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  • Indonesia’s Forestry Industry At Risk Of Going Bankrupt

    2010 - 05.19

    Due to illegal logging Indonesia’s forestry industry risks going bankrupt. The illegal logging has triggered a lack of material and reduces the ability of local companies to compete with foreign counterparts.

    The Chairman of the Indonesian Forest Society, Sudradjat Djajapertjunda spoke at a seminar detailing how illegal logging is one of various chronic problems in the sector that poses a serious threat.

    “In the popular term, the threat of bankruptcy on forestry activities and industry is known as forestry de-industrialization,” said Sudradjat. In his opinion the national forestry industry has become a shadow of its formers self when it was the main player in the world’s wood market.

    “It is dying or at the brink of destruction more precisely,” said Sudradjat. “Many forestry companies go bankrupt, factories closed while employers and capital owners switched to other countries with much conducive economic climate,” Sudradjat added.

    The Indonesian forestry industry in the international market is being killed by the rampant illegal logging, which has been playing a big role in wood smuggling abroad. To make the situation worse the more expensive official wood price bought by legal wood processing companies puts them at a disadvantage when competing with illegal ones. In addition the forestry sector de-industrialisation will carry follow up effects.

    “Obviously, the gross domestic product in regions with significant forestry sector like provinces of East Kalimantan, Central Kalimantan, West Kalimantan, Riau and Papua will decrease,” said Sudradjat.

    Sudradjat added that it risks posing mass layoffs in a sector that provides jobs for over 16 million people. He said that in the long term the de-industrialisation will trigger security and political instability.

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