Workshop 2 of the First IMM Trade Consultation held in London on 8 March 2018 consulted representatives of large retail companies, furniture importers, agents, and furniture associations on the main factors determining purchasing decisions and the competitive position of Indonesia.
Regarding purchasing dynamics, participants stated that priorities had changed in recent years. Traditionally, purchasing decisions were primarily taken on the basis of a combination of price and “fitness for purpose”, i.e. technical properties and quality of a product and its suitability for intended applications. This was followed by other criteria such as logistics and quality of service, for example.
Today, priorities would depend more strongly on the type of customer to be served. While for certain clientele, price still remains the predominant factor, a large proportion of customers, especially large retailers, focus strongly on legality and sustainability and only where these can be guaranteed, they look into other criteria. Companies wishing to supply the retail sector would thus always have to provide proof of legality or preferably legality and sustainability as a precondition. However, the question was raised whether this was a UK specific situation/preference. This will be something future Trade Consultations on the Continent will look into.
Participants unanimously agreed that FLEGT licensing had made purchasing in Indonesia easier compared to exercising due diligence. However, they also unanimously voiced criticism of the flow of information and product marketing, especially in the light of what they had heard about the definition of “legality” under VPAS, e.g. that it also means compliance with social, environmental and labour laws, as well as sustainable forest management and PHPL certification in Indonesia during the morning session.
All participants found that information provided during the morning session had changed their perception of FLEGT licensing and representatives of retailers said they would have to reconsider the status of licensed timber in their procurement policy.
In the light of this new information, participants also found that a “FLEGT certified” logo would make sense. While participants saw little point in marketing wood products as “legal”, they felt that there would definitely be potential for marketing FLEGT by highlighting such aspects as its contributions to sustainability, improved governance, improved living conditions and climate change mitigation. This is also reflected in a short survey conducted among all participants during the trade consultation. For this approach participants said would require more and better information about the FLEGT process, as well as background/human interest stories. Providing such information and stepping up targeted promotion of FLEGT licensing timber was the primary recommendation of the group.