Indonesian furniture industry weighed down by regulations and inadequate raw materials supply

The Vice Chairman of the Raw Materials Sector in the Indonesian Furniture and Handicraft Industry Association, Andang Wahyu Triyanto, has said the recent poor export performance of the furniture sector is the result of over burdening regulations and problems with raw material supplies.

She said the introduction of the SVLK and FLEGT license systems are holding back the industry and while the FLEGT license was promoted as a means to secure more exports to the EU this has just not happened. She said “so far, FLEGT implementation has not significantly raised sales’.

Not only is FLEGT an issue but also the Indonesian Timber Legality Verification System (SVLK) is a problem, both of which are considered as hampering the furniture and handicraft industries.

In related news, Gati Wibawaningsih, Director General of Small and Medium Industry in the Ministry of Industry, revealed that inadequate raw material supplies, overlapping regulations and the decline in the number of craftsmen in the furniture and handicraft sectors are major problems.

In addition, inadequate attention to market promotion has allowed competitors to capture international market share from Indonesia. He said Indonesian manufacturers have become less competitive than those in Malaysia, Singapore and Vietnam.

Indonesian Furniture exports in 2015 totalled US$1.21 billion but fell to US$1.04 billion in 2016. Despite the problems in the furniture sector the government is aiming for furniture and handicraft export in 2018 to top US$2 billion.

Gati said that while the government plans to increase its support for export promotion manufacturers should improve their productivity and be more innovative in designs.