 151.70 0.01 2.43 282.09 0.35

0.13 0.36 63.97 180.05 0.01 1.14 175.38 0.47

Growth (%) Periodic Annual -58% -12% 1627% 50% 1514% 49% -7% -1% -96% -37% -95% -35% 24% 3% 223% 18%

MOF (2008b and 2009b) reported over the period 2003-2008, major importer countries were The Republic of Korea, Taiwan, Viet Nam, Hongkong and China, which together accounted for 90% of Indonesia’s particleboard exports (Figure 9). Moreover, during that period Indonesia’s particleboard exports to those countries were also declining sharply. Major importers of Indonesia's particleboard export over the period 2003-2008

Europe 0%

Other Countries 10%

Korea, Republic of 28%

China 11%

Hongkong 16%

Taiwan, Province of China 18% Viet Nam 17%

Figure 9. Major importers of Indonesia's particleboard over the period 2003-2008

3.4. Fiberboard During the period 2003-2008, Ministry of Forestry of the Republic of Indonesia did not report Indonesia’s fiberboard production, but it did report exports and imports of fiberboard as shown in Table 19. Table 19 shows that in the year 2003, export quantities were much higher than import quantities, but in the year 2008 it only less than twice. This was due to export growth that was much slower that import growth over the period 2003-2008. Table 19. Production, imports, and exports of Indonesia fiberboard in 2003-2008 Item Production Quantity Imports Quantity Imports Value Import s Price Exports Quantity Exports Value Exports Price Consumption

Unit Million ton Million ton US$ Million US$/ton Million ton US$ Million US$/ton Million ton

2003 NA 0.03 10.20 317.75 0.17 34.55 202.22

2004 NA 0.05 17.30 324.09 0.20 47.22 235.30

Year 2005 NA 0.06 20.32 313.78 0.23 55.09 234.65

Sources: MOF (2008a, 2008b, 2009a and 2009b)

2006 NA 0.06 20.79 328.92 0.20 49.35 240.80

2007 NA 0.06 23.61 377.73 0.21 70.80 329.46

2008 NA 0.10 43.55 426.05 0.18 56.14 311.86

Growth (%) Periodic Annual 219% 327% 34% 5% 62% 54%

26% 34% 6% 1% 10% 9%

Meanwhile, during the period 2002-2009, FAO (2010) reported that Indonesia’s fiberboard production was relatively unchanged (Table 20). Coupled with import quantity that was more than doubled over that period, Indonesia fiberboard export quantity was increased by 185%. However, export value increased only by only 117%, indicating a decrease in Indonesia fiberboard export prices. Table 20. Production, imports, and exports of Indonesia fiberboard in 2002-2009 Item Production Quantity Imports Quantity Imports Value Imports Price Exports Quantity Exports Value Exports Price Consumption

Year

Unit Million M3 Million M3 US$ Million US$/M3 Million M3 US$ Million US$/M3 Million M3

Source: FAO (2010)

2002

2003

2004

2005

2006

2007

2008

2009

0.43 0.08 12.95 166.66 0.25 44.14 178.51 0.26

0.43 0.05 10.20 188.23 0.22 34.87 160.90 0.26

0.43 0.11 17.54 161.21 0.36 50.82 140.45 0.17

0.43 0.13 20.57 163.73 0.43 61.23 142.91 0.12

0.43 0.04 9.02 205.48 0.44 58.55 133.70 0.03

0.43 0.11 24.79 219.56 0.72 110.60 152.91

0.43 0.19 44.74 234.19 0.70 95.95 136.38

Growth (%) Periodic Annual 0% 0% 146% 14% 246% 19% 41% 5% 185% 16% 117% 12% -24% -4% -87% -40%

MOF (2008b and 2009b) reported over the period 2003-2008, major importer countries were China, Saudi Arabia, the Republic of Korea, Taiwan and Syria Arab Republic, which together accounted for 63% of Indonesia’s fiberboard exports (Figure 10).

Moreover, during that period Indonesia’s fiberboard

exports to all those major importer countries decreased, except to Syria Arab Republic.

Major importers of Indonesia's fiberboard over the period 2003-2008 China 27%

Other Countries 37%

Europe 0%

Syria Arab Republic 7%

Saudi Arabia 14%

Taiwan, Province of China 6%

Korea, Republic of 9%

Figure 10. Major importers of Indonesia's fiberboard over the period 2003-2008

3.5. Woodpulp MOF (2008a, 2008b, 2009b and 2009a) reported that during the period 20032008, Indonesia’s woodpulp production slightly increased from 4.66 millions ton in year 2003 to 4.78 millions ton in year 2008, a 3% increase (Table 21). Table 21 also shows woodpulp export was increased during the period 20032008 from 2.37 millions ton in year 2003 to 2.62 millions ton in year 2008, a 10% increase. However, Indonesia’s woodpulp import increased by 58%, which indicated an increase in consumption of 10%. Moreover, in terms of prices, Indonesia’s woodpulp export price was increased by 63%, while import price was increased by 68% during that period. Table 21. Production, imports, and exports of Indonesia woodpulp in 2003-2008 Item

Unit

Production Quantity Imports Quantity Imports Value Import s Price Exports Quantity Exports Value Exports Price Consumption

