Indonesia
Last updated: 07 March 2020
Profile
Profile
Forestry and legality
| Source | ||||
|---|---|---|---|---|
| Region | South-eastern Asia | (2019) | UNSD | |
| FLEGT status | FLEGT licensing | (2019) | FLEGT Facility | |
| Forest area | 91 | million ha | (2015) | FAO |
| Deforestation rate | 0.68 | million ha/year | (2010-2015) | FAO |
| Planted area | 4.946 | million ha | (2015) | FAO |
| Tree cover loss | 25.6 | million ha | (2001-2018) | Global Forest Watch |
| Tree cover loss (%) | 16 | % | (2001-2018) | Global Forest Watch |
| Tree cover gain | 6.96 | million ha | (2001-2012) | Global Forest Watch |
| FSC certified area | 2,955,291 | ha | (December 2019) | FSC |
| PEFC certified area | 3,912,747 | ha | (December 2019) | PEFC |
| Double certified area (FSC & PEFC) | 0 | ha | (Mid-2019) | FSC & PEFC |
VPA status of Indonesia
In November 2016, Indonesia became the first country to issue FLEGT licences, having signed a VPA with the EU in 2011.
Full VPA implementation means that Indonesia has structures in place to issue FLEGT licences as well as manage, monitor and evaluate the legality assurance system.
To satisfy the terms of the FLEGT VPA, Indonesia’s legality assurance and licensing system had to:
- include a timber legality definition stating aspects of national laws with which the system requires compliance;
- meet strict chain of custody requirements, as set out in the VPA’s Appendix V, ensuring unverified products do not enter supply chains;
- be subject to ‘Periodic Evaluation’, a minimum annual assessment to ensure the timber legality assurance system is functioning properly and effectively (VPA Annex VI);
- be backed by market monitoring, assessing the impact of FLEGT licensing on Indonesia’s trade in the EU market (VPA Appendix VII);
- be subject to civil society monitoring;
- include procedures for issuing FLEGT licensing documents, licensing document formats and for information exchange procedures between EU authorities and licensing authorities in Indonesia (VPA Attachments III and IV).
- include a timber legality definition stating aspects of national laws with which the system requires compliance;
From November 2016, Indonesia’s established SVLK framework became the VPA timber legality assurance system for exports to the EU.
The SVLK ‘V-Legal’ documentation and label is maintained as the legality assurance validation for exports to non-EU countries.
JPIK, the Indonesian civil society organisation network, is officially recognised as independent monitor as required for FLEGT licensing.
Under scrutiny by JPIK and EU and Indonesian authorities, the Indonesian licensing and assurance system has continued to evolve.
In November 2018, the EU FLEGT and REDD facilities produced a working paper looking into the feasibility of amending the SVLK to apply to customary forests to support livelihoods and forest protection. To date only a limited area has been recognised as customary forest but it could extend up to 2 million hectares.
Feedback in IMM surveys from importers and EU Competent Authorities, and during IMM trade consultations, indicates that generally the FLEGT licensing system has worked effectively and efficiently.
One issue has been mismatches in HS customs codes between those applied on licences and those used by EU customs. However, this seems to have been largely resolved in 2018 through dialogue between EU and Indonesian authorities. The number of licences issued after consolidation of shipments, which tended to lead to errors, has also been reduced.
To further streamline licence administration, the EU and Indonesia are looking at the feasibility of implementing e-licensing.
Forest resources in Indonesia
According to Indonesian Ministry of Environment and Forestry data, after declining by 3% to 48.4 million m3 in 2016, log supply in Indonesia increased by 12% to 54.3 million m3 in 2017 and by a further 7% to 57.9 million m3 in 2018.
Much of the increase in log supply in 2017 and 2018 was due to a continuing rise in production from industrial plantations and, to a lesser extent, community forests.
In 2018, 70% of Indonesia’s log supply came from industrial plantations, up from 61% in 2014, while 15% came from community forests, the same proportion as in 2014. Between 2014 and 2018, the share of log supply from land clearing declined from 7% to 1%, and the share from natural forest concessions fell from 11% to 9%.
