ASMINDO
Impact of the FLEGT Licencing Shipment Test in
Kendal : Strengthening SME Furniture Production
Made of Timber
By ;
Indonesia Furniture Industry & Handicraft Association
(Asmindo)
INTRODUCTION
• The Indonesian Furniture industry is normally classified based on its raw
material such as wooden furniture, rattan, plastic, metal, bamboo and
others.
• Data from the Indonesian Statistical Bureau (BPS) to April 2013 showed that
wooden furniture export value reached 55,24% of the total Indonesian
furniture export value.
• The Indonesia Law No. 20/2008 tentang SMEs, classifies businesses based
on investation value (excluding land and building) as follows :
Small
:
50 – 500 million rupiah
Medium
:
500 million – 10 billion rupiah
Besar
:
more then 10 billion rupiah
• The Indonesian furniture industry is dominated by the SMEs (small 45%,
Medium 37%, Big 18%).
INDONESIA FURNITURE EXPORT 2009 – 2013
(milion USD)
Source: Indonesia’s Statistical Bureau, Analyzed by ASMINDO
INDONESIA FURNITURE EXPORT BY RAW
MATERIAL 2011 - 2013
USD
No
2011
A
1
2
3
4
5
6
%
2012
USD
%
Up to April 2012 Up to April 2013
Furniture :
Wooden
824,966,947
977,452,109
18.5%
327,894,803
332,953,742
1.54%
Rattan
160,311,190
282,711,031
76.4%
93,368,448
82,021,728 -12.15%
Bamboo
10,468,342
7,527,717
-28.1%
3,162,271
2,573,928 -18.61%
Metal
84,268,271
98,032,730
16.3%
38,744,726
40,977,984
Plastic
51,362,752
30,583,848
-40.5%
26,677,645
23,971,709 -10.14%
Others
632,972,285
382,840,502
-39.5%
162,465,274
120,198,433 -26.02%
Total Furniture
1,764,349,787
1,779,147,937
0.8%
652,313,167
602,697,524
5.76%
-7.61%
Source: Indonesia’s Statistical Bureau, Analyzed by ASMINDO
INDONESIA FURNITURE EXPORT BY
RAW MATERIAL, APRIL 2013
BAMBOO
0.43%
METAL
6.80%
OTHERS
19.94%
PLASTIC
3.98%
WOODEN
55.24%
RATTAN
13.61%
Source: Indonesia’s Statistical Bureau, Analyzed by ASMINDO
Top 10 Indonesia Furniture Export
by Country of Destination, April 2013
Source: Indonesia’s Statistical Bureau, Analyzed by ASMINDO
THE CURRENT CONDITION OF FURNITURE SMEs
• 80% of the raw material used by the furniture industry is
wood from Java Island (Perhutani, community forest,
plantation, recycled wood, etc) while the rest are from
outside Java Island or imported wood (for big industry).
• The supply chain system for the furniture SMEs, majority is a
sub-contracting or supplier system, where exporters work
with small enterprises or home industries. One exporting
company can work with a few up to hundreds of suppliers.
COMMON CHALLENGES FOR SMEs IN THE
IMPLEMENTATION OF SVLK
Internal Factors :
• Legality Documents as required by SVLK
incomplete.
• Raw material legal documents
Not preperly
documented (The Standard requires small enterprise
to document the raw material purchase documents
up to 3 months prior to audit or up to 1 year for
medium and big companies.
External Factors :
• Policies need to be synchronized between central government and
districht authorities.
• There are certain local regulations that become obstacles in the
implementation of SVLK, especially due to the difficulties, in terms of
complexity and cost, in getting such legal documents. For instance in
getting environmental documents such as UKL-UPL.
• The limited number of registered FAKO administrator (Ganis) at Furniture
cluster areas.
• There are still different perceptions among auditors in interpreting the
SVLK standard.
• There are occurrences of V-Legal documents being commercialized in
some areas.
OPPORTUNITIES
• To open and expand access of international furniture
market especially to EU Countries, which is one of the most
important export destination beside The US and Japan.
• To build the positive image of Indonesian furniture product
as legally verified in the internatioanl market.
• Internally the implementation of SVLK system improves
production efficiency.
• To reduce the unfair competition among the Indonesian
furniture exporters.
10
HOW THE KENDAL SHIPMENT TEST
STRENGTHENING FURNITURE SMEs
• The shipment test demonstrates that SVLK and the corresponding
V-Legal is a robust system to verify wood legality.
• Increasing the self-confidence among the Indonesian wood sector
industry that the international market appreciates and accepts the
SVLK verification statement.
• Branding the wooden furniture product from Indonesia as legally
verified products and thus achieving a better market position.
• Building market trust (credibility).
• Opening a wider market opportunities to all SVLK verified furniture
exporters .
FOR IMPORTERS :
WHY SOURCING FROM SVLK VERIFIED COMPANIES
• Better company image for only sourcing verified legal
timber.
• Better market position as a legal player
• No complicated due dilligent requirement, saving time
and money (once VPA is endorsed by all EU state
members)
• Secured supply chain, because starting January 2014
only SVLK holders are able to export timber product
SUPPORTS NEEDED
• Commitment from the government to eradicate illegal logging and
supports the implementation of legal timber trade.
• Law enforcement and improvement of forest management
• Cross departments communication and cooperation in regulating
legal timber trade.
• Development of market access through trade promotion of legal
timber from Indonesia
THANK YOU