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1 INTRODUCTION
1.1 Background
Indonesian forestry sector faces some problems seen both from economic and environmental perspective. Being one of the largest tropical countries in the
world, Indonesia faces increasing problems with deforestation and related environmental degradation issues. For some periods, natural forests have been
increasingly and unsustainably exploited for gaining some economic benefits. Although Indonesia has comparative advantage with a given condition of forest
resource abundance, but nowadays, Indonesia has been entering into a period of decreasing forest resource availability due to a highly degraded growing stock and
declining in forest area. If it is compared to the other countries which have experienced substantial declines in forested land during 1990 until 2005,
Indonesia ranks second in terms of the absolute loss of area and fourth in relative terms with about 15 of the total land area World Trade Organization, 2010.
Even though there are various estimations of the rate of deforestation, but it is generally believed that deforestation in Indonesia reaches the level of at almost
one million hectares annually, with a significant portion resulted from conversion to large-scale estate crops and timber plantation Ministry of Forestry of
Indonesia, 2005.
Table 1 Deforestation rate in Seven Main Islands in Indonesia during 2000-2005
Island 2000-
2001 2001-
2002 2002-
2003 2003-
2004 2004-
2005 Average
Sumatera 259.500 202.600
339.000 208.700 335.700 269.100
Kalimantan 212.000 129.700
480.400 173.300 234.700 246.020
Sulawesi 154.000 150.400
385.800 41.500 134.600
173.260 Maluku
20.000 41.400
132.400 10.600
10.500 42.980
Papua 147.200 160.500
140.800 100.800 169.100 143.680
Jawa 118.300 142.100
343.400 71.700
37.300 142.560
Bali Nusa
Tenggara 107.200
99.600 84.300
28.100 40.600
71.960 Indonesia
1.018.200 926.300 1.906.100 634.700 962.500 1.089.560 Source: Ministry of Forestry of Indonesia 2006
2 Timber industry is one of the main sources of income from forestry sector
in Indonesia. Due to the increasing growth of GDP and domestic demand from construction industry, Indonesia has grown to become the largest tropical timber
producer in the world with 32.4 million m
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annual production since 2007 ITTO, 2008, and thus has contributed to cover almost a half of world supply of tropical
logwood as shown in the figure 1. The share of tropical timber in total world timber is relatively high. In 2009, reported by ITTO 2010, the share of tropical
wood products to total world timber production is 13 percent for logwood, 14 percent for sawn wood, and 24 percent for plywood. As it is in the production, its
share in total world timber export is high as well, and even a bit higher, i.e. 22 percent for logwood, 11 percent for sawn wood, and 30 percent for plywood.
Figure 1 . Tropical Logwood Production of Five Top Producer Countries During 2008-2010
Source: International Tropical Timber Organization, 2010 A major shift has been occurred in Indonesian timber industry from its
earlier role as major tropical logwood exporter in the world market, which contributed for over 40 percent of world exported log in 1979, to processed
products exporter. This was due to the change in the government ‟s orientation to
promote wood processing export since the early 1980‟s and the introduction of log
5000 10000 15000 20000 25000 30000 35000 40000
Others Nigeria
Malaysia India
Brazil Indonesia
2010 2009
2008
3 export ban in 1987. As reported by the Ministry of Forestry 2005, for most
tropical wood products, Indonesia has been known as a country with a relatively high share of export to production for sawn wood 22.2 percent, plywood 62.8
percent, wood pulp 37.4 percent, new print 64.77 percent, and paper 36.8 percent. However, in the last decade, Indonesian timber industry has experienced
a declining trend in production as well as its share in the world market as shown in the figure 2. During 1995-2011, the export of plywood statistics has shown a
substantial decline. In 2003 the country experienced an extreme reverse production slope with a decline of more than fifty percent in compare to the
previous year. It is quite contrast to the fact that, before 2002, Indonesia was the largest exporter of plywood, before it was replaced by China afterwards. While
for the sawn wood, the trend is quite contradictory. During 1995-2004 the export of sawn wood was increased before it started to decline afterwards.
Figure 2 Annual Export of Wood Primary Wood Products of Indonesia During 1995-2011
Source: FAO, 2012
1.2 Research Problem
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