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Tuesday, January 27, 2009

Log Export expected to raise timber price

Jakarta (ANTARA News) - The Forestry Ministry's plan to open exports of logs produced from timber estates (HTI) would help HTI businesses strengthen their bargaining power in facing domestic pulp and paper industries at home, an executive said.

"It will increase HTI businessmen's bargaining position. So far, they are facing difficulties in developing their timber estates due to unfavorable prices," President Director of state-owned forestry company PT Inhutani IV, Mustoha, said here on Monday.

He said that Asia Pulp&Paper and Riau Andalan Pulp&Paper (Riaupulp) were two pulp and paper giants which absorbed some 85 percent of the timber produced by HTIs.

Mustoha who spoke during a discussion with forestry reporters on the government plan to export logs, said that the imbalance between pulp industries and HTI businesses caused a significant disadvantage to HTI companies.

Mustoha said the HTI log prices, which were set at a range of Rp220,000 to 230,000 per cubic meters, were less profitable as HTI businesses could not maintain the development and expansion of their estates.

"So far, the prices offered by the pulp and paper companies are too low but HTI owners have no choice because there are only two companies which purchase their products," Mostoha said.

He said that demand for timber in the world market in the last several years remained on the rise, although pulp and paper prices dropped to US$560 per ton.

Therefore, Mustoha expressed hope that the Indonesian Forestry Businesses Association (APHI) would play a decisive role in fixing prices of HTI logs. Thus, HTI businesses could resume the development of their forestry estates.

The Indonesian government is studying the possibility of exporting logs produced from timber estates (HTI).

According to the director general for timber estate development of the Ministry of Forestry, Bejo Santoso, the study on the possibility of log exports was aimed at expanding the export market and in response to a decline in domestic demand for timbe.

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