SEMINAR REPORT

APHI - TBI Sustainable Business Event 2014

10 11 November 2014
Surabaya, Indonesia

I. Introduction
The Borneo Initiative is a private initiative established in 2008 that intends to contribute to a
reversal in the trend of deforestation and forest degradation. Specifically, The Borneo
Initiative offers financial and technical support to forest concessions for enhancing their
capacity for sustainable forest management according to both mandatory (SVLK/PHPL) as
well as voluntary (FSC) standards of certification. While the integrity of Indonesias rain
forests is our core concern, The Borneo Initiative supports forest concessions, wood
industries and overseas buyers in their efforts towards adoption and promotion of sustainable
forest management practices. As part of a broader promotion, The Borneo Initiative and the
Indonesian Association of Forest Concessionaires (APHI) jointly hosted a Sustainable
Business Event 2014 in Surabaya on November 10-11 that aimed to increase market
awareness in export markets for the SVLK and FSC certified Indonesian wood producers.
This event brought together 12 international timber companies from the USA, Europe and
Asia, plus 24 Indonesian wood industries involved in the production of plywood, veneer,
indoor flooring, outdoor decking, truck flooring and garden furniture.
This event report presents highlights and proceedings of the Sustainable Business Event
2014, plus a set of recommendations based on feedback collected from the participants. The
business event was generally considered a success, and we already are looking ahead to
organizing repeat events in the coming years 2015 and 2016.

II. Table of contents

I. Introduction ............................................................................................................ 1
II. Table of contents................................................................................................... 1
III. Program and participants ..................................................................................... 2
a. General program outline ................................................................................................. 2
b. Participants ..................................................................................................................... 2

IV. Summary of presentations ................................................................................... 2

V. Highlights of the working groups .......................................................................... 4
VI. Feedback and recommendations ........................................................................ 4
VII. Annexes .............................................................................................................. 5
a.
b.
c.
d.

List of participants (day 2) .............................................................................................. 5

Program .......................................................................................................................... 6
Press release .................................................................................................................. 8
Media coverage .............................................................................................................. 9

Seminar report APHI TBI Sustainable Business Event 2014

III. Program and participants

a. General program outline
Seminar
Date: 10 November 2014
Venue: Hotel Majapahit Surabaya
Match making event
Date: 11 November 2014
Venue: Hotel Majapahit Surabaya
Excursions to forest industries
Date: 12-13 November 2014
Venue: PT. IFURA, PT. Integra, PT. Sumber Mas (Surabaya)
Excursion to forest concession
Date: 14-16 November 2014
Venue: PT. Dwimajaya Utama (Palangka Raya)
b. Participants
Guests of honour in the seminar on day 1 included representatives of the International Wood
Products Associations (IWPA) from the USA, from the UK Timber Trade Federation (TTF),
from the Directorate General of Forest Business Development (BUK, Ministry of Environment
and Forestry), and from the Directorate of Export of Agriculture and Forestry Product, Ministry
of Trade.
The audience consisted of representatives of several Indonesian wood producers
associations, i.e. APHI, APKINDO and ASMINDO. Private sector was represented by 27
Indonesian wood industries, 12 overseas timber-trading companies and several forest
concessions. The seminar on day 1 was also attended by representatives from FSC,
certification coaches, donor agencies and forest concessions.
In total there were approx.135 participants on day 1, 55 participants on day 2, 10 participants
on day 3-4, and 3 participants on day 5-7.

IV. Summary of presentations

Bambang Hendroyono, Director General of Forest Business Development (Ministry of
Environment and Forestry) explained all the efforts undertaken by the ministry towards the
improvement of legal and sustainable management of forests and forest product industries.
All forest concessions and industries need to comply to this new Timber Legality Assessment
system or SVLK as from January 2015 in order to get so-called V-legal export permits. From
1 January till 10 November 2014, 80 thousand V-legal documents have been issued.
Government clearly sees a positive impact on trade since the implementation of SVLK
certification scheme. As regards voluntary certification, the ministry sees that as
complementary and helpful towards achievement of the ministrys own targets for SVLK, and
as helpful in the promotion of Indonesian forest products in overseas markets.
Nurlaila Nur Muhammad, Director of Export of Agriculture and Forestry Product (Ministry of
Trade) summarised the new governments emphasis on export-led growth and the need for
supporting infrastructural investments. Government set itself very ambitious growth targets of
10% annually for exports. The certification of agricultural and forestry products is seen as
useful in gaining the confidence of international markets.