Million ton Million ton US$ Million US$/ton Million ton US$ Million US$/ton Million ton

2003 4.66 0.73 355.00 484.68 2.37 790.51 332.89 3.02

Year 2005 0.99 0.88 490.07 555.77 2.55 932.52 365.29 -0.68

2004 2.59 0.89 505.03 568.81 1.68 588.51 350.96 1.80

Sources: MOF (2008a, 2008b, 2009a and 2009b)

2006 3.37 0.92 536.08 584.62 2.81 1,123.62 399.52 1.48

2007 4.88 0.86 594.84 693.24 2.44 1,065.41 437.13 3.30

Growth (%) 2008 Periodic Annual 4.78 3% 1% 1.16 58% 10% 944.05 166% 22% 816.44 68% 11% 2.62 10% 2% 1,422.45 80% 12% 543.80 63% 10% 3.33 10% 2%

On the contrary, FAO (2010) reported that Indonesia’s woodpulp production and consumption were, respectively, decreased by 6% and 11% during the period 2002-2009 (Table 22).

Meanwhile, during that period wood pulp

export quantity and value was sharply increased by 22% and 114%, respectively; indicating a sharply increase in Indonesia’s woodpulp export price. Further, FAO’s production and consumption figures were higher than those reported by MOF, but export and import figures were almost the same. Table 22. Production, imports, and exports of Indonesia woodpulp in 2002-2009 Item Production Quantity Imports Quantity Imports Value Imports Price Exports Quantity Exports Value Exports Price Consumption

Unit Million M3 Million M3 US$ Million US$/M3 Million M3 US$ Million US$/M3 Million M3

Source: FAO (2010)

Year

2002

2003

2004

2005

2006

2007

2008

2009

5.48 0.81 365.32 448.94 2.25 706.71 314.77 4.05

5.48 0.73 354.03 485.78 2.38 790.73 332.93 3.84

5.48 0.89 505.03 568.81 1.68 589.71 351.57 4.69

5.48 0.90 505.93 560.58 2.49 905.26 363.07 3.89

3.58 0.91 535.67 586.22 2.86 1156.08 404.03 1.63

5.18 0.86 594.84 693.21 2.44 1065.92 437.12 3.60

5.18 1.16 944.05 816.44 2.73 1515.41 554.57 3.60

Growth (%) Periodic Annual -6% -1% 42% 5% 158% 15% 82% 9% 22% 3% 114% 12% 76% 8% -11% -2%

MOF (2008b and 2009b) reported over the period 2003-2008, major importer countries were China, The Republic of Korea, Japan, India, and Taiwan, which together accounted for 83% of Indonesia’s wood pulp exports (Figure 11). Total exports to all European countries were about 11%.

Moreover, during

that period Indonesia’s woodpulp exports to those countries were increased, except to Taiwan and Europe.

Major importers of Indonesia's woodpulp export over the period 2003-2008

Europe 11%

Other Countries 6%

Taiwan, Province of China 4%

China 46%

India 5% Japan 6% Korea, Republic of 22%

Figure 11. Major importers of Indonesia's woodpulp over the period 2003-2008

3.6. Paper and paperboard During the period 2003-2008, MOF (2008a, 2008b, 2009b and 2009a) reported that paper and paperboard export and import quantities were increased by 84% and 94%, respectively (Table 23). In terms of value, paper and paperboard export and import values were respectively increased by 182% and 127%, indicating an increase in Indonesia’s paper and paperboard export and import prices.

However, MOF did not report Indonesia’s paper and

paperboard production.

Table 23. Production, imports, and exports of Indonesia paper and paperboard in 2003-2008 Item

Unit

Production Quantity Imports Quantity Imports Value Import s Price Exports Quantity Exports Value Exports Price Consumption

Million ton Million ton US$ Million US$/ton Million ton US$ Million US$/ton Million ton

2003 NA 0.23 229.16 1,006.52 2.04 1,185.16 580.56

Year 2005 NA 0.32 358.72 1,105.19 2.86 1,964.94 687.00

2004 NA 0.34 329.25 982.25 2.45 1,626.00 663.68

2006 NA 0.32 360.74 1,130.01 3.49 2,482.90 711.88

2007 NA 0.37 403.12 1,103.92 3.81 298.75 78.49

Growth (%) 2008 Periodic Annual NA 0.44 94% 14% 520.76 127% 18% 1,181.77 17% 3% 3.75 84% 13% 3,339.39 182% 23% 890.10 53% 9%

Sources: MOF (2008a, 2008b, 2009a and 2009b)

Meanwhile, FAO (2010) reported that Indonesia’s paper and paperboard production significantly increased during the period 2002-2009. That is from 7.00 million tones in year 2002 to 7.78 million tones in year 2009, an 11% increase (Table 24). Paper and paperboard export and import quantities were also increased by 51% and 54% during that period 2002-2009, respectively. But, increase in their values was more than two times, which led to a sharply increase in export and import prices. These FAO’s export and import quantity figures were not too different with those figures reported by MOF (2008a, 2008b, 2009b and 2009a). Table 24. Production, imports, and exports of Indonesia paper and paperboard in 2002-2009 Item Production Quantity Imports Quantity Imports Value Imports Price Exports Quantity Exports Value Exports Price Consumption

