Opportunities for Indonesian tropical hardwood products and market - PowerPoint PPT Presentation

"3rd International Trade Seminar: Boosting international trade in certified wood products from Indonesia“ January 25, 2016 Surabaya (modified) Opportunities for Indonesian tropical hardwood products and market developments in Japan Hiromitsu Samejima (Institute for Global Environmental Strategies)

2 2 Plywood is the main wood product from Indonesia • Japan is still the largest importer • Import of plywood from Indonesia in 2013 (m 3 ) Timber export from Indonesia France in 2014 Mexico Belgium Value Others Egypt (million USD) GermanyUK Japan Logs 25 Sawn timber 340 USA Netherla … Venner 32 Korea, Plywood 2,196 Rep. Total 2,593 Taiwan China (ITTO 2014) Indonesian wood producers & exporters need to understand what is happing in Japanese market.

3 3 Forest in Japan: 2.5 million ha Government forest Private forest Forest coverage rate: 68% (Indonesia 51%) Government : Private forests = 3:7 200 km Natural : Planted forests = 5:5 However, the domestic forestry & timber industries have lost the national market by imported log and timbers. 1973 1996 2013 1960 Foreign log Foreign log & & process domestic process Domestic log & process Lumber Pulp & chips Plywood (Forestry Agency 2015)

4 4 Principle of Japanese government policy is to rebuild the domestic forestry & timber industries, not to support foreign industries. Price of domestic tree Number of domestic plywood factories 800 2014 1971 Number of people working for forestry industries 146,321 200 51,200 2010 1965 2010 (Forestry Agency 2015) 1980

5 5 Competitors with Indonesian plywood to Japanese market

6 6 Competitors of Indonesian plywood in the Japanese market are million m 3 Malaysia (mainly Sarawak) • 9.0 Japan’s domestic plywood • China & Vietnam • Total demand in 2013 74 million m 3 China 5.0 Indonesia Foreign log Foreign log & & process domestic process Malaysia 1.0 Domestic log & process Lumber Plywood Pulp & chips 2013 (Forestry Agency 2015) 2003 28 million 11 million 30 million

7 7 Tropical plywood from Indonesia and Malaysia is the best material for concreate forming panel and floor base . Normal plywood http://www.depro- Concrete forming panel home.jp/%E6%9C%AC%E7%94%BA%E3%81%AE%E5% Floor base AE%B6/ http://esprithome.blog59.fc2.com/blog-category-9.html http://www.hokuryo-kensetsu.co.jp/katawaku/

8 8 Historical trend of tropical log & plywood imported to Japanese market Round log (m 3 ) 12,000,000 Indonesia 10,000,000 Sabah 8,000,000 Sarawak 6,000,000 Philippine Log-ban 4,000,000 Indonesia Philippine Sabah 2,000,000 Solomon Is. 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 9,000,000 8,000,000 APKINDO monopoly 1984-1998 7,000,000 Plywood (m 3 ) NIPPINDO monopoly 1992-1998 6,000,000 5,000,000 4,000,000 Japan’s domestic production 3,000,000 Indonesia 2,000,000 1,000,000 Malaysia total China 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

9 9 Six major trading companies of plywood Annual sale 2014 (million USD) 0 10 20 30 40 0 10 20 30 40 Indonesia Malaysia Domestic Vietnam China Indonesia & Malaysia (Estimated from data in Mokuzai-Kenzai Weekly)

10 10 Many Indonesian and Malaysian plywood producers export the products to Japan through the six trading companies Indonesia Sabah Kalabakan Kutai Timber Industry Sumitomo Daya Sakti Sinora Forestry STUD Korindo Sarawak Sumber Mas Sojitsu WTK Surya Satrya Timur Alas Kusuma Samling Marubeni KTC RH (Jaya Tiasa) Erna Djuliawati Itochu Tanjung Raya Shin Yang Tirta Mahakam KTS SMKC Intracawood Tanjung Selatan Ta Ann Kayu Lapis Toyo Materia Wijaya Tri Utama (2011-2012, Mokuzai-Kenzai Weekly) IDEC

11 11 Japanese domestic plywood industries: Niche shift & revival They innovated thick plywood using small domestic softwood and succeeded to promote it as structure plywood for housing. Self-sufficiency ratio 50% 40% Sawn timber 30% Pulp & Chip 20% 10% Plywood They are trying to move into concrete 0% forming panel and floor base now… 1975 1985 1995 2005

12 12 China and Vietnam: New comers Poplar (Central China) and Eucalyptus (South China & Vietnam) planted since 1970s’. Chinese plywood export > import since 2001. The plywood is used especially for packing. Planted Eucalyptus forest harvested in 5-7 years rotation. 1.7 million ha in total. http://www.konpo.net/3/konpo-gohan.html

