DEVELOPMENT OF THE TIMBER INDUSTRY AND TIMBER TRADE IN INDONESIA

Abstract

The timber industry in Indonesia started growing in the late 1960s. In the early state of timber development, unprocessed logs were the dominant wood export and a major source of foreign exchange earnings after petroleum. When the government supported the establishment of plywood mills and began to restrict log exports in 1982, plywood replaced unprocessed logs as the dominant export as the economy began to diversify and stopped relying so heavily on the export of oil. Realizing that too many mills had been built, in 1990 the central government barred the erection of additional plywood mills or the expansion of existing mills, thereby sustaining log supplies for existing plywood mills. The promotion of pulp and paper plantations as an environmental and economic solution to depleting timber resources started in 1990. Soft loans, the inclusion of government equity and gaining permission for the use of logging waste for wood products are determinant measures in promoting the pulp and paper industry.