Unit Million M3 Million M3 US$ Million US$/M3 Million M3 US$ Million US$/M3 Million M3

Source: FAO (2010)

Year

2002

2003

2004

2005

2006

2007

2008

2009

7.00 0.26 238.93 921.45 2.37 1271.96 537.80 4.89

7.04 0.23 228.73 1003.91 2.06 1203.36 583.52 5.21

7.22 0.35 355.47 1027.77 2.48 1650.11 665.40 5.09

7.22 0.35 367.38 1055.70 2.97 2093.04 705.40 4.60

7.22 0.33 369.92 1132.48 3.50 2532.16 722.49 4.04

7.73 0.35 392.99 1138.54 3.67 2912.53 794.62 4.41

7.78 0.40 496.64 1240.06 3.57 3232.95 904.55 4.60

Growth (%) Periodic Annual 11% 2% 54% 6% 108% 11% 35% 4% 51% 6% 154% 14% 68% 8% -6% -1%

MOF (2008b and 2009b) reported over the period 2003-2008, major importer countries were China, Malaysia, Japan, Australia, Hongkong and United States of America, which together accounted for 48% of Indonesia’s paper and paperboard exports (Figure 12). Total exports to all European countries were about 4%.

Moreover, during that period Indonesia’s paper and paperboard

exports to those major importer countries as well as to European countries were significantly increased, except to China and Hongkong.

Major importers of Indonesia's paper and paperboard over the period 2003-2008 China 10%

Malaysia 10% Japan 9%

Other Countries 52%

Australia 5%

Europe 4%

Hongkong 5% United States 5%

Figure 12. Major importers of Indonesia's paper and paperboard over the period 2003-2008

4 Shares of products imports from Indonesia to total imports as reported by mayor importer countries

DUE to the lack of trade data reported by major importer countries, the review was based on available forest trade data reported by FAO (2010) and by MOF (2008a, 2008b, 2009b and 2009a) over the period 2002-2008. The results are shown in Tables 25-30.

4.1. Plywood As explained, in order of importance, major country destinations of Indonesiaâ&#x20AC;&#x2122;s plywood exports were Japan, United States, China, the Republic of Korea, Taiwan, Saudi Arabia, United Arab Emirates, United Kingdom, and Belgium, which together accounted for 81% of Indonesiaâ&#x20AC;&#x2122;s plywood exports (Table 25). Table 25. Shares of plywood imports from Indonesia to total imports as reported by major importer countries over the period 2002-2008 Plywood export reported by MOF Country Destination Percentage Japan 39% United States 8% China 8% Korea, Republic of 7% Taiwan, Province of China 6% Saudi Arabia 5% United Arab Emirates 4% United Kingdom 2% Belgium 2% Other countries 19% Total

100.0%

Plywood import share in RC Reporting Country (RC) Percentage Japan 27% United States 8% China 33% Korea, Republic of 25% Saudi Arabia United Arab Emirates United Kingdom Belgium

Sources: MOF (2008a, 2008b, 2009b and 2009a) and FAO (2010)

60% 32% 11% 19%

In Japan, China, the Republic of Korea, and United Arab Emirates, plywood import from Indonesia’s ranged from 27% to 33% of their total plywood imports.

In Saudi Arabia, it was almost 60% of its total plywood imports.

Although China has been the largest plywood producer in the world since 2003 as well as a net exporter, its plywood import was still large, ranging from 1.3 to 1.8 millions m3 per year. Meanwhile, even though, consumption in United States of America, Japan, United Kingdom and the Republic of Korea were decreased, but these countries were net and major world importers, which together accounted for 49% of world’s plywood imports. Hence, it is obvious these five countries (China, United States of America, Japan, United Kingdom and the Republic of Korea) would still be the future market for Indonesia’s plywood exports.

4.2. Veneer sheets MOF (2008a, 2008b, 2009b and 2009a) reported over the period 2002-2008, in order of importance, major country destinations of Indonesia’s veneer sheets exports were Japan, United States, China, the Republic of Korea, Taiwan, Germany, Saudi Arabia, Italy, and United Kingdom, which together accounted for 80.9% of Indonesia’s veneer sheets exports (Table 26).

However, In

United States, the Republic of Korea, and Italy, veneer sheets import from Indonesia’s was much less than 1% of their total veneer sheets imports. In Germany and United Kingdom it was around 1% of their total veneer sheets imports. Meanwhile, in Japan, China and Saudi Arabia, it ranged from 5.1% to 6.8% of their total veneer sheets imports.

Table 26. Shares of veneer sheets imports from Indonesia to total imports as reported by major importer countries over the period 2002-2008 Veneer export reported by MOF Country Destination Percentage Japan 34.0% United States 14.8% China 8.8% Korea, Republic of 7.1% Taiwan, Province of China 4.8% Germany, Fed. Rep. of 3.4% Saudi Arabia 3.0% Italy 3.0% United Kingdom 2.1% Other countries 19.1% Total

Veneer import share in RC Reporting Country (RC) Percentage Japan 5.1% United States << 1% China 5.0% Korea, Republic of << 1% Germany, Fed. Rep. of Saudi Arabia Italy United Kingdom

1.1% 6.8% << 1% 1.3%

100.0%

Sources: MOF (2008a, 2008b, 2009b and 2009a) and FAO (2010)

The fact that most veneer sheets production were consumed domestically over the period 2002-2008 and considered that veneer sheets export price were more than double of plywood export price, then, if Indonesia would domestically process veneer sheets, it should produce high added value forest products. Otherwise, selling veneer sheets is more profitable than to process it first into plywood and then sold it.