Industry
Industry
Economic and industrial status
| Source | ||||
|---|---|---|---|---|
| GDP | 1042.2 | billion USD | (2018) | World Bank |
| Population | 267.7 | million | (2018) | World Bank |
| Income group | Lower middle income | (2019) | World Bank | |
| Ease of Doing Business (EDB) Rank | 73 | / 190 | (2019) | World Bank |
| Global Competitiveness Index Rank | 50 | / 141 | (2019) | World Economic Forum |
| Liner Shipping Connectivity Index | 44.4 | (maximum value in 2004 = 100) | (2019) | World Bank |
Timber industry competitiveness of Indonesia
Indonesia is one of the world’s leading producers and exporters of tropical timber, competitiveness having been built, historically, on a large natural resource and a strong local tradition of wood knowledge and craftsmanship.
Indonesia was ranked 45th on the Global Competitiveness Index in 2018, with slightly higher scores than in 2017. It retained third place among the VPA partner countries, behind Malaysia (25th) and Thailand (38th). Of two main Asian non-VPA competitor countries, China (28th) ranked higher and India (58th) lower.
On the Ease of Doing Business Index, Indonesia ranked 73rd in 2018, hardly changed from 72nd in 2017. Malaysia (15th), Viet Nam (69th) and China (46th) all ranked higher than Indonesia, with India (77th) coming out lower.
Indonesia’s ranking in the Connectivity Index has improved in recent years but remains a challenge for export industry competitiveness. Indonesia was ranked 36th on the index in 2018, considerably lower than key competitors including China (1st), Malaysia (5th), and Viet Nam (19th), but marginally better than Thailand (36th) and significantly better than tropical supplying countries in Africa and South America.
EU timber importers surveyed by IMM in 2018 highlighted that Indonesian suppliers tend to offer higher quality and reliability relative to other non-EU suppliers of competing products.
The risk of intellectual property theft was also regarded as lower in Indonesia than in some other countries, notably China.
There was almost unanimous agreement at all IMM Consultations in 2018 and early 2019 that FLEGT licensing has made importing from Indonesia into the EU easier compared to exercising due diligence.
However, trade data indicates that FLEGT licensing has had little impact on the market share of Indonesian products in the EU and has not overridden the on-going effects or direction of larger economic trends. Equally, licensing does not seem to have had any detrimental effect on import share.
Several agencies stepped up their communication and marketing of FLEGT-licences in the EU during 2018, but FLEGT’s profile is still low compared to forest certification initiatives such as FSC and PEFC.
Trade Overview
Trade Overview
Highlights
Most wood supplied to Indonesia’s wood processing sector is from domestic forest sources, with a growing dependence on plantations. Imports of primary wood are limited.
Indonesia does not allow log exports and limits sawnwood exports to S4S (products surfaced on four sides). As a result, exports include a wide variety of further-processed timber products, ranging from S4S, veneer, plywood, pulp and paper to doors, furniture and handicrafts.
Indonesia’s timber exports were rising in 2017 and 2018 with particularly strong growth in China, but gains were also made in the EU for plywood, doors, charcoal and S4S.
However, exports of Indonesian wood furniture and decking/moulding to the EU declined during this period, due both to supply side issues and intense competition from other wood suppliers and non-wood materials.
| Imports (3,441.46 Million USD) | Exports (12,452.58 Million USD) | ||||
|---|---|---|---|---|---|
| Region | Country | Product | Product | Country | Region |
Indonesia’s production, imports, exports and domestic consumption of primary wood products in 2018
(data source: ITTO) Hover over the chart to see the value.
Trend in production, imports, exports and domestic consumption of primary wood products (logs, sawnwood, plywood, and veneer) in Indonesia
(data source: ITTO) 
Imports
Imports
(data source: STIX)
Highlights
While still dwarfed by domestic production and exports, Indonesia’s own imports of timber and timber products are rising in several product groups. Total Indonesian imports of timber and timber products increased by 35% to 4.23 million tonnes between 2015 and 2018.
