Country Profiles

Access to latest commentary on timber industries and economies of EU and VPA partner countries

VPA COUNTRY

INDONESIA

VPA Status: FLEGT Licensed

VPA history 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).
  • 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 2020, the EU FLEGT and the Indonesian Civil Society Organisation KARSA (Lingkar Pembaruan Desa dan Agraria) began consultations in support of a review of the SVLK legality definition to potentially accommodate 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 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

Forest area (2020) 92.13 mil. ha
Deforestation rate (2015-2020) 0.58 mil. ha/year
Planted area (2020) 4.526 mil. ha
Tree cover loss (2001-2020) 27.7 mil. ha (17 %)
Tree cover gain (2001-2012) 6.96 mil. ha
FSC certified area (Dec. 2020) 3.132 mil. ha
PEFC certified area (Dec. 2020) 3.999 mil. ha
Double certified area (FSC & PEFC, Mid-2019) 0 ha

Source: FAO, Global Forest Watch, FSC, PEFC

  • Indonesia has three categories of forest land: Conservation Forests, Protection Forests, and Production Forests. In 2018 production forests (Hutan Produksi, HP) accounted for 57% (68.8 million hectares) of Indonesian forest area. Conservation forests (Hutan Konservasi) cover a total area of 22.1 million hectares or 18% of Indonesian forest area. Protection forests (Hutan lindung) have watershed functions and cover the remaining 29.7 million hectares or 25%.
  • The Indonesian government defines deforestation as the “permanent alteration from a forested area into a non-forested area as a result of human activities”. Recognised causes range from intensification of management activities in natural forests; conversion to agriculture; mining; unsustainable forest management; illegal logging encroachment and illegal land occupation and forest fires. Related to these considerations may be added infrastructure development, demand for commodities, population growth or movement and global commodity prices.
  • 2018 assessments indicate that the immediate direct cause of over 40% of total forest loss recorded in 2015 and in 2016 in Indonesia was forest fires.
  • Industrial plantations of oil palm (Elaeis guineensis) and pulpwood (Acacia mangium and other tree species) have replaced large areas of natural forests in Indonesia. The links between plantation expansion and deforestation remain debated. Although some plantations replace old growth forests, a substantial fraction make use of land cleared of forests many years previously.
  • According to Indonesian Ministry of Environment and Forestry data log supply in Indonesia increased by 7% to 57.9 million m3 in 2018, then declined 1% to 57.3 million m3 in 2019, before rebounding strongly by 7% to 61.3 million m3 in 2020.
  • In 2020, 74% of Indonesia’s log supply came from industrial plantations, 14% from community forests, 8% from natural forest concessions, 3% from other domestic sources, and 1% from log imports.
  • In the decade between 2011 and 2020, log supply from industrial plantations increased by 127% to 45.4 million m3 while log supply from community forests increased 153% to 8.5 million m3. Log supply from natural forest concessions was broadly flat during the decade, at 4.8 million m3 in 2020, just 1.5% down on 2011. Log supply from land clearing fell 98% from 13.6 million m3 in 2011 to 0.3 million m3 in 2020.

Industry

GDP (2020) 1,058.4 billion USD
Population (2020) 273.5 million
Income group (2020) Lower middle income
Ease of Doing Business (EDB) Rank (2019) 73 / 190
Global Competitiveness Index Rank (2019) 50 / 141
Liner Shipping Connectivity Index (maximum value in 2004 = 100) (2019)
44.4

