Indonesia has become a major force in the global market for wooden furniture because of its abundance of raw materials, low minimum order requirements, and intricate weaving and woodcarving methods. According to a statement by National Agency for Export Development (Nafed), on an average, the US imports nearly 30% of Indonesia’s total furniture output yearly. Furthermore Indonesia is the fourth largest supplier of wooden furniture to the US, with a market share of 4.26%.
The Indonesian Furniture Entrepreneurs Association (Asmindo) chairman Ambar Tjahyono said, “The shift has already commenced this month. The extra orders worth $250 million may create demand for up to 1 million workers.”
Mr. Ambar added, “China sends 80% of its furniture to the US furniture market, and Indonesia only 27-30%. Indonesia’s furniture and handicraft exports in 2007 were valued at $2.35 billion, with the amount estimated to grow by 6.5%to $2.8 billion this year.”
Mr. Ambar also predicts that additional orders from the United States would boost Indonesia’s exports throughout 2009. However, the ongoing global economic slowdown could prohibit overall growth.
Vice president Jusuf Kalla said, “The crisis threatens more the high-end furniture producers such as Italy and the US and less the mid-level producers such as Indonesia.”
Recession in the US, Europe, and Japan has had a negative impact on Chinese exports, with many furniture exporters closing down or decreasing production. Fierce competition, price increase of raw materials, tighter credit bands, and decreased tax rebates have also contributed to an overall decline in Chinese exports. In turn, a lack of buyers has forced some Chinese manufacturers to shut down their facilities, whilst an increase in labor costs and overheads relating to raw materials and production have decreased profit margins substantially.