Seminar report APHI TBI Sustainable Business Event 2014

Cindy Squires, Executive Director, International Wood Products Association (IWPA),

presented the major factors affecting tropical timber imports, e.g. a general anti-import
sentiment, regulations against illegal logging, more awareness on sustainability, product
quality regulations, and substitution by composites and plastics. IWPA takes a central role in
promoting tropical timber, identification of new market opportunities, and education of its
membership. The USA housing market is recovering and the import of forest products is
picking up significantly again. Indonesian forest products exports, mostly plywood, are not
following and are still much below previous export levels. Yet, new opportunities are
presenting themselves, e.g. the revision of the generalized system of preferences, the call for
reduction of trade tariffs on green goods, anti-dumping regulations, etc. Furthermore, the
Lacey Act requires a sound understanding of the origin of a product, due diligence is gaining
more attention. US industry is increasingly looking for brand partners, not commodity
salesmen, and compliance includes all rules, not just legality. Serious adoption of effective
chain of custody programs and certification schemes, improves the perception of imported
forest products and their sales.
Anand Punja, Head of Sustainability of the Timber Trade Federation UK explained that 2014
has been a very strong year for sales of tropical timber in the UK, the best since 2007 and
imports are expected to grow further in 2015, even though there are still many uncertainties,
which can influence negatively (financial sector reform, weakness in EU economies and the
impact of this on UK economy). UK importers not always buy directly from the country of
origin, e.g. they also buy from other European tropical timber traders. However, in the top 7 of
tropical hardwood producing countries exporting to the UK, Indonesia takes the 7the position
only, way behind Cameroon and Malaysia. Still, the UK market uses a lot of tropical species
that Indonesia also produces e.g. keruing and meranti spp. On the one hand, the EUTR has
lead to some supply moving away from EU to other markets, especially as they tend to be
less fussy in terms of species mix or quality. On the other hand, the UK nowadays has lots of
interest in timber and will continue to be an important market in the future if the timber
sector gets the story right. Responsibly sourced products are the foundation for this.
Rudy T. Luwia, Vice Chairman of Indonesia Furniture and Handicraft Industry Association
(ASMINDO) showed how world furniture consumption is steadily growing. Yet, mostly
Chinese producers benefit from this growth they take 30% of the global market. In stark
contrast, Indonesia has less than 0.5% market share only. ASMINDO therefore set itself a
most ambitious target to achieve 8% market share in 5 years time, and 20% in 10 years
time. This is feasible, since Indonesian per capita income itself is improving, its index for
competitive industrial performance is improving, and Indonesia has huge forest stock in
natural forests, man-made forests and community forests. Indonesian species are highly
appreciated, e.g. teak and rattan. Government has big investment plans to improve
infrastructural conditions too. Indonesian producers must work hard now to comply with the
legality regulations introduced or being introduced in big trading blocks as USA, EU, Japan
and Australia. But Indonesian products are of high quality - Indonesians are excellent
craftsmen, art is in their blood.
Eko Pratomo, Executive Director of PT. Dwimajaya Utama, explained how their company
strives towards managerial excellence. The company works together with various sustainable
forest management support schemes, resulting in various recognitions e.g. PHPL good
rating, FSC certification, and APHI award for best social management. To achieve this, the
company had to introduce many best practices in the fields of planning, production, forest
development, community relationships, and worker conditions. It follows that all these
measures add cost to operations, while forests are under consistent pressure from mining
and agro-plantations. To survive, markets must recognise the intrinsic values of natural forest
management and pay a reward for the extra effort invested in forest certification.
Budi Hermawan, Indonesian Wood Panel Association (APKINDO) explained that plywood
dominates the panel industry in Indonesia. Focus is quickly changing from Sumatra and
Kalimantan, where natural forest species were exploited, to Java, than now have 43% of
active mills. Since 2009, export value is growing again but is still only around half of

Seminar report APHI TBI Sustainable Business Event 2014

production in 1993. Asia is the main destination (about 55%), followed by Middle East (14%),
USA (7%) and EU (6% only). In terms of production, unfair competition from illegal logging or
land clearing is being addressed better than before thanks to the SVLK program. There is a
huge and skilled workforce available, and Indonesia has the potential to develop raw
materials from fast growing species due to a suitable climate and the availability of sufficient
land. ON the other hand, costs are increasing, and with the global recession, consumers opt
for the cheapest option, without consideration of the environmental concerns. Producers from
other countries, with less law enforcement, also spoil the market. What is seen as a
contradiction though, is that buyer countries demand legality documentation but are not
willing to cover the extra costs for green wood products. If there is a premium, it is not
balanced with the costs to meet the standards of sustainable forest management. Therefore,
governments, NGOs, importers and retailers need to educate and socialize to end-users the
importance of legal and green products that hopefully will result in higher consumer
willingness to pay.