4.3. Particleboard MOF (2008a, 2008b, 2009b and 2009a) reported over the period 2002-2008, in

order

importance,

major

country

destinations

Indonesia’s

particleboard exports were the Republic of Korea, Taiwan, Viet Nam, Hongkong, China, and Malaysia, which together accounted for 97.6% of Indonesia’s particleboard exports (Table 27). However, in the Republic of Korea, Viet Nam, China, and Malaysia, particleboard import from Indonesia’s was only ranged from 2.0% to 10.0% of their total particleboard imports.

Table 27.

Shares of particleboard imports from Indonesia to total imports as reported by major importer countries over the period 2002-2008

Particleboard export reported by MOF Country Destination Percentage Korea, Republic of 26.9% Taiwan, Province of China 21.8% Viet Nam 16.5% Hongkong 16.1% China 10.3% Malaysia 6.0% Other countries 2.4% Total

Particleboard import share in RC Reporting Country (RC) Percentage Korea, Republic of 3.0% Viet Nam

10.0%

China Malaysia

2.0% 3.1%

100.0%

Sources: MOF (2008a, 2008b, 2009b and 2009a) and FAO (2010)

Although during that period Indonesia’s particleboard exports to those countries were declining, China and Republic of Korea imports of particleboard were still large, ranging from 1.2 to 1.9 millions m3 per year. Similar to that veneer sheets product, most particleboard were consumed domestically over the period 2002-2008.

Coupled with particleboard import that was increased

by more than nineteen times over that period, particleboard production should be intended for domestic consumption.

4.4. Fiberboard MOF (2008a, 2008b, 2009b and 2009a) reported over the period 2002-2008, in order of importance, major country destinations of Indonesia’s fiberboard exports were China, Saudi Arabia, Republic of Korea, Taiwan, Syria Arab Republic, Egypt, United Arab Emirates, Viet Nam, Philippines, and Hongkong, which together accounted for 81.3% of Indonesia’s fiberboard exports (Table 28).

Fiberboard import from Indonesia’s in the Republic of Korea and Saudi

Arabia were, respectively, 40% and 44% of their total fiberboard imports (Table 28). For the rest countries, it ranged from 3.0% to 8.0% of its total fiberboard imports.

Table 28. Shares of fiberboard imports from Indonesia to total imports as reported by major importer countries over the period 2002-2008 Fiberboard export reported by MOF Country Destination Percentage China 26.1% Saudi Arabia 13.6% Korea, Republic of 12.7% Taiwan, Province of China 7.2% Syria Arab Republic 6.7% Egypt 4.1% United Arab Emirates 3.5% Viet Nam 3.4% Philippines 2.1% Hongkong 2.0% Other countries 18.7% Total

Fiberboard import share in RC Reporting Country (RC) Percentage China 8.0% Saudi Arabia 44.0% Korea, Republic of 40.0% Syria Arab Republic Egypt United Arab Emirates Viet Nam Philippines

3.0% 5.1% 4.4% 5.1% 6.1%

100.0%

Sources: MOF (2008a, 2008b, 2009b and 2009a) and FAO (2010)

China and the Republic of Korea would still be potentially become major country destinations of Indonesia’s fiberboard exports in the future since they are world’s major consumers and net importers of fiberboard with total imports ranging from 1.1 to 2.6 millions m3 per year for China and from 0.3 to 0.8 millions m3 per year for the Republic of Korea.

4.5. Woodpulp As explained, in order of importance, major country destinations of Indonesia’s woodpulp exports were China, the Republic of Korea, Japan and India, which together accounted for 79.1% of Indonesia’s woodpulp exports (Table 29). In Japan, India and the Republic of Korea, woodpulp import from Indonesia’s was around 27%-30% of their total plywood imports, whereas, in China, it was around 12%.

Table 29. Shares of woodpulp imports from Indonesia to total imports as reported by major importer countries over the period 2002-2008 Woodpulp export reported by MOF Country Destination Percentage China 46.5% Korea, Republic of 21.8% Japan 5.9% India 4.9% Other countries 20.9% Total

Woodpulp import share in RC Reporting Country (RC) Percentage China 12% Korea, Republic of 30% Japan 27% India 30%

100.0%

Sources: MOF (2008a, 2008b, 2009b and 2009a) and FAO (2010)

As explained China was the country with the highest growth of woodpulp consumption.

China’s net import of woodpulp increased from 6.1 million

tones in the year 2002 to 10.3 in the year 2009, a 71% increase. This has affected Indonesia’s trade of woodpulp as indicating by increasing of shares of woodpulp imports from Indonesia to China’s total woodpulp imports from 8% in the year 2002 to 12% in the year 2008. Further, India, one of countries with the highest growth of woodpulp consumption (48%), was also an important consumer with net import of 0.3-0.5 million tones.

Meanwhile,

although woodpulp consumptions in Japan and the Republic of Korea were declined significantly, they were still important consumers in the world with their total net import of 4-5 million tones.