Source: World Bank, World Economic Forum

Timber Industry Competitiveness

  • 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

  • Most wood supplied to Indonesia’s wood processing sector is from domestic forest sources, with a growing dependence on plantations. Only a relatively small proportion of timber supply to Indonesia derives from imports – estimated by IMM to be around 10 million m3 roundwood equivalent per annum or about 15% of total wood fibre supply to Indonesia if all wood and wood furniture, pulp and paper imports are included.
  • 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.
  • Although the trend was inconsistent, the broad direction of Indonesia’s worldwide exports of all timber and timber products (HS 44, 47, 48 and 94) was upward between 2017 and 2020. The rise was driven mainly by pulp and paper products destined for China although there was also some growth in exports of wood furniture, particularly to the United States.
  • In the period immediately following FLEGT licensing, which began in November 2016, EU+UK imports of Indonesian timber and timber products recovered some of the ground lost in this market in the previous decade. However, with the onset of the COVID-19 pandemic EU+UK import value from Indonesia fell again in 2020 due to supply side problems in Indonesia and severe shortages in container space for shipment to European markets.

Imports

  •  Total Indonesian imports of timber and timber products increased by 61% to 5.1 million tonnes between 2016 and 2019, a trend mainly driven by chips imported from Vietnam and destined for the pulp sector which increased from a negligible volume to 1.4 million tonnes during this period. In value terms, total imports increased by 25% to USD3.3 billion between 2016 and 2019.
  • In 2020, import volume of timber products into Indonesia declined 40% to 3.1 million tonnes while import value fell 24% to USD2.5 billion. Imports of wood (HS 44) products fell 66% in volume terms to 900,000 tonnes and 36% in value terms to USD330 million in 2020. During the year imports of chips from Vietnam fell back to negligible levels while imports of logs, mainly plantation timbers from Malaysia for the Indonesian pulp and paper sector, fell 33% to 422,000 tonnes. During 2020, Indonesia’s imports of particleboard declined 32% to 97,000 tonnes, plywood fell 36% to 34,000 tonnes, and fibreboard fell 6% to 84,000 tonnes. In 2020, Indonesia’s imports of sawnwood were down just 2% to 165,000 tonnes.
  • Indonesia’s sawnwood imports are dominated by temperate species from the USA, New Zealand, and Chile, with small volumes from Canada, Germany, France, Uruguay, and China. Panel products are sourced almost exclusively from Thailand, Malaysia and New Zealand.
  • Indonesian import data indicates that if tropical wood from third countries is being transited through Indonesia to obtain a FLEGT licence, the volumes involved are quite restricted and declining overall. Indonesian imports of sawnwood products identified in trade statistics as being of tropical origin fell from 20,000 tonnes in 2017 to 15,000 tonnes in 2020. Imports of tropical plywood fell from 6,000 tonnes in 2017 to 4,900 tonnes in 2020. Imports of tropical veneer increased from 1,200 tonnes in 2017 to 3,100 tonnes in 2019 but declined to 1,600 tonnes in 2020.
  • Indonesia’s imports of tropical timbers from Papua New Guinea increased from 1,600 tonnes in 2017 to 5,500 tonnes in 2020. However, during the same period, imports of tropical timber declined from Brazil (from 3,700 tonnes to 3,300 tonnes), Cameroon (from 4,700 tonnes to 3,200 tonnes), Vietnam (from 2,600 tonnes to 2,400 tonnes), China (from 1,500 tonnes to 1,200 tonnes), and Malaysia (from 2,700 tonnes to 1,200 tonnes).
  • In practice there is no way of determining the proportion of these tropical timber imports into Indonesia that are re-exported from the country.
  • Indonesia imports of wood pulp fell 8% to 1.32 million tonnes in 2020. Imports from the USA were rising between 2017 and 2019 but fell 11% to 417,000 tonnes in 2020. In contrast to the USA, imports from Canada fell sharply between 2017 and 2019, a trend which continued in 2020 with further 20% fall to 347,000 tonnes. Pulp imports from the EU27 increased 57% in 2019 and a further 26% in 2020 to 307,000 tonnes.
  • Indonesia’s imports of paper products are sourced from a wide variety of countries, although only in relatively small volumes. The EU was formerly the largest external source, supplying around 150,000 tonnes per year between 2015 and 2020, but was recently overtaken by China, which supplied 202,000 tonnes in 2020. Imports of paper from the Republic of Korea increase sharply to just over 150,000 tonnes in 2019 but declined to 112,000 tonnes in 2020. Only two other countries – Thailand and Viet Nam – supplied more than 50,000 tonnes of paper to Indonesia in 2020.
  • Indonesia imported USD138 million of wooden furniture in 2020, 13% less than in 2019. China is the leading external supplier of wood furniture to Indonesia, with sales of USD108 million in 2020, 8% less than in 2019. Wood furniture imports from the EU were US$16.4 million in 2020, down 26% compared to the previous year. Viet Nam (USD8.0 million) and Malaysia (USD5.5 million) were the only other countries supplying more than US$5 million of wood furniture to Indonesia in 2020, respectively down 25% and 21% compared to the previous year.
Indonesia’s imports by product group (data source: STIX)