13 13 Current trade of FSC-certified plywood from Indonesia to Japanese market

14 14 FSC-certified HPHs are drastically <CCM> increased in Indonesia Intracawood <ALAS KUSMA> <Integra> Sari Bumi Kusuma Narkata Rimba Suka Jaya Makmur Belayan River Timber <Roda Mas> <LYMAN> Kemakmuran Berkah Timber Erna Djuliawati Roda Mas Timber Ratah Timber <Dwima> <KAYU LAPIS> <SURYA SATRYA TIMUR (SSTC)> Dwima Jaya Utama Sarmiento Parakanca Timber (Sarpatim) Indexium Utama Carus Indonesia

15 15 Sumitomo Forestry , Itochu and Toyo Materia are main importers of certified plywood from Indonesia Sabah Sumitomo plywood Forestry producers Sojitsu Indonesian Marubeni plywood Sarawak producers plywood Itochu producers SMKC Toyo Materia (Mokuzai-Kenzai Weekly, NGO etc.)

16 16 Sumitomo Forestry and Itochu use FSC-certified plywood for their original brands of environment-conscious products, in addition to plywood from planted fast-growing trees (ex. Falcata). “ Kikorin ” imported 1.85 million m 3 of FSC/PEFC certified wood & wood products in 2014. Indonesian FSC-certified “ Chikyugi ” Itochu producers sold for 9.2 billion USD in 2014. (FSC plywood: 1 billion USD) (Mokuzai-Kenzai Weekly)

17 17 jutec is the major lumber wholesalers trading FSC-certified plywood. Flooring makers Asahi wood-tech FSC/PEFC certified timber from Chile and Russia Indonesian FSC-certified Itochu producers FSC certified 18,000m 3 Toyo Materia (2013) FSC certified plywood 18,000m 3 (2015)

House maker Order for FSC plywood regarding the environmental aspect House owners （ Panasonic group ） Lumber Builders About 80% dealers Order for FSC plywood Furniture industry regarding the quality Home center 223 shops

19 19 Timber certifications in Japanese market

20 20 There are three types of certification (1) Environmental and Social Impact (ex. FSC) (2) Local product (3) Quality

21 21 (1) Certification for environment • FSC was introduced in Japan in 2000. • However, the recognition is still very weak . Recognition Eco-mark rate in Japan (low environment impact) (2015, n=5274) 90.7% 11.4% Low emission vehicle 8.3% 81.4% Recycled paper 6.5% 55.1% http://www.ecomark.jp/pdf/report2015.pdf

22 22 FSC Japan Main supporters to FSC Japan are domestic planted forestry companies and paper companies Hayami Forestry The first FSC-FM certified forest in Japan (2000) Promoting FSC-certified timbers from foreign countries are not their priority

23 23 (2) Certification for local timber Many housing companies appeal • that their building materials are national or local timbers. Many prefecture governments • promote the local forestry industries with subsidy to home building using the local timbers.

24 24 (3) Certification for quality The most interested & important certification for consumers. All plywood for housing in Japan should be certified by Sabah 9 Japan Agriculture Standard (JAS) . Sandakan 2 Keninggau3 Sarawak 21 Miri 3 Tawau 4 Kedah 1 Muka 2 Tarakan 2 Pahang 2 North Sumatra 1 Bintulu 6 Kuching 2 Tatau 2 Sibu 6 E. Kalimantan 7 45 factories in Indonesia W. Kalimantan 3 Samarinda 4 Riau 2 33 factories in Malaysia Sanggau Pontianak Jambi 1 are certified. C. Kalimantan 5 Pasir Ketapang Barito Kuala 2 Kotawaringin Barat JAS mark clarify the Banjarmasin 3 Lampung 1 S. Kalimantan 5 produced factories Jakarta 1 South Sulawesi 2 C. Jawa 7 Banteng 3 W. Jawa 3 Trita Mahakam Resources E. Jawa 8

25 25 Future potential to promote FSC-certification in Japan (1) Tokyo Olympic 2020 (2) Promotion of Timber export (3) Timber legality (4) TPP (bad news?)

26 26 (1) Tokyo Olympic 2020 The new National Stadium will be build using a volume of domestic timber. Domestic certified timber will be used for the stadium & other buildings. • Many prefecture government started to promote forest certification to • supply materials for the memorial buildings. It will finally increase recognition of forest certification (especially • FSC) in Japan.

27 27 (2) Timber export from Japan • As domestic population and number of new wooden housing will decrease continuously, Japanese government started to promote timber export. • To promote timber export, the government start to support domestic forestry to be certified by FSC & PEFC. • It will also finally increase recognition of forest certification in Japanese market. Volume of exported timber from Japan million houses 1.2 0.6 South Korea Number of wooden China house built 1973 2020 (Forestry Agency 2015)