Hence, it is obvious these four

countries (China, the Republic of Korea, Japan and India) would still be the future market for Indonesia’s woodpulp exports.

4.6. Paper and Paperboard MOF (2008a, 2008b, 2009b and 2009a) reported over the period 2002-2008, in order of importance, major country destinations of Indonesia’s paper and paperboard exports were China, Malaysia, Japan, Australia and United States, which together accounted for 39.4% of Indonesia’s paper and paperboard exports (Table 30). Shares of paper and paperboard import from Indonesia’s to total paper and paperboard imports of Australia, Japan and Malaysia were, respectively, 28%, 30%, and 36%, whereas, in China and United States, they were 8% and 18%, respectively. 52

Table 30. Shares of paper and paperboard imports from Indonesia to total imports as reported by major importer countries over the period 2002-2008 Paper and Paperboard export reported by MOF Country Destination Percentage China 10.6% Malaysia 10.5% Japan 8.4% Australia 5.3% United States 4.6% Other countries 60.6% Total

Paper and Paperboard import share in RC Reporting Country (RC) Percentage China 8% Malaysia 36% Japan 30% Australia 28% United States 18%

100.0%

Sources: MOF (2008a, 2008b, 2009b and 2009a) and FAO (2010)

Malaysia would be the most important country destination of Indonesia’s paper and paperboard export in the future since this country has advantages in transportation cost and was the country with the second fastest consumption growth in the world (82%). Malaysia’s net import of paper and paperboard ranged from 1.0 to 2.2 million tones over the period 2002-2009. Meanwhile, although China is one of countries with the highest growth of consumption of 75% and the second largest consumers of paper and paperboard in the world (19%), its net import was sharply decreased from 6.0 million tones in the year 2002 to 0.5 million tones in the year 2009. Nevertheless, this country would still be an important consumer for Indonesia’s paper and paperboard. United States of America and Japan would also be important consumers since these countries were net importers and together consumed 32% of world’s paper and paperboard consumption.

5 Drivers and principal policies affecting forest products markets

5.1. Drivers From demand side, needs for wood composites were driven by population, economic growth, product application and substitution, price level, and industry push for innovation and value addition to resources.

Population.

Demand of wood composite products is strongly affected by

changes in population (growth or decline), age structures and household composition. ITTO (2007) stated that in producer countries total population was increased by almost 600 millions during the period 1987 to 2007. Population in consumer countries was also increases, though more moderately. However, Japan, a major importer, was believed to have ceased its population growth during that period and then declining in its demand would be expected in coming years.

Economic growth . Since 2000, trends in GDP growth have been similar for all consumer regions, but Asia clearly showed the greatest volatility, with Europe and North America tracking each otherâ&#x20AC;&#x2122;s growth within a much narrower band. ITTO (2007) stated that GDP growth for all ITTO Consumers was grown in 2006, where Asia was the fastest (4.9%) and followed by North America (3.4%), non-EU Europeâ&#x20AC;&#x2122;s (2.7%), and the EU (2.5%). ITTO Producer economies generally have been growing significantly faster than Consumers ever since 2000, with a spread of 2 percentage points expected to persist at least until the end of 2007. ITTO Producer Asia continues to show the most robust growth of all ITTO sub-regions, with Africa running a close second. Latin America has lagged due to relatively slower growth in both Brazil and Mexico. Although Japan remains in number-one position among all ITTO importers of tropical 57

plywood, its imports would expectedly decline hereafter as its population has peaked and its economy has reached a steady state with little or no GDP growth.

Product application and substitution . Currently, temperate and coniferous plywood is increasingly substituted for tropical hardwoods, holding down the latterâ&#x20AC;&#x2122;s price. This was indicated by a progressive substitution of temperate and boreal conifers for tropical hardwoods imports of Japan. China, one of major tropical plywood manufacturers, has broadened tropical export panel products to include a variety of combinations of some different core (often China-grown poplar) overlaid with face veneers of tropical woods such as

meranti.

As a result, its plywood products are comparatively lighter and

cheaper than Southeast Asian products while their quality has noticeably improved. Meanwhile, consumption of veneer theoretically not destined for plywood, presumably in the furniture and other secondary processing industries of ITTO member countries, had marked a minor decline of 0.6% to 3.51 million m3 in 2006.

Moreover, there are clear trends for European

governments and buyers, in good part responding to expressed desires of producers, to shift their import product mix increasingly away from tropical hardwood roundwood in favor of sawnwood, panels and further-processed products manufactured in producing countries.

Price level. The future of tropical plywood consumption in most markets is apt to be determined mainly by price competition.

Consumer country inflation

rates were mostly in a band around 2%, whereas most producer countries held inflation rates near 5% in the period 2000-2005. Prices for most primary tropical timber products and species ended 2006 considerably further strengthened over their already-strong performances during 2005, as supplies of raw materials tightened, severely in some cases. At the same time most ITTO consumer country economies were expanding or at least stabilized, steadying or improving consumer confidence in most markets. Prices for Asian plywood kept on rising steadily and steeply through 2006, due to basic scarcities of peeler logs in some case heightened by regulatory policies, strong demands from North American and some European consumers as well as transport interruptions due to weather and other factors. However, further price rises 58

were prevented by strong competition from cheaper Chinese combiplywood and the mounting concern of public opinion-leaders over illegal logging. Meanwhile, the international markets for tropical veneer remain quite small and buyers mainly seek decorative sliced veneers. The individual markets for these very varied sliced veneers are extremely narrow and knowledge of transactions is closely held. There are no representative benchmark species whose prices could serve as indicators of overall market trends.