V. Highlights of the working groups

The audience was divided in three groups to discuss the opportunities and challenges in
international timber trade. Main outcomes included the following:

Overseas markets (USA, UK) have strict requirements as to quality. Instead of seeing
this as a barrier, Indonesian industry should see this as an opportunity (early
adopters). More product innovation is needed.
Indonesia looses market share because of its very strict regulations on minimum
levels of processing (profiling of sawn timber products)
Markets are not sufficiently aware of the intrinsic values of certified products, e.g. the
conservation of natural forest, indigenous culture, and endangered wildlife species.
The Indonesian wood sector is not seen to do much promotion. Better promotion
materials would be helpful to overseas traders in approaching buyers.
In terms of promotion the Malaysian government is more aggressive compare to
Indonesian government.
Indonesian wood products must tell their story on how they managed the forest
accordingly to the standard.
Importers are willing to give the premium if their Indonesian counterpart is helping
them in marketing the products.

Discussion in the working group for wood working industries:

TBI should encourage the forest financing aspect as it could provide improvement
both in the supply side (the concession) and also the manufacturer side.
Concessioners within this group mentioned about the lack of appreciation for the
market to the efforts made to achieve some scheme for forest certification.
Meanwhile the manufacturer disagrees with the statement above while saying said
that theyve added more value to the log price from certified (both SVLK and FSC).
But they also admitted that the additional value/premium price is lesser than the
expectation, as they also facing the pricing problem when selling the product abroad.
The buyer in this group mentioned that apart from the certification claim, they also
appreciated if the producer side (Concession and manufacturer in Indonesia) would
add more of a story behind the timber product which could attract more attention
and preference from the end consumer.

VI. Feedback and recommendations

We circulated a concise survey to 12 overseas buyers and 24 wood industries asking for their
opinion and feedback on the event program.
All participants were satisfied with the program and indicated that they would participate in a
next event. 73% indicated that this event generated new business contacts. 17% of
participants succeeded making business deals immediately during the event, while 33% of
buyers indicated that they are still under negotiating with their new business partners.

Seminar report APHI TBI Sustainable Business Event 2014

Some recommendations that were made:

Shorter program, 1 day is enough

Keep the event location in Surabaya, considering practicality visiting wood factories.
Give it larger scale, invite more importers (Asia, Australia, and New Zealand,
European) as well as more suppliers/producers/manufacturer/companies
Organise this event regularly, even though not all the visiting buyers will attend every
time

VII. Annexes
a. List of participants (day 2)
Overseas timber trading companies:
1. Inter-Continental Hardwoods
2. Wood Brokerage International
3. Dekker Hout Den Haag BV
4. Felix Clercx
5. Fetim Group
6. Timber Trade Connection
7. Timbrian Europe
8. Timber Connection Ltd.
9. Laschwood International
10. Masterlinq
11. Wood United
12. Taraca Pacific Inc.
Indonesian wood industries:
1. PT. Karya Guna Ekatama
2. Perum Perhutani
3. PT. Seng Fong Moulding Perkasa
4. PT. Kayu Multiguna Indonesia
5. PT. Indo Furnitama Raya (IFURA)
6. PT. Agung Kharisma Jaya Abadi
7. CV. Jati Makmur
8. PT. Profilindah Kharisma
9. PT. Karunia Rejeki Abadi (KAREA)
10. PT. Bogowonto Primalaras
11. PT. Sumber Mas Indah Plywood
12. PT. Jatim Sentra Utama
13. PT. Inhutani I
14. Integra Group
15. PT. Sumalindo Lestari Jaya Global
16. PT. Diraja Surya Furniture
17. PT. Haswin Hijau Perkasa
18. CV. Foresindo Jaya Timber
19. PT. Prima Coating Cemerlang
20. PT. Indo Veneer Utama
21. PT. Antamas
22. CV. Almenta
23. PT. Sinar Wijaya Plywood Industries
24. PT. Aneka Rimba Indonusa

Seminar report APHI TBI Sustainable Business Event 2014

b. Program
TBI-APHI SUSTAINABLE BUSINESS EVENT
Boosting international trade in certified wood products from Indonesia
Monday, 10 November 2014
Balai Adika, Hotel Majapahit Surabaya
Time