Exports

  • In quantity terms, Indonesia’s worldwide exports of all timber and timber products (HS 44, 47, 48 and 94) increased from 13.8 million tonnes in 2016 to 15.2 million tonnes in 2017, falling slightly to 15.0 million tonnes in 2018, but then rising sharply to 16.2 million tonnes and 18.1 million tonnes in 2020.
  • In value terms, exports increased sharply from USD 10.1 billion in 2016 to USD 11.4 billion in 2017 but then peaked at USD 12.9 billion in 2018. In the next 2 years, some of the value gains were lost as exports fell to USD 12.3 billion in 2019 and USD 12.0 billion in 2020.
  • This variable pattern of export growth is explained both by external market factors and a significant shift in the mix of products and destinations.
  • The key external factor has been the changing pace of growth in the global economy which was rising between 2016 and 2018, but then cooled in 2019 owing mainly to the trade dispute between the US and China, before weakening sharply in the first half of 2020 with the onset of the COVID-19 pandemic, and then experiencing an uneven recovery in the second half of that year driven almost entirely by a rapid rebound in the Chinese and US economies while the rest of the world recovered more slowly.
  • Between 2016 and 2020, there was a shift in the balance of Indonesia’s timber products exports away from traditional solid wood and wood furniture products, destined primarily for the US, Japan, Republic of Korea, the EU and UK, more towards pulp and paper products destined primarily for China and, to a lesser extent, Southeast Asia. During this period, the share of Indonesia timber products export value destined for China increased from 23% to 32%.
  • In contrast the share of timber product export value destined for the EU27 declined from 8.2% in 2016 to 7.1% in 2020. In the same period, the share of export value destined for the UK fell from 2.4% to 1.8%, while the share destined for North America fell from 19.1% to 15.8%.
  • Indonesia’s export value of pulp (HS 47) and paper (HS 48) products increased from USD 3.4 billion in 2016 to a peak of USD 7.1 billion in 2019 before sliding to USD 6.7 billion in 2020. In quantity terms, Indonesia’s pulp and paper exports increased from 7.7 billion tonnes in 2016 to 10.8 billion tonnes in 2019 and then surged to 12.4 billion tonnes in 2020.
  • Much of the rise in pulp and paper exports has been destined for China where demand for virgin pulp has increased, particularly following restrictions imposed in 2018 on China’s imports of waste paper which were formerly an important source of recycled fibre in the country.
  • Export value of Indonesian wood furniture (HS 94) products was stable at USD 1.29 billion in 2016 and 2017 and then increased by 4% to USD 1.34 billion in 2017, by 2% to USD 1.37 billion in 2019 and by a further 10% to USD 1.51 billion in 2020.
  • Wood furniture export value has increased particularly strongly to North America, from USD 540 million in 2016 to USD 690 million in 2019 and then surging to USD 840 million in 2020. Wood furniture exports have been boosted by the US trade dispute with China which led US importers to look to Indonesia as an alternative source of supply.
  • After a shaky start in 2017, wood furniture exports have also risen to the EU and UK since the introduction of FLEGT licensing. Exports to the EU27 fell slightly from USD 268 million in 2016 to USD 251 million in 2017, a level maintained in 2018 before rising 5% to USD 268 million in 2019 and 9% to USD 290 million in 2020.
  • Wood furniture exports to the UK fell from USD 50 million in 2016 to USD 44 million in 2017, but then rebounded to USD 47 million in 2018 and USD 49 million in 2019. In 2020, the economic and logistical effects of COVID19 contributed to a 3% decline in wood furniture export to the UK, to USD 47 million.
  • Indonesia’s export quantity of HS 44 wood products was declining overall between 2016 and 2019, from 5.7 million tonnes to 5.1 million tonnes. The decline was driven mainly by plywood and chips, exports of both products falling particularly dramatically between 2016 and 2017. Large quantities of plywood and chips were formerly exported to China but these fell to negligible levels from 2017. Export quantity of other HS 44 wood products were broadly flat throughout this period.
  • In 2020, export quantity of HS 44 wood products increased, by nearly 5% to 5.3 million tonnes, despite the disruption caused by the pandemic, mainly due to a slight rebound in exports of plywood and chips. Exports of plywood to the USA were particularly strong in 2020.
  • Export value of HS 44 wood products followed a slightly different trajectory, rising from USD 3.88 billion in 2016 to USD 4.42 in 2018 before easing back to USD 3.83 billion in 2019 and USD 3.78 billion in 2020. The rise and subsequent fall in value was primarily driven by trends in the plywood sector. Exports of higher value plywood increased to Japan and the USA between 2016 and 2018 while exports of lower value plywood to China declined.
  • The total share of Indonesia’s timber export value in 2020 destined for countries with some form of regulation to mitigate the risk of illegal wood imports was 47% including the EU27 (7%), UK (2%), United States (12%), Japan (11%), Republic of Korea (6%), Malaysia (3%), Australia (3%), and Viet Nam (2%). The proportion exported to regulated markets in 2020 was unchanged from the previous year but down from 50% in 2016 mainly due to the recent rise in pulp and paper exports to China (classed here as an unregulated market).
Indonesia’s exports by product group (data source: STIX)