Tropical

veneer prices are therefore not regularly covered by the ITTO MIS and are also not regularly quoted by any other readily available source.

Industry push for innovation and value addition to resources . The highest degree of conversion at least to primary products is in Latin America. In 2005, 86.7% of logs have been converted locally into sawnwood, 10.8% into plywood, and 1.9% into veneer sheets. Moreover, this region has been relatively highly advanced, with about 70% of total exports by value being secondary processed wood products (SPWP) in 2005. Meanwhile, as roundwood export policies are tightening, the roundwood exports proportion of log production in Producer Asia was declined from 8.8% in 1995 to 7.2% in 2005. The SPWP shares were also increased from about 30% in 1995 to 55% in 2005.

Only African

producers still export significant proportions of their log harvests as roundwood, though there is also progressive cutting back on roundwood exports in this region: From 40.6% of the log harvest in 1995, to 17.3% in 2005, 16.3% forecast for 2007. Clearly substantial progress has been made in fostering domestic processing, but evidently there is significant further potential for capture of value-added by the African economies by intensifying industrial development efforts. Even more dramatic inter-regional differences in progress toward higher-value-added products in the timber industries sector, coupled with higher foreign-exchange earnings from the forest resource, are seen by comparing the proportional values of primary versus further-processed wood products exported.

5.2. Principal policies The principal policies affecting forest products markets in the future are forest law enforcement, governance and trade (FLEGT); the Lacey Act, forest certification; policies promoting the sound use of wood; research and development related policies; industry competitiveness and investment policy; climate change policy; wood energy promotion policy; trade policy and tariff and non-tariff barriers; and phytosanitary measures.

Forest law enforcement, governance and trade . The most prominent group of policy issues discussed in international and national forums is forest law enforcement, governance and trade (FLEGT). This is a regulation to control imports of illegally-sourced timber from specific countries and will form the legal basis for the licensing scheme and partnership agreements. However, if it is restricted only to logs and sawnwood, it would be negligible. To be essential, this licensing scheme should include all product groups but at the same time would lead to additional administrative burdens, possibly similar to chain-ofcustody tracking systems in forest certification. The key instruments to achieve this goal are: (a) the VPA (Voluntary Partnership Agreement) licensing scheme where under this scheme the European Union countries provide technical assistance and training to help build an improved TLAS (Timber Legality Assurance System) and ensure effective means of legality verification in producer countries, and (b) Due Diligence Regulation (DDR; currently under consideration) to help curb the laundering of illegal timber, or â&#x20AC;&#x2DC;leakageâ&#x20AC;&#x2122;, via third countries. Once implemented, FLEGT-VPA and DDR is expected that will not only be effective in safeguarding the integrity of direct timber trade, but also make broader contributions to foster the adoption of sustainable forest management (SFM), improve forest governance and livelihoods in producer countries, and avoid the creation of market inequalities between domestic and industrial timber sectors. US Lacey Act. As of May 22, 2008, the United States of America passed the Lacey Act to minimize the U.S. market for illegal wildlife, fish, and plants. This measure would expectedly support the efforts of other countries to combat illegal logging and trade. Under the Lacey Act, it is unlawful to import, export, 60

transport, sell, receive, acquire, or purchase in interstate or foreign commerce any plant, with some limited exceptions, taken or traded in violation of the laws of a U.S. State, or most foreign laws. It is also unlawful to make or submit any false record, account or label for, or any false identification of, any plant. Similar to FLEGT, the Lacey Act was promoted by consumer country and based on traceability to origin.

This implies requirements to be complied by

producers and or exporters with different enforcement mechanism. However, there is a need to provide better consultation, communication mechanism, and protocol in multilateral and bilateral formats since some interpretations were not clearly understood, no concrete benefits were perceived from adoption the Lacey Act and there were fears among producers/exporters of loosing sales in the short term.

Forest certification .

Many factors are considered in forest certification

programmes including illegal logging. There are some evidences that certification programmes are having a positive impact on forest management practices around the world although doubts about the value and future viability of forest certification from a market perspective exist. Issues related to more comprehensive management planning, plant and animal biodiversity, retention of sensitive areas, and social responsibility have all become more important as certification processes have become more prevalent.

The development of

demand for certified forest products through specific public procurement policies have been facilitating by several governments at local, provincial and national levels in the US and Europe. However, these measures were seen as effectively constituting non-tariff barriers to trade by some developing countries.

Policies promoting the sound use of wood . The harmonization of functional specifications in standards across borders is clearly important to more efficient use of wood. For example, although no direct regulatory barriers to the use of wood or wood-based products in the construction of residential buildings, differences between sets of regulations act as barriers to common practice across Europe. The development of wood-based composite products such as oriented strand board (OSB), laminated strand lumber, parallel strand lumber and laminated veneer lumber (LVL) provides is another example of significant 61

advancement in the sound use of wood. This has dramatically affected wood markets and provided new options to forest managers and policy makers. New developments related to wood-based composite products technology is associated with myriad products that can be substituted for products made of solid wood and is likely to stimulate further interest in plantation establishment while at the same time further reducing interest in long rotation periods on industrial forestlands.

