High-end U.S. wood products make music…and more…in Indonesia

AgExporter, April, 2003

In 2001, Indonesia imported a total of $107 million worth of wood products. Over a third of the imports were from the United States. Indonesia exported more than $1 billion in furniture ($742 million), wooden floors ($201 million) and musical instruments ($100 million).

After U.S. exports of wood products to Indonesia peaked in 2000 at $47.5 million, sales fell off to $39.4 million in 2001. Because of a strong re-export trend, imports of woods were largely unaffected by the 1997 Southeast Asian economic crisis that buffeted other U.S. exports. However, the furniture export industry in Indonesia was impacted by the 2001 global slowdown, as its biggest customers are the United States, Europe, Japan and Australia.

Accordingly, U.S. wood product exports to Indonesia dropped; however, a rebound in U.S. sales is expected as the economic recovery comes for primary customers.

Some U.S. Products From Europe

In 2001, the best selling U.S. wood entering the Indonesian market was hardwood logs, valued at $14.2 million, This same year, U.S. hardwood lumber ($8.4 million) and hardwood veneer ($3.3 million) exports lost the most ground. Best selling veneers include oak, maple and softwood pine.

Other U.S. high-grade products enter Indonesia via European countries, adding maple, cherry, walnut and ash to the mix. European countries are able to offer high quality, precision thickness with competitive prices.

Two major importer/distributor firms import U.S. wood products for Indonesia's furniture manufacturers. Most U.S. products enter via Java Island, which has the infrastructure to handle the imports. Distribution to other islands has proven less reliable.

A major flooring company imports sawn lumber directly from the United States, mostly white oak, beech, red oak and cherry but also some maple, walnut, pecan and pine. Several smaller flooring companies import mostly oak logs.

U.S. maple is used in necks of guitars made locally. Piano manufacturers use U.S. cherry. U.S. birch plywood is turned into drum parts.

Competition Is Worldwide

As with other markets, price and credit terms can be the determining factors for Indonesian wood product importers. Developing personal relationships with Indonesian importers and promoting products are also important in making sales.

U.S. exporters usually require 30-day cash terms upon delivery, compared to more lenient terms from other countries. They also require a minimum order large enough to fill a 40-foot container. European countries often consolidate products for Indonesian importers.

China provides the most competition for U.S. hardwood lumber products. The United States is third in supplying hardwood veneer products, after Japan and China.

As technology for veneer production develops, local industries do expect to import more U.S. solid wood directly and process their own veneers, a development that may limit U.S. wood products imported through Europe.

Other products with opportunity in this market include medium-density fiberboard and surplus cuts from U.S. processing.

This article was prepared by a contractor for the FAS Agricultural Trade Office in Jakarta, Indonesia. For more information about this market, contact that office at: Tel.: (011-62-21)3435-9161; Fax: (011-62-21) 3435-9920; E-mail: atojkt@cbn.net.id

For details, see FAS Report ID2015. To find it on the Web start at www.fas.usda.gov, select Attache Reports and follow the prompts.

U.S. Wood Products Have Multiple Uses in Furniture, Flooring and Musical
Instruments

Type of U.S.                            Species
Wood Product  End Product               (Common and Scientific Name)

Logs          Fancy plywood             Cherry (Prunus serotina)
              Furniture                 Maple (Acer Saccharum,
              Flooring                  acer nigrum)
              Veneer                    Red oak (Quercus spp.)
                                        White oak (Quercus spp.)
                                        Walnut (Juglans spp.)

Lumber/       Complement for furniture  Cherry (Prunus serotina)
Sawn timber   edge, doors, cabinets,    Maple (Acer Saccharum,
              vanities, fireplace       acer nigrum)
              mantels, as hand-crafted  Red oak (Quercus spp.)
              accessories *             White oak (Quercus spp.)

              Flooring                  Cherry (Prunus serotina)
                                        Maple (Acer Saccharum,
                                        acer nigrum)
                                        Red oak (Quercus spp.)
                                        White oak (Quercus spp.)
                                        Pecan (Carya spp.)
                                        Pine (Pinus spp.)
                                        Walnut (Juglans spp.)

              Musical instruments       Cherry (Prunus serotina)
                                        Maple (Acer Saccharum,
                                        acer nigrum)

              Piano keyboard            Spruce (Picea spp.)
                                        Poplar/Tulip (Liriodendron
                                        tulipifera)

              Guitar neck               Maple (Acer spp.)
              Guitar top/               Spruce (Picea spp.) or Alder
              front board               (Alnus spp.)

Veneer        Furniture *               Red alder (Alnus rubra)
                                        Ash (Fraxinus spp.)
                                        Beech (Fagus grandifolia)
                                        Birch (Betula spp.);
                                        White & Red
                                        Birch
                                        Cherry (Prunus serotina)
                                        Elm (Ulmus spp.)
                                        Maple (Acer Saccharum,
                                        Acer nigrum)
                                        Red oak (Quercus spp.)
                                        White oak (Quercus spp.)
                                        Pecan (Carya spp.)
                                        Pine (Pinus spp.)
                                        Oregon Pine (Pseudotsuga
                                        menziesii)
                                        Sycamore (Platanus occidentalis)
                                        Black walnut (Juglans nigra)

* Furniture accessories include horizontal friezes, vertical pilasters,
carved corbels, rosettes, scrolls and swags.

U.S. Wood Product Sales to Indonesia Peaked in 2000

Wood Product        1996            1997         1998         1999

                                      U.S. Dollars

Hardwood logs     21,327,000      21,341,000   18,156,000   12,940,000
Hardwood lumber    6,085,000       8,740,000    8,186,000   11,286,000
Softwood logs        310,000         330,000      795,000      511,000
Softwood lumber    2,355,000       1,664,000    3,132,000    5,484,000
Hardwood veneer    3,011,000       3,584,000    2,961,000    6,157,000
Softwood veneer       54,000          19,000      120,000       12,000
Others             2,538,000       1,895,000    2,472,000    2,149,000

Total            $35,680,000     $37,573,000  $35,822,000  $38,539,000

Wood Product        2000         2001

                        U.S. Dollars

Hardwood logs     16,763,000   14,245,000
Hardwood lumber   13,005,000    8,396,000
Softwood logs        265,000    7,954,000
Softwood lumber    9,431,000    2,736,000
Hardwood veneer    6,499,000    3,257,000
Softwood veneer      674,000      732,000
Others               867,000     2,112,00

Total            $47,504,000  $39,432,000