EU Imports from Indonesia

  • Considering the long term perspective, the value of EU+UK imports of Indonesian timber and timber products (HS 44, 47, 48 and 94) were at an historic low of USD 1.11 billion in 2016, the year when FLEGT licensing was first introduced. Imports fell from an all-time high of over USD 2 billion in 2007 just prior to the Great Recession to USD 1.2 billion in 2012 and remained at around that lower level for the next five years.
  • In the period immediately following FLEGT licensing, which began in November 2016, EU+UK imports of Indonesian timber and timber products recovered some of the lost ground, rising to USD 1.33 billion in 2019. However, with the onset of the COVID-19 pandemic EU+UK import value from Indonesia fell again in 2020, by 14% to US$1.19 billion.
  • In quantity terms, EU+UK imports of all timber and timber products from Indonesia increased from 679,000 tonnes in 2016 to 769,000 tonnes in 2019 before falling 11% to 687,000 tonnes in 2020.
EU+UK imports from Indonesia by product group
(data source
: Eurostat COMEXT)
EU+UK imports from Indonesia by destination
(data source
: Eurostat COMEXT)
  • Analysis of trade data indicates that while there was some slight recovery in EU+UK timber and timber products imports from Indonesia in the period 2017 to 2019 following FLEGT licensing, this coincided with a wider expansion of EU imports and in practice Indonesia experienced little or no increase in market share. Furthermore, the minor market gains were reversed in 2020, primarily due to the detrimental effects of the COVID-19 on supply and shipment of products to the EU+UK from Indonesia.
  • In terms of import value, the Netherlands was the largest EU+UK destination for timber and timber products imports from Indonesia in 2020, accounting for 23%, followed by the UK (20%), Germany (13%), Belgium (10%), Greece (7%), France (6%), Italy (6%), Spain (4%) and Poland (3%). The share of imports from Indonesia destined for the UK fell during the year (26% in 2019) while there was a significant increase in share destined for the Netherlands (20% in 2019), Greece (5% in 2019) and Poland (1% in 2019).
  • The trend in EU imports of Indonesian wood (HS 44) products was upwards between 2016 and 2018 but then turned sharply downwards in 2019 and 2020. Import value peaked at USD 604 million in 2018 before falling by 4% to 580 million in 2019 and by a further 13% to 503 million in 2020. Import volume peaked at 326,000 tonnes in 2018 but fell back by 4% to 313,000 tonnes in 2019 and by 10% to 282,000 tonnes in 2020.
  • These recent changes in EU+UK imports of HS 44 products from Indonesia are strongly influenced by trends in the hardwood plywood, mouldings (particularly decking) and joinery products (particularly doors) trade.
  • EU+UK imports of plywood from Indonesia strengthened between 2016 and 2018 in line with a general rise in plywood consumption in the EU+UK at a time of rising activity in the EU+UK construction sector. However there was no increase in Indonesia’s share of total EU+UK imports of tropical hardwood plywood which remained static at around 36% of value during this period. The lack of any increase in Indonesia’s share of the EU+UK plywood market was due the combined effects of supply constraints in Indonesia and intense competitive pressure from alternatives, particularly Chinese and Russian plywood products.
