Indonesia has one of the largest furniture export industries
in the world. Based on Indonesian statistics, Maskayu bulletin
estimates that the Indonesian furniture sector comprises
more than 3,500 companies with over two million
workers. Wooden furniture dominates the furniture sector,
accounting for two-thirds of the total furniture exports.
The furniture industry is mainly concentrated in Java
(notably Jepara, Semarang, Solo and Surabaya), where
furniture accounts for about 40% of Java’s total exports.
Jepara is particularly known for its crafted wooden
furniture. Small firms market their products through a
network of furniture shops that sells locally. Exports are
carried out through sub-contracting arrangements and
small enterprises play an active role in export.
The Indonesian furniture industry relies heavily on timber
as its raw material with an annual requirement of 4.5
million m3. Although Indonesia is the world’s second
largest timber producer, the industry faces shortages of
raw materials. The main timber species for wood carving
are teak, mahogany and sonokeling (Dalbergia latifolia).
Almost half of the total national rattan production is based
in Cirebon.
Wooden furniture accounts for the bulk of the exports
Indonesia is after Malaysia the world’s second largest
tropical exporter of furniture. Indonesia’s furniture exports
are expanding, growing from $1.58 billion in 2004 to
$1.65 billion in 2005 (Maskayu, 2007). The chart above
shows the upward trend of Indonesian furniture exports.
According to Maskayu, exports are poised to grow 3.5% in
2006 after growing at about 4% a year during the past five
years. A higher growth of 5-7 % is expected in the coming
years. The chart below shows that wooden furniture
accounts for three-quarters of the total furniture exports,
followed by rattan (21%), metal (2%) and bamboo (1%)
furniture. The major markets for Indonesian wooden
furniture are the USA (24% of total exports), Japan (7%),
the Netherlands and France (5% each). The USA is the
main export destination for rattan furniture.
Challenges faced by the furniture industry
Indonesia faces several challenges in expanding its
furniture exports. Firstly, despite its vast forest resources,
illegal timber logging and trade have affected the supply
of timber to the furniture sector. This was aggravated by
the government’s reduction of the logging quota for
natural forests to 5.7 m3 in 2004 and 5.4 million m3 in
2005. Secondly, China, the world’s largest producer and
exporter of furniture, is gaining market share in key export
markets. Thirdly, increasing power and fuel costs have
also raised operating costs, eroding Indonesia’s
competitiveness. Indonesia has sustained its
competitiveness by making progress in both quality and
design enhancement. |
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