Indonesia has enforced a new legislation mandating that every forest product entering the country must originate from legal sources.

The Forestry Ministry released the new law on the “Assurance of Legality for Imported Forestry Products” on November 6, which took effect on December 26. The new regulation requires all importers to fulfil two key legality assurance obligations: the feasibility test and import declaration, both conducted through the SILK Portal (Legality and Sustainability Information System), according to the Global Timber Index (GTI)-Indonesia November Report.

During the Belem Leaders Summit in Brazil on November 6, Indonesia’s special presidential envoy for energy and climate change, Hashim Djojohadikusumo, said his country would actively participate in the Tropical Forest Forever Facility (TFFF) and had committed to matching Brazil’s contribution of US$1 billion.

In the July-September 2025 quarter (3Q2025), Indonesia’s wood processing exports experienced a notable contraction. The decline was driven by several converging factors: weaker global demand amid slowing economic growth, reduced housing and construction activities in the United States (US) and parts of East Asia, elevated logistics and freight costs, and persistent uncertainty caused by shifting global trade policies.

Domestically, rising production costs and stronger competition from alternative suppliers further pressured export performance, said the GTI-Indonesia report, based on information provided by the GTI-Indonesia Focal Point.

Indonesia’s primary export markets for wood panel products are the US, Japan and South Korea, followed by Malaysia, the United Kingdom and China. Indonesia maintains its competitiveness in the global market due to:

i.sustainably and legally sourced timber, ensured through the PHPL/SILK certification system;
ii.stable product quality and a wide selection of workable species;
iii.compliance with international technical and environmental standards; and
iv.long-standing commercial relationships with construction and industrial buyers in major markets.

On export performance, the report said Indonesia’s woodworking products, including mouldings, joinery and engineered components, are primarily exported to China, Australia and Japan. Demand for these products remains resilient owing to Indonesia’s strong capacity for customised production, favourable pricing relative to regional competitors, and a secure supply base of certified plantation timber.

Indonesia’s wood furniture exports are predominantly shipped to the US, Belgium and Brazil, with additional growth observed in secondary markets across Europe and the Asia-Pacific.

Indonesia’s furniture sector benefits from high craftsmanship and design adaptability, a reputation for quality materials and sustainable sourcing, and the ability to serve both high-volume retail chains and premium niche buyers.

In the first six months of 2025, Indonesia’s furniture exports generated revenue of US$920 million, with the US remaining the largest export destination, accounting for 54.6 per cent of the total. However, the Indonesian government acknowledged the need to develop new strategies to tap into non-traditional markets, such as Eastern Europe, the Middle East, Latin America, India and Japan.

GTI-Indonesia enterprises reported several key challenges in November, notably low log prices in the domestic market due to weak demand from the timber processing industry. Heavy rainfall slowed log transportation, and there was a shortage of raw materials, particularly red meranti.

Other challenges include unstable global market conditions for plywood products, which tended to be sluggish, an insufficient number of plantation workers, and an unstable fuel supply.

To address or mitigate these challenges, enterprises called on the authorities to revise regulations related to the export of forestry products, particularly restrictions on types related to cross-sectional area provisions, to support the sustainability of upstream and downstream sectors.

Policy incentives, they said, are needed to increase the absorption of wood in the domestic market and to seek new markets for Indonesian wood products abroad.

“Policies are needed to ensure a continuous supply of raw materials for the industry. A strong role of the government in international trade is needed to enhance the competitiveness of wood products and forest commodities. Marketing in other countries should be expanded with government support,” they added.

The enterprises also suggested that, to meet annual logging plan targets, wood production could be maximised during dry weather periods.

To reduce equipment breakdowns, they called for strengthening preventive maintenance and operator training, establishing partnerships with multiple suppliers and maintaining critical spare parts, implementing fuel efficiency measures and exploring alternative energy sources, as well as diversifying market channels and securing long-term contracts to mitigate wood price fluctuations.

In November, the GTI-Indonesia index registered 49.1 per cent, below the critical value of 50 per cent for the second consecutive month, indicating that business prosperity among the leading timber enterprises represented by the index declined from the previous month.

Despite the overall contraction on the supply side among the sampled enterprises, both domestic and international market demand demonstrated growth during the month under review.

Source: sarawaktribune.com