  • In 2019, the EU+UK plywood market began to weaken as consumption in the construction sector could not keep pace with supply which led to a period of severe over-stocking. In the first half of 2020, plywood demand fell again as the first COVID-19 lockdown led to a short-term decline in construction activity.
  • However, EU+UK plywood demand recovered rapidly in the second half of 2020 as construction and DIY activity rebounded at a time when supplies were severely affected by raw material shortages and production shutdowns in the main supply countries and lack of access to containers, particularly in shipments into Europe from Southeast Asia.
  • The combined effect of these trends was a 11% decline in EU+UK plywood import value from Indonesia in 2019, to USD 111 million, followed by a 30% decline to USD 78 million in 2020. Between 2019 and 2020, Indonesia’s share of EU+UK tropical hardwood plywood import value fell from 36% to 32%, with most share lost to Malaysia and Gabon. During this period, Indonesia was also losing market share to non-tropical plywood, notably from Belarus and Ukraine.
  • EU+UK import value of mouldings (mainly bangkirai decking) from Indonesia was stable between 2017 and 2019 at around USD 120 million, the stability indicative of a rise in prices for Indonesian mouldings as import quantity fell by 10% from 76,000 tonnes to 64,000 tonnes during the same period. According to EU+UK importers, the decline in import quantity and rise in prices from Indonesia during this period was driven by limited availability. Indonesia’s share of EU+UK tropical hardwood mouldings import value fell from 43% to 35% between 2017 and 2019, mainly losing share to Brazilian products.
  • In 2020, EU+UK imports of Indonesian mouldings fell by 16% in value to USD 101 million and by 5% in quantity to 60,500 tonnes as supply problems and the challenges of shipping products from Indonesia to Europe worsened during the year. However, Indonesia’s share of EU+UK tropical mouldings imports remained level at 35% as imports from Brazil, the major competitor, fell by a similar amount in 2020.
  • EU+UK imports of joinery products, mainly doors and laminated window scantling and kitchen tops, increased sharply between 2017 and 2019 before falling back in 2020 during the pandemic. Import value increased by nearly 10% to USD 205 million in 2018 and by 6% to USD 216 million in 2019 but then declined by 10% to USD 194 million in 2020. In quantity terms, imports increased by 5% to 81,000 tonnes in 2018 and by 6% to 86,300 tonnes in 2019 before falling by 8% to 79,200 tonnes in 2020.
  • Of low and medium income (LMI) countries, Indonesia is the second largest external supplier of joinery products to the EU+UK market after China accounting for 15.1% of total joinery import value from LMI countries in 2020, a decline from 16.7% in 2019 and from 17.5% in 2016 prior to FLEGT licensing. While Indonesia’s share of EU+UK wood door imports from LMI countries remained quite stable throughout the whole period between 2016 and 2020 (at around 30%), Indonesia’s share of imports of laminated joinery products fell from 24.8% to 18.6% while share of flooring imports fell from 5.1% to 3.3%. Indonesia was primarily losing share to joinery products imported from LMI countries neighbouring the EU+UK during this period, particularly Ukraine. China remains by far the largest external supplier of joinery products to the EU+UK but was also losing share between 2016 and 2020.