Much of the recent growth in import quantity in Indonesia is driven by logs, chips and fuel wood of low unit value. Logs are derived almost exclusively from Malaysian plantations and are destined for the pulp sector. Chip and fuel wood imports are derived from Malaysia and Viet Nam, with a smaller volume from Australia.
Indonesian imports of sawnwood were rising only slowly between 2015 and 2018 and total volumes are still very restricted, comprising mainly hardwoods from the USA, France and Germany, and softwoods from New Zealand.
The value of Indonesia’s imports of pulp and paper rose steeply between 2016 and 2018. Pulp import value increased from less than US$1 billion to over US$1.2 billion during this period, while imports of paper increased from around US$1.3 billion to over US$1.5 billion.
The rise in pulp imports came mainly from Canada and the USA, while pulp imports from the EU have fallen sharply.
Indonesia’s imports of paper products are sourced from a wide variety of countries. The EU was formerly the largest external supplier, but recently has been overtaken by China.
China is the leading external supplier of wood furniture to Indonesia, with sales of $128 million in 2018, 25% more than in 2017 but a decline compared to 2015 and 2016. Other leading external suppliers are Thailand and Japan.
Trend in Indonesia’s timber product imports by region (12-month rolling averages)
Indonesia’s top 5 import partners in the latest 12 months (from January 2019 to December 2019)
| Country | Value (Million USD) |
|---|---|
| China | 619.57 |
| United States | 464.74 |
| Canada | 345.30 |
| Thailand | 205.19 |
| Viet Nam | 194.86 |
Indonesia’s timber product imports by product group in the latest 12 months (from January 2019 to December 2019)
| Product | Value (Million USD) |
|---|---|
| Paper | 1,578.13 |
| Pulp | 1,071.37 |
| Wood | 523.54 |
| Furniture | 268.42 |
*Timber products are categorized according to Harmonized Commodity Description and Coding System (HS) codes: wood (chapter 44), pulp (chapter 47), paper (chapter 48) and furniture (chapter 94)
Indonesia’s timber product imports by product group and region (12-month rolling averages)
*Timber products are categorized according to Harmonized Commodity Description and Coding System (HS) codes: wood (chapter 44), pulp (chapter 47), paper (chapter 48) and furniture (chapter 94)
Indonesia’s timber product imports from top 5 origin countries by product group (12-month rolling averages)
*Timber products are categorized according to Harmonized Commodity Description and Coding System (HS) codes: wood (chapter 44), pulp (chapter 47), paper (chapter 48) and furniture (chapter 94)
Total value of Indonesia’s wood product imports from top 5 origin countries in the latest 12 months (from January 2019 to December 2019)
(unit: 1000 USD)
| Composite panels | Fuel and charcoal | Joinery | Logs and other raw wood | Other processed wood | Pallets, packaging and barrels | Sawnwood and mouldings | Veneers and plywood | |
|---|---|---|---|---|---|---|---|---|
| All countries | 74,043 | 133,769 | 7,233 | 65,066 | 18,009 | 1,595 | 136,177 | 87,651 |
| Rank 1 | Thailand 25,251 | Viet Nam 93,473 | China 3,730 | Malaysia 48,239 | China 13,957 | Republic of Korea 571 | United States 37,551 | China 57,099 |
| Rank 2 | Malaysia 18,597 | Malaysia 14,035 | Malaysia 1,051 | Viet Nam 5,420 | Germany 867 | Singapore 419 | New Zealand 19,447 | United States 9,932 |
| Rank 3 | New Zealand 16,503 | Australia 9,452 | Russian Federation 570 | China 4,950 | Italy 586 | China 349 | Canada 9,248 | Republic of Korea 2,810 |
| Rank 4 | China 3,838 | South Africa 8,972 | Indonesia 549 | Germany 2,323 | Hong Kong 480 | Brazil 64 | Germany 8,681 | Canada 2,719 |
| Rank 5 | Belgium 2,288 | Thailand 6,924 | United States 316 | France 1,680 | Viet Nam 472 | Bahrain 43 | Uruguay 7,717 | Japan 2,272 |
*Wood products are products under Chapter 44 of Harmonized Commodity Description and Coding System (HS).