Research and development related policies .

In forestry sector, publicly

funded research is related to the development of policies aimed at the sound use of wood. The objective of all wood products research program globally is to improve efficiency of wood use, whether through development of new conversion technologies, product designs, building codes and application guidelines or durability enhancements. For example, in US, the development of wood composites and engineered structural materials has allowed better utilization of low value resources to create high value materials, thereby enhancing forest management options.

Industry competitiveness and investment policy . The developed countries is forced to reassess a long-established manufacturing and marketing strategies due to the flow of capital investment to new producing regions, and growing global competition in wood-based commodity products markets. One result in North America is radical new thinking about the nature of paper manufacturing in

the

future,

which

transform

the

entire

industry

biochemicals/biofeedstocks/bioenergy/pulp and paper industry, with individual mills operating as integrated biorefineries.

Under this new paradigm,

manufacturing centres will have the capacity to produce electricity, liquid fuels (such as ethanol), and a wide variety of bio-derived chemicals and chemical feedstocks, in addition to pulp and paper. Paper will effectively become only one of a number of (diverse) co-products. The biorefinery is quickly moving beyond the concept stage, with a major research effort now underway involving both wood products and the agricultural sectors of the US and Canadian economies.

Climate change policy .

Although a considerable research effort has

been conducted to quantify carbon flows and storage within forests under various management regimes, it has little impact on forest management practices and uncertainty impacts on markets and trade in the US. The carbon trade market is growing globally with market buyers are mainly Japan, the Netherlands and the Carbon Finance Business (CFB) of the World Bank (Prototype Carbon Fund and Community Development Carbon Fund). However, carbon sink projects especially those linked to plantations and large-scale hydropower projects face strong NGO resistance, which will likely make such projects less attractive for Carbon Emission Reduction (CER) buyers. On the other hand, the working group of an EU Advisory Committee (EU 2004) has recently focused on carbon sequestration benefits associated with substitution of wood for non-wood materials.

Wood energy promotion policy .

As countries promote renewable energy

sources, energy markets and the international biofuel trade are rapidly developing.

In Europe, demand continues to increase for the use of forest

biomass for energy. This is partly driven by targets to fulfill national commitments under the Kyoto Protocol. Meanwhile, increase demand for wood as a source of bioenergy in North America and Europe whether as a result of business initiatives or government policies, or both creates a competitive alternative use of raw material in wood-based industries, especially the pulp and paper and panel industries. This new reality means the price of wood fibre will have to be competitive with the price of wood as a fuel even though this is a positive development from the standpoint of profitability of forestry.

Trade policy and tariff and non-tariff barriers .

There

still

tariff

escalation of forest products in developed countries. But, the overall level of applied tariffs is higher in developing countries than in the industrialized regions, with considerable differences in the applied rates between regions. Reducing tariff barriers would then increase new export market opportunities, which in turn, increase wood and forest products production in the forest-rich, net exporting countries. On the other hand, non-market barriers, such as those set through environmental, social or health standards, are considerably more difficult to negotiate. 63

Phytosanitary measures .

The WTO Sanitary and Phytosanitary (SPS)

Agreement aims at clarifying inspection and quarantine control procedures. The profile of SPS measures has risen in recent years, partly as a response to increased vigilance and concern about environment and safety issues. Concern is not limited to risks of wood transport from developing countries. Regulations also impact trade between North America and Europe in order to prevent transmission of a range of forest pests across the Atlantic.

6 Indonesiaâ&#x20AC;&#x2122;s forest industry revitalization

INDONESIAâ&#x20AC;&#x2122;S forest sector is facing crisis, due to rapid forest resource loss and degradation that threaten the livelihoods of rural people and the sectorâ&#x20AC;&#x2122;s continued contribution to export earnings and economic development. Industrial restructuring and development of alternative timber resources are needed to bridge the growing gap between demand for forest products and sustainable supply. The Ministry of Forestry and most stakeholders recognize the problem of industrial over capacity and the obstacles to revitalization posed by continued illegal logging. There is also recognition that the future of the wood processed industry will depend on an expanded plantation program. In many areas, there is considerable potential to involve the rural poor in plantation production on both community and individually owned land. Expanding plantations will be challenged by conflict over land resources and the need to address issues of due process related to gazettal to help ensure legality of products in international markets. Industry revitalization will also require restructuring of the wood processing industry, the main source of demand for Indonesian timber resources. With regard to develop operational policies and plans, the Ministry of Forestry established an In-house Experts Working Group in June 2006, with a mandate to advise the Minister of Forestry on key issues related to industry revitalization, including plantation acceleration and industry retooling/reform and prepare policy recommendations for the Minister directly. The Working Group, which consists

senior

Forestry

Ministry

experts

including

representatives from each of the Departmentâ&#x20AC;&#x2122;s main directorates, as well as the legal and planning bureaus, and outside academics, has: conducted regular meetings with several major stakeholders, visited several forest plantation 67

concessionaires, community forests, and wood processed companies; and conducted stakeholder consultation workshops.