Agenda

11:00 12:30

Lunch and registration

12:30 12:35

Opening Remarks
Mr. Jesse Kuijper, Executive Member of TBI Board

12:35 13:00

Key note address

Mr. Ir. Bambang Hendroyono, MM, Directorate General of Forest Business
Development (BUK)

13:00 13:10

Key note address

Mr. Irsyal Yasman, Indonesian Association of Forest Concessionaires
(APHI)

13:10 13:20

Key note address

Mr. Boen Purnama, TBI Advisory Board

13:20 13:35

Indonesias wood panel industry status and outlook

Mr. Budi Hermawan, Indonesian Wood Panel Association (APKINDO)

13:35 13:50

Indonesias furniture and craft industry status and outlook

Mr. Rudy T. Luwia, Indonesian Furniture and Craft Industry Association
(ASMINDO)

13:50 14:05

USA tropical timber imports status and outlook

Mrs. Cindy Squires, International Wood Products Association (IWPA)

14:05 14:20

USA tropical timber imports status and outlook

Mr. Chris Connelly, Wood Brokerage

14:20 14:35

UK tropical timber imports status and outlook

Mr. Anand Punja, Timber Trade Federation UK

14:35 14:45

Coffee break

14:45 15:00

Certified forest management experiences from the field

Mr. Eko Pratomo, PT. Dwimajaya Utama

15:00 16:00

Parallel round tables on:

Growing the market share for Indonesian wood panel exports
Growing the market share for Indonesian wood working product
exports
Towards a competitive Indonesian forestry sector issues and
challenges

16:00 17:00

Plenary presentation of working group outcomes

17:00 17:10

Closing

17:10 17:30

Press conference

18:00 Finish

Buffet with cultural program

Seminar report APHI TBI Sustainable Business Event 2014

Tuesday, 11 November 2014

Time

Agenda

09:00 10:00

Registration and coffee

10:00 12:00

Business meeting session I

12:00 13:00

Lunch

13:00 15:00

Business meeting session II

15:00 15:10

Coffee break

15:10 17:00

Business meeting session III

Wednesday, 12 November 2014

Time

Agenda

07:30

Leave Hotel Majapahit (gather at the lobby)

09:30 12:00

PT. IFURA (moulding, flooring)

12:00 13:00

Lunch

14:00 16:00

PT. Integra (furniture, moulding, decking, flooring)

Thursday, 13 November 2014

Time

Agenda

07:30

Leave Hotel Majapahit (gather at the lobby)

09:00 11:00

PT. Sumber Mas Indah Plywood (plywood)

12:00 13:00

Lunch

Friday, 14 November 2014

Time

Agenda

08:30

Leave Hotel Majapahit (gather at the lobby)

10:30

Flight Surabaya Palangka Raya

11:40

Arrive in Palangka Raya

12:00 12:30

Lunch

12:30 16:00

Palangka Raya airport to PT. Dwimajaya Utama basecamp

16:00 17:00

Electricity out

17:00 19:00

Free time

19:00 21:00

Dinner at guest house

Saturday, 15 November 2014

Time

Agenda

07:00 08:00

Breakfast

08:00 16:00

Go to production forest (lunch will be in the filed)

16:00 17:00

Electricity out

17:00 19:00

Free time

19:00 19:30

Dinner at guest house

Seminar report APHI TBI Sustainable Business Event 2014

19:30 21:00

Meet and greet with PT. Dwimajaya Utamas management

Sunday, 16 November 2014

Time

Agenda

08:00 09:00

Breakfast

09:00 11:00

Meet and greet with PT. Dwimajaya Utamas management

11:00 16:00

Basecamp Palangka Raya

17:30 19:10

Flight Palangka Raya Jakarta

c. Press release

!
!

