Indonesia’s timber market on the rise

14 July 2023

A plywood warehouse in Indonesia. Photo: Ir. Herman Prayudi

Yokohama, Japan, 14 July 2023: Indonesia’s timber market showed signs of recovery in June despite insufficient international orders, according to the latest edition of the GTI Report. Indonesia’s Global Timber Index (GTI) registered 55.3%, putting it above the threshold value of 50% for the second time since April. A GTI value above 50% indicates growth in the sector.

Less positively, GTIs for Gabon (44.3%), Malaysia (40.1%), Mexico (46.6%), the Congo (36.8%) and China (48.2%) were all below the threshold value in June. Nevertheless, all these GTIs were higher than in May, indicating that the contraction of the timber industry has eased in these countries.

The news was worse in Brazil, where the GTI was 30.8% in June, down by 2.1 percentage points from May, indicating continued sluggishness in timber production and manufacturing. This trend was also apparent in feedback from Brazilian enterprises, which reported that the appreciation of the Brazilian real against the United States dollar was unfavourable for timber exports and the Asian market was showing a preference for Russian products, resulting in lower sales volumes for Brazilian products and a significant decline in international orders.

GTI-participating enterprises made various suggestions for tackling challenges in their countries. For example, companies in the Congo called on the government to ensure forest management consistency and promote the development of tropical timber markets. In Mexico, businesses want more financial support to enable them to upgrade their equipment. Enterprises in Indonesia recommended more effort on marketing as well as more international market access, cooperation on investment, tariff reductions in international trade, and use of digital technology.

The European Union Deforestation Regulation officially entered into force on 29 June, and some countries have taken proactive measures. Indonesia and Malaysia sent a joint trade mission to Brussels to urge the European Commission to recognize their efforts in protecting the environment and avoiding deforestation in the palm-oil sector. The International Tropical Timber Technical Association launched a training programme on timber legality and traceability and held sessions in Ouesso and Pointe-Noire with the aim of strengthening private-sector capacity in timber legality and traceability.

The GTI has been developed as part of collaborative work between ITTO, the Macao Trade and Investment Promotion Institute and the Secretariat of the Global Green Supply Chains initiative, with about 160 enterprises and companies also participating. The aim is to facilitate the exchange of business information and data on the timber trade and promote collaboration among stakeholders in a stable, transparent and predictable business environment.

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