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Development of Indonesian Rattan Processing Industry

Monday, April 8th 2019.

To improve the competitiveness of the national rattan processing industry, it can be seen from the development of the rattan industry as follows: 1. Potential of Rattan Raw Materials Indonesia is the largest rattan producing country in the world, estimated that 80% of rattan raw material in the world is produced by Indonesia, the rest is produced by other countries such as: Philippines, Vietnam and other Asian countries. Rattan producing areas, namely Kalimantan, Sumatra, Sulawesi and Papua, with the potential of Indonesian rattan around 622,000 tons / year 2. Development of Rattan Processing Industry (2003-2006) In the period 2003-2006, the capacity of the national rattan processing industry only experienced an average growth of 0.38% per year or only increased from 545,405 tons / year to 551,585 tons / year and production realization decreased from 381,784 tons in 2003, to 372,761 tons in 2006 or grew by an average – 0.79% per year. The export volume of processed rattan decreased from 193,078 tons in 2003 to 172,782 tons in 2006 or decreased by an average of – 3.63% per year, but on the other hand the value increased from US $ 359 million to US $ 399 million or up an average of 3.58% per year. This indicates an increase in export selling prices per unit of processed rattan products. Meanwhile for processed rattan imports, although the volume and value is relatively small compared to the volume and value of exports, but the growth is very rapid, so it needs to be watched out for the period 2003 – 2006, processed rattan imports increased from 788 tons (worth US $ 1.41 million ) increased to 2,709 tons (worth US $ 3.74 million) or the volume of imports grew by an average of 50.92% per year, while the value increased by an average of 38.43% per year. The rattan industry is mostly located in Cirebon and its surroundings. In the period 2001 – 2004, both the number of companies, production, exports and employment in the rattan processing industry sub-sector in Cirebon increased, where the number of companies increased from 923 business units to 1,060 business units, production increased from 62,707 tons to 91,181 tons, exports increased from 32,881 tons (worth US $ 101.67 million) to 51,544 tons (worth US $ 116,572 million) and employment absorption increased from 51,432 people to 61,140 people. However, since 2005, both production, exports and employment in the rattan processing industry sub-sector in Cirebon experienced a significant decline. And the decline continued in 2006.


In 2007, some rattan furniture producers in Cirebon experienced a decline in production, including those which were able to export as many as 120 containers per month, currently only able to export 15-20 containers, even some of them are no longer producing. This is caused by the difficulty of obtaining quality rattan raw materials, but on the contrary in competing countries these raw materials are easier to obtain. As a result, many small rattan entrepreneurs who were originally sub-contractors did not get any more jobs, which caused a lot of unemployment. Besides that, it also has an impact on the delays in repaying credit by the rattan processing industry to banks (aka bad credit). If this is not immediately resolved, it is possible that the rattan processing industry will become worse off. The decline in the rattan processing industry, both occurring on a national scale and in the Cirebon industrial center since 2005 was allegedly the reason for the issuance of Decree of the Minister of Trade No. 12 / M-DAG / PER / 6/2005 concerning Provisions on the Export of Rattan, which allows the export of raw materials for rattan and rattan to be half-finished (coupled with the flow of rattan raw materials abroad illegally), making it difficult for domestic rattan processing industries to obtain raw material. On the other hand, the rattan processing industry in competing countries, especially China and Taiwan, is growing rapidly again, thus seizing market share and the export market potential of rattan products from Indonesia. On the other hand, Chinese rattan product exports which in 2002 were still balanced with Indonesia amounting to US $ 340,000, in 2006 it has increased four-fold, while Indonesia as a producer of rattan raw materials exports its rattan products to decline. 3. Policy in the Field of Rotation and Its Impact on the National Rattan Industry Before 1986, Indonesia was the largest exporter of rattan raw materials in the world, while the national rattan processing industry at that time had not yet developed. Since 1986, namely the issuance of Decree of the Minister of Trade No. 274 / KP / X / 1986 concerning the prohibition on the export of rattan raw materials, the national rattan processing industry experienced a very rapid development, which increased from only 20 companies to 300 companies.


Meanwhile, the rattan processing industry abroad (Taiwan and Europe), whose raw materials rely on supplies from Indonesia, experienced bankruptcy and shifted its business to Indonesia, especially in the Cirebon area. In a further development when the export of rattan raw materials was reopened in 2005, namely the issuance of Decree of the Minister of Trade No. 12 / M-DAG / PER / 6/2005 concerning Provisions on Rattan Exports, the national rattan processing industry has begun to be hampered and business activities have become sluggish, resulting in unemployment, bad credit, reduced foreign exchange earnings and a decline in the national rattan processing industry’s contribution formation of GDP. On the other hand in competing countries such as China, Taiwan and Italy the rattan processing industry has risen again and is growing very rapidly. 4. Problems faced by the Rattan Processing Industry include: • Raw materials for the national rattan processing industry have difficulties in obtaining raw materials which are caused by the existence of rattan raw material export policies and the continued proliferation of rattan smuggling abroad Production of mastery of finishing technology and product design Processed rattan is still determined by overseas buyers (job orders). · Marketing Still weak market intelligence, resulting in limited export market information. 5. Development Strategy To overcome the problems faced by the rattan processing industry mentioned above, a strategy was developed as follows: Reviewing the export policy of rattan raw materials and increasing eradication of smuggling of rattan abroad. Enhancing market intelligence capabilities, by optimizing the functions of Atperindag and diplomatic representatives abroad, actively participating in prestigious rattan product exhibition events abroad. 6. Follow-up Policy To revive the national rattan processing industry, support from all parties (stakeholders) is needed to cooperate with each other synergistically by prioritizing national interests above personal, group and sectoral interests. It is necessary to review the Rattan Export Provisions contained in the Minister of Trade Regulation No. 12 / M-DAG / PER / 6/2005, in order to guarantee the continuity of domestic supply of rattan raw materials, as well as to increase the competitiveness of rattan finished goods products abroad.

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