Exports
Exports
(data source: STIX)
Highlights
In value terms, Indonesia’s worldwide exports of all timber and timber products (HS 44, 47, 48 and 94) increased dramatically in the two years following FLEGT licensing. Total export value increased by 13% to US$11.4 billion in 2017 and by another 13% to US$12.9 billion in 2018.
While the quantity of Indonesia’s worldwide exports of HS 44 wood products declined in the last two years, export value increased, rising by 3% to US$4 billion in 2017 and a further 12% to US$4.4 billion in 2018.
The recent rise in Indonesia’s export value of pulp (HS 47) and paper (HS 48) products was even more pronounced, increasing by 24% to US$6.2 million in 2017 and a further 15% to US$7.1 billion in 2018.
Export value of Indonesian wood furniture (HS 94) products also increased between 2016 and 2018, but at a slower pace, rising by 2% to US$1.29 billion in 2017 and a further 4% to US$1.34 billion in 2018.
The value of Indonesia’s timber and timber product exports increased to all regions in 2017 and 2018, but was most pronounced to China, the primary destination for Indonesia’s pulp and paper.
The total value of Indonesia’s exports of all timber and timber products to China increased by 39% to US$3.3 billion in 2017 and by an additional 9% to US$3.6 billion in 2018. In 2018, China accounted for 28% of Indonesia’s total export value and 36% of export quantity.
The value of Indonesia’s timber and timber product exports to the EU increased by 2.1% to US$1.03 billion in 2017 and by a further 8.6% to US$1.12 billion in 2018. In quantity terms, exports to the EU increased by 5% to 732,000 tonnes in 2017 but declined by 3% to 713,000 tonnes in 2018.
In 2018, the EU accounted for 9% of Indonesia’s total export value and 5% of export quantity.
The total share of Indonesia’s timber export value in 2018 destined for countries with some form of regulation to mitigate the risk of illegal wood imports was 47%, including Japan (12%), the United States (11%), South Korea (6%), Malaysia (3%), Australia (3%), and Viet Nam (3%), alongside the EU (9%).
Total value of Indonesia’s exports of timber products in the latest 12 months (from January 2019 to December 2019)
| Total export: | 12,452.58 Million USD |
| Total export to EU: | 1,179.56 Million USD |
| Total export to other regulated countries (Australia, Japan, Malaysia, Norway, Republic of Korea, United States of America, and Viet Nam): | 3,198.99 Million USD |
Trend in Indonesia’s timber product exports by region (12-month rolling averages)
Indonesia’s top 5 export partners in the latest 12 months (from January 2019 to December 2019)
| Country | Value (Million USD) |
|---|---|
| China | 3,029.76 |
| United States | 1,441.21 |
| Japan | 1,370.96 |
| Republic of Korea | 767.33 |
| India | 502.70 |
Trend in Indonesia’s timber product exports to EU and other regulated countries (12-month rolling averages)
*Other regulated countries include Australia, Japan, Malaysia, Norway, Republic of Korea, United States of America, and Viet Nam
Total value of Indonesia’s exports by timber product group in the latest 12 months (from January 2019 to December 2019)
| Product | Value (Million USD) |
|---|---|
| Paper | 4,370.74 |
| Wood | 3,825.12 |
| Pulp | 2,777.61 |
| Furniture | 1,479.11 |
*Timber products are categorized according to Harmonized Commodity Description and Coding System (HS) codes: wood (chapter 44), pulp (chapter 47), paper (chapter 48) and furniture (chapter 94)
Trend in Indonesia’s exports by timber product group and region (12-month rolling averages)
*Timber products are categorized according to Harmonized Commodity Description and Coding System (HS) codes: wood (chapter 44), pulp (chapter 47), paper (chapter 48) and furniture (chapter 94)
Trend in Indonesia’s exports to top 5 destination countries by timber product group (12-month rolling averages)
*Timber products are categorized according to Harmonized Commodity Description and Coding System (HS) codes: wood (chapter 44), pulp (chapter 47), paper (chapter 48) and furniture (chapter 94)
