Current Issue

Indonesia's Furniture Industry 2010

An Independent View by Michael Buckley

In the first of a series of short commentaries, wood industry specialist MICHAEL BUCKLEY writes on his reasons for believing that the furniture industry in indonesia can go far in the global market of the next decade.

ABOUT THE AUTHOR

Michael Buckley is an acknowledged expert on the uses and market applications of hardwoods and has a Masters degree in US and European hardwoods. He is a Fellow of the Institute of Wood Science and works with leading furniture designers and many architects. Now based in Singapore, he gives many presentations on international wood issues.

THERE ARE MANY reasons to believe that in Indonesia today, most of the fundamental elements are in place for a new phase of growth in the production and export of wood furniture. Some of them are:
• Stable government and economy
• Stronger banking and finance infrastructure than a decade ago
• Improved national credit rating by international agencies
• Skilled worker base with a well established wood culture
• Competitive labour rates
• Woodworking infrastructure and management
• Improving design capabilities

Stable government and economy head the list as a prerequisite for successful industry and trade. The signs continue to emerge, such as the recent raising by S&P rating for Indonesia from BB- to BB, as well as S&P rating upgrades for three Indonesian banks.

The recent 3rd IFFINA held in Jakarta was a refreshing reminder that the industry is ready to take on the challenge. Organised by the furniture association (ASMINDO), this show was much larger than in 2009, with more contemporary designs and a significant increase in registrations of overseas buyers – all positive signs. Ambar Tjahyono, ASMINDO’s Chairman, is calling for a 15-20 percent increase in exports this year and, given the improved offering from many manufacturers, this might even be possible. For this to happen there are some long-term challenges, which in Southeast Asia today may be possible to mitigate.

First, Indonesia needs to attract more foreign investment in manufacturing, to ensure competitiveness through technology. It is interesting to note that at least one leading Japanese investor is reported to have transferred its focus from Thailand to Indonesia and more could follow. For this to accelerate the second challenge needs addressing.

Second, Indonesian woodworking industries all continue to suffer from a negative image internationally, related to past mismanagement of its forest resources, which deter buyers in some markets. The extent to which the country has tackled such issues, in many cases operating with local plantation and imported wood species such as European and American hardwoods, needs reinforcing in the marketplace.

Finally, on the strength of IFFINA 2010, a campaign to return international buyers to Indonesia would be well justified. As this journal has pointed out, there are far too many furniture shows in Southeast Asia and China in the early part of the year for overseas buyers to cover. Nonetheless in their 2011 travel plans it might well be worth swinging by Jakarta to see how things are changing.