PRESS RELEASE

Surabaya, 11 November 2014

Overseas markets see positive improvements in Indonesian forest management

Surabaya International markets see new opportunities for trade with Indonesia given its progress in
certified forest management, giving assurances about the legal and sustainable origin of timber
products from natural forest. Today, 11 November 2014, the Indonesian Association of Forest
Concessionaires (APHI) and The Borneo Initiative (TBI), a Dutch foundation that promotes
sustainable forest management, brought together 12 international timber companies from the USA,
Europe and Asia plus 27 Indonesian industries involved in the production of plywood, veneer, indoor
flooring, outdoor decking, truck flooring and garden furniture.
The outcome of this event was most positive for our company, states Mr. Henry Kumala of PT. Jatim
Sentra Utama, a company that specializes in outdoor wood decking products. We made many
previous efforts towards entering the USA market, but this time we have been very successful. We
signed up orders with at least two USA companies and one UK company, on the strength of our SVLK
certification as well as FSC certification. As a company, we are very confident that we can meet
international competition and expend trade volume much further. This is a welcome statement in
view of the governments target to increase exports 3-fold, as explained by Mrs. Nurlaila Nur
Muhammad of the Ministry of Trade.
Our company wants to distinguish itself by its quality of production, states Mr. Ivan Hartono of PT.
Sumber Mas Indah Plywood. This event was very helpful in raising our company profile among
buyers. We saw a lot of interest in our products from the overseas buyers, although pricing remains an
issue. So it would help when Indonesian Government could help us to bring down the costs of
production via improvement in infrastructure (ports and roads), while Indonesia is much behind
other countries like New Zealand with the establishment of forest plantations which would help us in
producing a more competitive product.
I have been visiting Indonesia for 20 years now, and I am most impressed to see great improvements
in forest management says Mr. Chris Connelly of Wood Brokerage and President of IWPA. I am very
happy to see the progress made by Government in developing and implementing its new system of
regulations to control legal harvesting (SVLK). In addition, sustainability is much ensured too by the
great number of forest concessions and industries that have achieved, or are on the way to achieving
voluntary forest management certificates (FSC). As USA buyers, we feel now so much more
comfortable in conducting business with Indonesian forest industries. Looking forward, Mr. Connelly
says; to grow its market share in the USA market, the Indonesian forestry sector must become better
at promoting all the effort that is going into legal and sustainable production, and the intrinsic values
of sustainable harvesting from natural forests that safeguard so many values wildlife, indigenous
cultures, and carbon stocks to mitigate climate change. USA markets must be sensitised to appreciate
the special origin of Indonesian wood products.
It is most encouraging to see Government and private sector to work together on the implementation
of SVLK, really an outstanding achievement. The willingness of industries to accept this legality
standard is very good to promote timber products offered. Not to punish but to support and to advice,
is clearly the right path forward. The business event hosted by APHI and The Borneo Initiative was
resulting in actual business transactions for our company. We feel very encouraged to move forward
with APHI and The Borneo Initiative on promoting trade between Indonesian and USA companies
says Mr. Lenny Shibley of Inter-Continental Hardwoods. Adds Mrs. Cindy Squires, Executive Director
if IWPA: IWPA is pleased to work closely with The Borneo Initiative to connect responsible
Indonesian suppliers to the North American market place. This partnership is an important part of
IWPAs mission to build acceptance and! demand! in! North! America! for! globally! sourced! wood!

production!from!sustainable!managed!forests.!
!
!

Seminar report APHI TBI Sustainable Business Event 2014

!
!

Editorial note: For enquiries and/or pictures please contact Indri (indri@theborneoinitiative.org)
Indonesian Association of Forest Concessionaires (APHI)
APHI is a trade association for forest concessionaires in Indonesia. http://www.rimbawan.com
The Borneo Initiative
The Borneo Initiative is a non-profit organisation that promotes sustainable forest management in
Indonesia. In close coordination with the Indonesian Association of Forest Concessionaires (APHI),
we extend financial support to forest enterprises in Indonesia and neighboring countries with the
certification of their forest management. We operate a sustainable business program that promotes
voluntary certification (FSC) additional to the mandatory certification (SVLK), in corporation with a
wide platform of partners that include TFF, GFTN, TFT, TNC, and Wana Aksara. The Borneo
Initiative receives funding from The Sustainable Trade Initiative (IDH) (see below), Dutch housing
associations and several private charities. For more information: www.theborneoinitiative.org
International Wood Products Association (IWPA)
Established in 1956, IWPA is the leading international trade association representing the North
American imported wood products industry, with over 200 companies and trade organizations
engaged in the import of hardwoods and softwoods from sustainably managed forests in more than 30
nations across the globe. Association members consist of three key groups involved in the import
process: U.S. importers and consuming industries, offshore manufacturers and the service providers
that facilitate trade. http://www.iwpawood.org

d. Media coverage

Houtwereld Magazine
Vooruitgang Indonesi gewaardeerd (printed version)

Seminar report APHI TBI Sustainable Business Event 2014

Kabar Indo
Pasar luar negri incar produk kayu legal dari Indonesia

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Berita Surabaya
Pasar luar negri incar produk kayu legal dari Indonesia

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Global respon positif manajemen kehutanan

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Tempo Bisnis
Industri kecil diminta menggunakan kayu bersertifikat

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Pustaka Lewi
The Borneo Initiative galakan perdagangan kayu bersertifikat

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