Studies on the characteristics of the Indonesian timber markets and governmental policies to promote a high export of forest products

To finance the beginning of Indonesian development plans, Indonesia, which has a large natural forest, promoted forestry sector for generating national income. To realize this goal, Indonesian government issued some policies with economic instrument such as tax holiday for domestic investment, restriction and ban of logs export, a high tax and a minimum price on exported sawntimber, and export promotion. As a consequence, forest concession and then sawntimber and plywood industries grew rapidly, both on number and capacity. Success on developing timber-based industries has not been followed by the successful management of forest resources. A Selective cutting (TPTI), which was introduced at the beginning of the implementation of forest concession, caused natural forest degradation on a large area. A high installed production capacity of timber-based industries needs logs, which are in short supply because natural forest has declined considerably as a result of unsustainable forest practices. Some new government policies must be set up to ensure the Indonesian timber-based industries as well as natural forest resources.