Competition in international markets for furniture and handicraft industries is getting tougher as Vietnam and Malaysia strive to expand their market share.
The chairman of the Indonesian Furniture and Crafts Industry Association, Abdul Sobur, said that given the state of the global economy, it was vital that the industry improved the competitiveness of the national handicraft and furniture industries and adopted advanced technologies, asking the Ministry of Industry to provide subsidies.
The Japan-based International Tropical Timber Organisation says the industry is optimistic that the wood processing industry can grow by 5% -6% this year even though several main export markets, such as the UK and Japan, are facing economic downturns.
Mr Sobur said his association had developed strategies to realise market growth, and one aspect was exploring exports to non-traditional markets. Japan and the UK were among the main markets for furniture and craft, although the market share for furniture exports to the US was larger.
Statistics Indonesia notes that furniture exports to Japan decreased from US $174.71 million in 2022 to US $141.15 in 2023. Meanwhile, furniture exports to England reduced from US $58.34 million in 2022 to US $45.76 million last year.
The sector’s export returns in 2023 were US $1.8 billion. Moreover, the Industrial Performance Index for the furniture industry stood at 52.4 in January this year, an expansion that suggests that furniture companies are confident about business conditions.
One of the efforts made by the Ministry of Industry is to continue the restructuring program for machines and/or equipment in the wood and furniture processing sector.
Director General of Agro-Industry Putu Juli Ardika said the ministry was implementing a restructuring program for machinery and equipment in the wood processing industry, providing partial reimbursement for purchases based on specific criteria.
Regarding wood resources, the responsibly managed Southeast Asian plantation forest industry has the potential to offer attractive returns from strong regional and international demand for timber products, competitive cost structures, and carbon market opportunities.
Integrating plantations into sustainably managed landscapes can also mitigate climate change through forest protection, restoration, and biodiversity enhancement.
“Further, focusing on sustainable development outcomes creates economic opportunities for local communities,” according to timber traders in the Philippines.
The Asian region has the world’s fastest-growing demand for wood products and an increasing timber deficit. China has grown in importance as both a consumer and producer of forest products, overtaking traditional timber production regions such as Canada and the US.
Chinese demand continues to grow for hardwood and softwood logs, woodchips, plywood, lumber, wooden furniture, pulp and paper and wood pellets for fuel.
Other rapidly growing Asian economies also contribute to timber demand growth – India, the world’s largest market for teak; Malaysia and Vietnam, with substantial export-oriented furniture manufacturing industries; and Indonesia, with a burgeoning domestic consumption and its export-oriented furniture industry.
Despite growing demand for timber, the development of commercial plantations for high-value uses has lagged in southeast Asia versus other regions such as South America.
The total plantation area in key forestry countries – Malaysia, Indonesia, Vietnam, Cambodia, Laos, and Thailand – is estimated to be only five to six million hectares. Plantation development has focused on short-rotation, low-value crops for the pulp and paper industry.
New Forests believes these plantations can transition to higher-value species over time. Southeast Asia’s share of timber production is expected to rise from 39% in 2013 to 62% of world plantation production by 2050.
Meanwhile, the Australian government will announce a $2 billion finance facility to help fund green energy and infrastructure investment in Southeast Asia to tap into spiralling demand for renewable power in the region between now and 2050.
The announcement was made by Prime Minister Anthony Albanese yesterday, who is hosting the ASEAN-Australia Special Summit in Melbourne, attended by leaders from nine Southeast Asian nations.
The initiative, a key recommendation by business luminary and special envoy to southeast Asia Nicholas Moore, will provide loans, guarantees, equity and insurance to help bolster what he found to be “underweight” and “stagnant” two-way trade and investment with the ASEAN bloc.
“Acting on climate change is an environmental necessity for our region. It is also a transformative economic opportunity,” Mr Albanese said at the summit.
Mr Moore said southeast Asia would need an estimated 454 gigawatts of additional generation capacity between 2021 and 2050, in a transition that would employ more than five million people.
The demand for green project engineering design, construction and advisory services would be substantial. Estimates place the value of these services at more than $10 billion a year by 2030.
Export Finance Australia will manage the proposed financing facility.
