DEVELOPMENT OF INDONESIAN RATTAN PROCESSING INDUSTRY

Development of Indonesian Rattan Processing Industry

Tuesday, November 27, 2007

DEVELOPMENT OF INDONESIAN RATTAN PROCESSING INDUSTRY

In order to showcase the best results from the design of Indonesian rattan furniture and rattan handicrafts and to increase promotion and marketing for the development of the national rattan processing industry, the Indonesian Rattan Furniture and Rattan Crafts Exhibition was held, this exhibition was attended by Indonesian rattan furniture and handicraft manufacturers, who are members of the ASMINDO and AMKRI members. This exhibition was held from 27 to 30 November 2007.

To increase the competitiveness of the national rattan processing industry, it can be seen from the development of the rattan industry as follows:

1. Potential of Rattan Raw Material

Indonesia is the largest rattan-producing country in the world, it is estimated that 80% of rattan raw materials worldwide are produced by Indonesia, the rest is produced by other countries such as the Philippines, Vietnam and other Asian countries.

Rattan producing areas are  Kalimantan, Sumatra, Sulawesi and Papua with Indonesia’s rattan potential of around 622,000 tons/year

2. Development of Rattan Processing Industry (2003-2006)

In the 2003-2006 period, the capacity of the national rattan processing industry only experienced an average growth of 0.38% per year or only increased from 545,405 tons/year to 551,585 tons/year and the realization of its production decreased from 381,784 tons in 2003 to 372,761 tons in 2006 or grew by an average – 0.79% per year.

The export volume of processed rattan decreased from 193,078 tons in 2003 to 172,782 tons in 2006 or decreased by -3.63% per year on average, but on the other hand the value increased from US$ 359 million to US$ 399 million or increased an average of 3.58% per year. This indicates an increase in the export selling price per unit of processed rattan products. Meanwhile, for imports of processed rattan, although the volume and value are relatively small compared to the volume and value of exports, the growth is very rapid, so it is necessary to watch out for only in the 2003 – 2006 period, imports of processed rattan increased from 788 tons (worth US$ 1.41 million). ) increased to 2,709 tons (worth US$ 3.74 million) or the volume of imports grew by an average of 50.92% per year, while the value increased by an average of 38.43% per year.

Most of the rattan industry is located in Cirebon and its surroundings. In the period 2001 – 2004, both the number of companies, production, exports and employment in the rattan processing industry sub-sector in Cirebon increased, where the number of companies increased from 923 business units to 1,060 business units, production increased from 62,707 tons to 91,181 tons, exports increased from 32,871 tons (worth US$ 101.67 million) to 51,544 tons (worth US$ 116,572 million) and employment increased from 51,432 people to 61,140 people. However, since 2005, both production, exports and employment in the rattan processing sub-sector in Cirebon have decreased significantly. And the decline continued in 2006.

In 2007, several rattan furniture producers in Cirebon experienced a decline in production, including those that were originally able to export 120 containers per month, currently only able to export 15-20 containers, and some are no longer producing. This is due to the difficulty of obtaining quality rattan raw materials, but on the contrary in competing countries these raw materials are easier to obtain. As a result, many small rattan entrepreneurs who were originally sub-contractors did not find work anymore, causing a lot of unemployment. Besides that, it also has an impact on the delay in returning credit by the rattan processing industry to banks (aka bad loans). If this is not addressed immediately, it is possible that the rattan processing industry will become increasingly worse off.

The decline in the rattan processing industry, both on a national scale and in the Cirebon industrial center since 2005, was allegedly caused by the issuance of the Minister of Trade Decree No. 12/M-DAG/PER/6/2005 concerning Rattan Export Provisions, which allow the export of rattan raw materials and semi-finished rattan (plus the illegal flow of rattan raw materials abroad), making it difficult for the domestic rattan processing industry to obtain raw material. On the other hand, the rattan processing industry in competing countries, especially China and Taiwan, is growing rapidly again, thereby seizing market share and market potential for rattan product exports from Indonesia.

On the other hand, China’s export of rattan products, which in 2002 was still in balance with Indonesia’s at US$ 340,000, in 2006 had increased 4 times, while Indonesia as a producer of rattan raw materials, exports of rattan products decreased.

3. Policies in the Rattan Sector and Its Impact on the National Rattan Industry

Prior to 1986, Indonesia was the largest exporter of rattan raw materials in the world, while the national rattan processing industry at that time was not yet developed.

Since 1986, with the issuance of the Decree of the Minister of Trade No. 274/KP/X/1986 concerning the ban on the export of rattan raw materials, the national rattan processing industry has experienced very rapid development, increasing from only 20 companies to 300 companies. Meanwhile, many overseas rattan processing industries (Taiwan and Europe) whose raw materials rely on supplies from Indonesia have gone bankrupt and shifted their business to Indonesia, especially in the Cirebon area.

In a further development, when the export of rattan raw materials was reopened in 2005, namely with the issuance of the Decree of the Minister of Trade No. 12/M-DAG/PER/6/2005 concerning Rattan Export Provisions, the development of the national rattan processing industry has begun to be hampered and business activities have become sluggish, resulting in unemployment, bad loans, reduced foreign exchange earnings and the declining contribution of the national rattan processing industry in GDP formation. On the other hand, in competing countries such as China, Taiwan and Italy, the rattan processing industry has revived and developed very rapidly.

4. The problems faced by the Rattan Processing Industry include

·  Raw material

The national rattan processing industry is experiencing difficulties in obtaining raw materials due to, among others, the existence of a policy of exporting rattan raw materials and the widespread smuggling of rattan abroad.

Production mastery of finishing technology is still lagging behind and the design of processed rattan products is still determined by buyers from abroad (job orders).

· Marketing

Weak market intelligence, resulting in limited export market information.

 5. Development Strategy

To overcome the problems faced by the rattan processing industry mentioned above, the following strategies were developed:

Reviewing the policy on exporting rattan raw materials and increasing the eradication of rattan smuggling abroad.

Increasing market intelligence capabilities, by optimizing the function of Atperindag and diplomatic representatives abroad, actively participating in prestigious rattan product exhibition events abroad.

6. Follow-up Policy

To revive the national rattan processing industry, support from all parties (stakeholders) is needed to cooperate with each other in a synergistic manner by prioritizing national interests above personal, group and sectoral interests.

It is necessary to review the Rattan Export Provisions contained in the Regulation of the Minister of Trade No. 12/M-DAG/PER/6/2005, in order to ensure the continuity of supply of rattan raw materials in the country, as well as to increase the competitiveness of finished rattan products abroad.

Ministry of Industry

Bureau of Public Relations and Public Relations

Source :

https://www.kemenperin.go.id/article/471/Development-Industri-Pengolahan-Rotan-Indonesia