Trend in Indonesia’s timber product exports to regulated (EU and others) and unregulated countries (12-month rolling averages)
*Timber products are categorized according to Harmonized Commodity Description and Coding System (HS) codes: wood (chapter 44), pulp (chapter 47), paper (chapter 48) and furniture (chapter 94)
Total value of Indonesia’s wood product exports in the latest 12 months (from January 2019 to December 2019)
(unit: 1000 USD)
| Composite panels | Fuel and charcoal | Joinery | Logs and other raw wood | Other processed wood | Pallets, packaging and barrels | Sawnwood and mouldings | Veneers and plywood | |
|---|---|---|---|---|---|---|---|---|
| All countries | 114,922 | 354,590 | 417,831 | 1,648 | 481,224 | 7,363 | 666,735 | 1,780,805 |
| Rank 1 | Japan 23,177 | Japan 69,906 | United Kingdom 85,031 | China 670 | China 273,553 | Japan 3,851 | China 195,183 | Japan 579,845 |
| Rank 2 | Republic of Korea 14,750 | Republic of Korea 50,586 | Netherlands 67,999 | Taiwan 200 | Taiwan 64,525 | Taiwan 1,341 | Australia 103,662 | Republic of Korea 251,701 |
| Rank 3 | Egypt 12,811 | Saudi Arabia 46,947 | Japan 61,336 | United States 179 | United States 55,269 | Italy 1,151 | Japan 59,848 | United States 249,558 |
| Rank 4 | Syrian Arab Republic 9,411 | Iraq 20,184 | United States 60,900 | Japan 156 | Japan 21,488 | China 262 | Republic of Korea 55,514 | India 93,968 |
| Rank 5 | Saudi Arabia 8,337 | China 17,655 | Australia 23,246 | Saudi Arabia 109 | Netherlands 8,917 | Republic of Korea 205 | Netherlands 46,573 | Malaysia 92,556 |
Trend in Indonesia’s wood product exports to regulated countries (12-month rolling averages)
*Regulated countries include European Union, Australia, Japan, Malaysia, Norway, Republic of Korea, United States of America, and Viet Nam.
EU Imports
EU Imports
(data source: Eurostat COMEXT)
Highlights
Broadly consistent with the Indonesian export data, the EU import value of all Indonesian timber and timber products (HS 44, 47, 48 and 94) increased 6% to US$1.18 billion in 2017 and by a further 6% to US$1.25 billion in 2018.
In quantity terms, EU imports from Indonesia of all timber and timber products increased by 4% to 710,000 tonnes in 2017 but decreased 5% to 678,000 tonnes in 2018.
EU import volume of Indonesian wood (HS 44) products increased consistently each year between 2014 and 2018, rising from 277,000 tonnes to 325,000 tonnes during this period.
A decline in EU imports of decking/mouldings from Indonesia in 2018 was offset by rising EU imports of Indonesian plywood, doors, charcoal and S4S sawnwood.
EU imports of decking/moulding from Indonesia fell by 12% to 62,000 tonnes in 2018 and Indonesia’s share of all EU imports of this commodity from the tropics declined from 45% to 36% during the year. The trend was partly supply driven with prices for Indonesian bangkirai rising sharply during 2018 due to limited availability.
In 2018, EU imports of plywood from Indonesia increased by 7% to 170,000 m3. This followed a 24% increase the previous year. Indonesia’s share of total EU imports of tropical hardwood plywood was 27.2% in 2018, up from 26.1% in 2017 but still below 27.3% achieved in 2016.
The lack of any increase in Indonesia’s share of the EU plywood market is due the combined effects of supply constraints in Indonesia and intense competitive pressure from alternatives, particularly Russian birch plywood and Chinese products.
In 2018, EU wooden door imports increased from Indonesia by 7.8% to €112 million, much of this destined for the UK.
EU import volume of Indonesian wood furniture (HS 94) products declined by 2% to 102,000 tonnes in 2017 and a further 3% to 99,000 tonnes in 2018.
The relative lack of growth in EU furniture imports from Indonesia since the start of FLEGT licensing is disappointing, but the trend is influenced by wider stagnation in EU furniture market growth and by intense competition in the sectors targeted by Indonesian manufacturers.
