Thursday, 18 December 2008

RI risks losing $435.6m in wood exports on new U.S. policy

RI risks losing $435.6m in wood exports on new U.S. policy

Mustaqim Adamrah, The Jakarta Post, Jakarta 17th December 2008

Indonesia could potentially lose at least US$435.6 million a year in exports of wood-based products to the United States if it fails to address planned certification requirements next year, a study has found.

Vanda Mutia Dewi, Greenomics coordinator for forestry and mining, said Tuesday the losses would be inevitable if no effort was made to anticipate possible failures in policy implementation.

The policy, dubbed the Lacey Act, requires exporters of wood-based products to have certification that their wood is not sourced from illegally felled trees.

"The government should prepare (a set of policies) from now on as the Lacey Act will be effective in early April for wood products and in July for paper and its derivatives," she said.

"The country could lose $435.6 million in exports every year if the industry fails to meet requirements stipulated in the Act."

The Act is designed to combat illegal logging worldwide by banning any trade of products allegedly derived from illegal logging, which remains widespread in Indonesia.

Under the regulation, according to Vanda, global traders selling wood-based products to the United States are required to have a certificate issued by the U.S. government via internationally recognized agencies.

According to Greenomics, last year Indonesia shipped wood-based products worth $242.2 million, and paper and paper derivatives worth $193.4 million to the United States.

The amounts accounted for 6.94 percent of the country's total exports of wood-based products.

According to the Central Statistics Agency (BPS), exports of wood and wood-based products amounted to US$2.48 billion in the first 10 months of this year, a 3.9 percent drop from the $2.58 billion booked in the same period last year.

Vanda also said the government should compare standards stipulated in the Lacey Act to local standards issued by, for example, the Indonesian Ecolabel Institution.

She recommended the government consult with the World Trade Organization to ensure the implementation of the Lacey Act referred to "fair trade".

"That is necessary to avoid possible domination by foreign agencies in issuing certificates in the name of the Lacey Act," she said.

The implementation of the Lacey Act should also be based on facts, "not documents", she added.

Earlier this month, the government set up a team to address issues in relation to certification requirements.

Certification includes Sustainable Forest Management (SFM), Verification of Legal Origin (VLO) and Chain of Custody (CoC). The VLO and CoC confirm the legality of the wood, and the SFM certifies the wood was legally felled and comes from a sustainable forest.

An exporter can choose any of the three certificates.

Exports of wood-based products to the United States (in millions of dollars)


1. Plywood, veneer panels, solidified blocks--127.8--112.2
2. Wood for construction, housing, floor

panels, roof panels------------------------113.8---95.6
3. Wooden ornaments, kitchen sets, boxes-------33.9---34.4
4. Paper and paper derivatives-----------------145.7--193.4


Source: Greenomics