Our furniture industry has a number of manufacturing plants with components of high local content and no industrial scale limitations.
The industry, which should have export competitiveness, has lost out to neighboring countries with fewer competitive advantages.
Our advantage is having raw materials like wood. Indonesia is known as a country with widely diversified wood, including rattan, which is only available in tropical forests.
Indonesia also has abundant human resources and the manufacturing of furniture is not new. The female emancipation fighter, RA Kartini, wrote at the beginning of the 20th century about the importance of carved wood and the furniture industry in the Jepara economy.
Kompas’ field work, this week, discovered that the weak competitiveness of the Indonesian furniture industry had been caused by a lack of supporting regulations. If in 2005 the export value, according to the Association of Indonesian Furniture and Handicraft Industries (HIMKI), reached US$1.93 billion, in 2016 it dropped to an estimated $1.3 billion. Meanwhile, exports from Vietnam in 2005 reached $6.9 billion and Malaysia $2.4 billion.
For example, to export, entrepreneurs must have timber legality verification system documents (SVLK) as evidence the wood has been legally obtained. Western Europe had requested the documents, but the Trade Ministry applied the regulation for all countries.
The cost of Rp 80 million to process the SVLK documents for small and medium enterprises could have been eliminated if the documents were issued by the wood processing industry, starting from the forest concession holders, state-owned companies, up to timber growers under the supervision of the Environment and Forestry Ministry.
Other obstacles, which can also be eliminated, are the quarantine inspection for wood samples sent from overseas furniture buyers. The Agriculture Ministry should be able to ask for wood phytosanitary certificates from the countries of origin so that the waiting time for the logs out of the ports and their cost can be reduced.
With the good intentions of the government, it is not uncommon for the regulations issued to not be in accordance with the needs of the business world, especially if the industry is addressed across sectors because the regulators may not fully understand the business operations of the relevant industry.
We frequently tend to look inside. Amid the fierce competition in world trade, it is better if we learn from the achievements of other countries as a benchmark in setting regulations to increase our competitiveness.