Based on In-house Experts

Working Group’s assessments, four working groups: Woodworking WG, Furniture WG, Plywood and Other Wood Based Panel WG, and Pulp and Paper WG were then established by Direktorat Jendral Bina Produksi Kehutanan (BPK) in March 2007. guided

In-house Experts Working Group was then actively

those working groups to develop their industry roadmaps and

combined them into roadmap of Indonesia wood-based industry. All involved stakeholders have a shared vision regarding Indonesia wood-based industry. That is, in the future the industry would produce wood products that can enter highly competitive market and be supported by sustainable increasing wood supply. There would be enough log supply from different sources; particularly from certified and sustainable managed production forests and the production level of wood products would be in accordance with that sustainable log supply in the next 20 years.

Moreover, Indonesia wood-based

industry would operate efficiently and in environment friendly with capacity utilization rate of at least 70%, focus on high value-added products that can enter highly competitive market where at least 20% of them are certified, and enlarge their market share in domestic and foreign markets. However, they are also recognizing many problems that can hinder Indonesia to achieve that vision. At least six major problems agreed by all stakeholders are facing by the industry. They are: a huge gap between industrial demand for timber and the legal sustainable supply, industrial over capacity, inefficient in wood processing industry, declining in product competitiveness, declining in market share, and low value-added products. Two-stage strategy with a series of policy and action plans for each strategy in each stage was then recommended.

In the first stage or the restructuring

phase, which is from 2007 to the year 2014, it will be important strategy to intensify forest plantation, increase productivity of forest plantation, combat

In reference to: (1) Restructuring and Revitalization of Indonesia’s Wood-Based Industry: Synthesis of Three Major Studies. T. H. Brown, B. C. H. Simangunsong, D. Sukadri, D. W. Brown, Subarudi S., A. Dermawan, Rufi'ie. Ministry of Forestry, CIFOR, and DFID-MFP. Jakarta. November 2005; (2) Revitalization of Indonesia’s Forest Industry: A Supply Side Analysis. 2006. B. C. H. Simangunsong. Paper prepared for the World Bank; and (3) Revitalization of Indonesia’s Forest Industry: A Demand Side Analysis. 2007. B. C. H. Simangunsong. Paper prepared for the World Bank.

forest crimes, develop alternative sources of timber supply, optimize industrial log distribution, improve utilization of natural production forest, monitor operations of wood processing industry, invest in new wood processing technology for efficiency and waste reduction, reduce production cost of wood products, enhance wood products image in international market, facilitate development of wood industry clustering, find new market and sustain traditional market of wood products, invest in secondary wood processing technology, and diversify wood products. This first stage focuses on demand management and supply enhancement and sets the stage for the revitalization phase. Several strategies chosen in the first stage need to be continued in the second stage, the revitalization phase, in addition to strategies that take advantage of different timber supplies, different processing technologies, and different end products for different end markets. Those important strategies are to: intensify forest plantation, primarily for saw logs/veneer logs production; increase productivity of forest plantation, broaden utilization of alternative timber supply sources; broaden implementation of Intensive Silvicultural System (SILIN) in the natural production forest; continue investment in new wood processing technology for efficiency and waste reduction; broaden wood industry clustering; continue production cost reduction; continue enhancement of wood products image in international market; broaden foreign market and sustaining traditional market of wood products; penetrate potential market; invest in secondary wood processing technology; and continue wood products diversification. Series of policy and action plans for each strategy in each stage were recommended. One or several indicators were also developed and involved parties were also identified for each action plan. Nevertheless, there are several enabling conditions that are needed to be considered such as: good political will of the government, national stewardship, land tenure and use security, good forest governance, and existence of economic institutions. Implications of these chosen strategies are temporarily decrease in output and labour force level so that coordination and collaborations amongs related ministries or departments are a must. On the other hand, these chosen strategies reduce pressure to 69

natural forest utilization and give more space to health and efficient woodbased companies to operate.

7 Conclusions

BASED on current worldâ&#x20AC;&#x2122; s demand and its trend, shares of forest product imports from Indonesiaâ&#x20AC;&#x2122;s to total forest product imports in each major country destination as reported by importer countries and considering the principal policies and demand drivers that are likely to affect the global and regional markets, plywood, medium density fibreboard, wood pulp and paper and paperboard would be plausible to be developed for international market such as Japan, China, the Republic of Korea, Taiwan, Saudi Arabia, India, Malaysia and United Arab Emirates as well as for domestic market. Meanwhile, veneer sheets and particleboard would be plausible to be developed for domestic market. To realize these potential future markets, Indonesia needs to restructure and revitalize its forest products industry by addressing six major issues, namely: a huge gap between industrial demand for timber and the legal sustainable supply, industrial over capacity, inefficient in wood processing industry, declining in product competitiveness, declining in market share, and low value-added products. One thing to be noted, due to characteristics of forest resources such as exhaustibility, uneven distribution across regions, and externalities, Trade measures such as tariff, export restrictions, subsidies, FLEGT, the Lacey Act, government procurement, building codes, and private standards for SFM could in principle remedy overexploitation problems. But trade measures are often second best measures to address the problems of forest resources with open access. Strengthened property rights address the open access problem at the source.

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