  • The value of EU+UK wood furniture (HS 94) imports from Indonesia was rising slowly in the period immediately following FLEGT licensing, from USD 341 million in 2016 to USD 368 million 2019. Import value remained stable at USD 368 million in 2020 despite the market and transport disruption caused by the pandemic.
  • In contrast to import value, EU import quantity of Indonesian wood furniture products trended downwards from 102,000 tonnes in 2016 to 100,000 tonnes in 2019 with a further larger fall of 10% to 89,000 tonnes in 2020. Overall the unit value paid for Indonesian wood furniture by EU+UK importers has been rising, a trend which accelerated in 2020, at least partly due to the sharp rise in freight rates during the year.
  • The relative lack of growth in EU furniture imports from Indonesia since the start of FLEGT licensing is influenced by wider stagnation in EU furniture market growth and by intense competition in the sectors targeted by Indonesian manufacturers. EU+UK imports of wood furniture from Indonesia 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 LMI countries, Indonesia is the third largest external supplier of wood furniture products to the EU+UK market after China and Vietnam accounting for 5.4% of total import value from those countries in 2020, the same proportion as in 2018 and 2019 but a decline from 5.6% in 2017 and 2016 prior to FLEGT licensing. Alongside China and Vietnam, between 2016 and 2020 Indonesia was losing share in the EU+UK market for wood furniture primarily to Turkey, India, Ukraine and Belarus amongst LMI countries.
  • The import value of paper products imported by the EU+UK from Indonesia was rising between 2017 and 2019 but declined in 2020. Import value increased from USD 270 million in 2017 to USD 379 million in 2019 before falling back 16% to USD 319 million in 2020.
  • Indonesia’s share of total EU+UK imports of paper products from low and middle income (LMI) countries increased from 5% in 2017 and 2018 to 7% in 2019 but fell back to 5% in 2020. In 2020, share was lost primarily to China which accounted for over half of all EU+UK imports of paper products from LMI countries during the year.
  • Paper imported from Indonesia into the EU+UK consists primarily of uncoated papers (in large sheets or rolls for writing and printing) and sanitary paper products. Imports of uncoated papers were rising between 2016 and 2019 but declined in 2020. Imports of sanitary papers continued to rise throughout the whole period 2016 to 2020.
  • Prior to 2020, over a quarter of EU+UK paper imports from Indonesia were destined for the UK with most of the remainder destined for Greece, Belgium and Italy. In 2020, imports of Indonesian paper products by the UK and Belgium fell 40% and 26% respectively but these losses were partly offset by a 40% increase in imports by Greece and 240% increase in imports by Poland, the latter formerly only a minor buyer.
  • EU+UK imports of Indonesian wood pulp (HS 47) were close to zero between 2018 and 2020 having fallen from 16,000 tonnes in 2017 and 26,000 tonnes in 2016. The negligible level of EU+UK 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.

Data Sources and Issues

  • Data is derived from www.stix.global, Indonesia export statistics supplied to IMM by Business Trade Statistics Ltd and Eurostat COMEXT data analysed by IMM. Monthly data is available at www.immstats.org.