Indonesia’s furniture exports to the EU are dominated by outdoor products, particularly due to relatively abundant plantation teak supplies. There is now intense competition in this sector from a wide range of modified temperate wood and non-wood products which are taking share from tropical hardwoods.
Indonesia’s long woodworking tradition has also encouraged a focus on high quality specialist hand-made furniture to supply a niche market in the EU. In this market, Indonesia competes most directly with India which is currently increasing market share despite the lack of any comparable timber legality assurance system in India or widespread availability of third-party certified wood in the country.
Of tropical countries, Indonesia is by far the largest supplier of paper (HS 48) products to the EU. EU imports of these products have been volatile, rising 15% to a record level of 278,000 tonnes in 2017 before falling back by 9% to 252,000 tonnes in 2018.
In 2018, Indonesia accounted for 65% of all paper products imported by the EU from tropical countries, down from 70% in 2017.
Paper imported from Indonesia into the EU consists primarily of uncoated papers for writing and printing, together with kaolin-coated papers for a variety of printing applications.
EU imports of Indonesian wood pulp (HS 47) were no more than 1,000 tonnes in 2018, having fallen from 26,000 tonnes in 2016 and 16,000 tonnes in 2017. The negligible level of EU pulp imports from Indonesia is due to nearly all the available supply being absorbed by paper, board, and tissue mills in both Indonesia and China.
Trend in EU imports of timber products from Indonesia by product group (12-month rolling averages)
Trend in EU timber product imports from Indonesia to top 5 destination countries (12-month rolling averages)
Trend in timber product imports from Indonesia to top 5 EU countries by product group (12-month rolling averages)
Trend in EU imports of wood products from Indonesia by product group (12-month rolling averages)
Trend in wood product imports from Indonesia to top 5 EU countries by product group (12-month rolling averages)
Total quantity of EU imports of wood product from Indonesia to top 5 destination countries in the latest 12 months (from January 2019 to December 2019)
(unit: kg)
| Composite panels | Fuel and charcoal | Joinery | Logs and other raw wood | Other processed wood | Pallets, packaging and barrels | Sawnwood and mouldings | Veneers and plywood | |
|---|---|---|---|---|---|---|---|---|
| All countries | 140,410 | 49,568,536 | 87,203,725 | 32,410 | 22,961,417 | 102,454 | 68,686,654 | 86,326,907 |
| Rank 1 | Netherlands 50,997 | Netherlands 10,327,458 | United Kingdom 40,955,889 | Germany 17,180 | Germany 8,937,275 | United Kingdom 54,436 | Netherlands 25,014,753 | United Kingdom 34,209,794 |
| Rank 2 | Spain 47,200 | Germany 10,046,597 | Netherlands 28,626,404 | Denmark 14,918 | Netherlands 6,650,423 | Netherlands 28,558 | Germany 22,853,819 | Germany 19,597,313 |
| Rank 3 | Germany 21,931 | Greece 7,569,379 | Germany 4,405,353 | United Kingdom 312 | France 2,323,135 | France 7,058 | United Kingdom 6,584,639 | Netherlands 14,442,467 |
| Rank 4 | Belgium 13,340 | Belgium 6,731,312 | France 4,316,378 | United Kingdom 1,247,469 | Belgium 3,423 | Belgium 5,218,351 | Belgium 12,847,924 | |
| Rank 5 | France 6,365 | United Kingdom 4,899,531 | Belgium 4,068,717 | Spain 899,862 | Germany 2,939 | France 1,923,137 | Italy 4,111,918 |
*Wood products are products under Chapter 44 of Harmonized Commodity Description and Coding System (HS).
Data Sources and Issues
Data Sources and Issues
Data from STIX drawing directly from trade data reported by Indonesian statistical agencies is used for regular monthly trade updates in this Country report.
Comparison of this data with EU import data derived from Eurostat COMEXT shows that the two data sets are broadly consistent, at least at HS 4-digit level, and provide a reliable indication of Indonesian timber trade trends in the EU market.