Creative woodworking is part of the Indonesian tradition and woodcarving has been practised in Indonesia since ancient times.
- Woodcarving and furniture have a rich tradition and are part of the Indonesian culture.
- Based on raw materials used in exported products, wooden furniture is still the largest exported commodity.
- In 2018, revenue in the furniture segment amounts to IDR 11 trillion (USD 779 million), with an expected annual growth rate of 19.1% (CAGR 2018-2022), resulting in IDR 22 trillion (USD 1,568 million) in 2022.
- Indonesian furniture exports reached an estimated IDR 28 trillion (USD 2 billion), which is 1.5% of global exports.
- The Indonesian Timber Legality Assurance System (Sistem Verifikasi Legalitas Kayu, or INDO-TLAS) took effect in 2013 to ensure the global timber market fulfils the legality of its timber products.
- Global player IKEA from Sweden entered the Indonesian market in 2014.
Potential of Woodworking
Nowadays, woodcarving in Indonesia can be easily found in the form of statues, handicrafts and furniture. A huge supply of timber and woodcarving tradition makes Indonesia the best place to find creative furniture products. According to the Indonesia Ministry of Cooperatives and Small and Medium Enterprises (SMEs) for every IDR 14.2 trillion (USD 1 billion) of investment, approximately 500,000 jobs are created in the labour-intensive furniture and handicraft sector.
Wooden Furniture and Handicraft in Java and Bali
Many people, especially in Java and Bali, are known for their woodcarving skills. Java is also one of the main locations for wood, and thereby the production of wood furniture and handicraft is also concentrated in Central Java area—Jepara, Klaten, Sukoharjo, Semarang, Solo and Cirebon.
It is also worth knowing that Indonesian furniture is produced from a variety of raw materials, not just wood. These diverse raw materials include rattan, sawn, plastic, and even iron. Annually, the Indonesian wood furniture industry requires 4.5 million m2 of timber. The main timber species for woodcarving are teak, mahogany and rosewood also known as sonokeling.
Indonesia’s furniture and handicraft industry has long been considered as an export haven only. However, the private consumption is picking up and now driving the economic growth in Indonesia. As a result, the potential in the domestic market is currently taking centre stage. Every year, Indonesia’s domestic sales in furniture and handicraft are worth over IDR 9.8 trillion (USD 700 million).
The Indonesian handicraft and furniture sector comprises more than 3,500 companies, but real number of SMEs in this sector is much higher, with many of them partially owned by foreign direct investments. With its low cost in mass production, local furniture brands such as Olympic Furniture, Ace Hardware, and Informa dominate the Indonesian market.
Entrance of Overseas Furniture Giant
In 2014, the entrance of IKEA from Sweden also made a tremendous impact in this sector, once again proving the immense potential of this industry. IKEA aims to open a total of three stores in Indonesia with a total investment of IDR 4.2 trillion (USD 300 million) over the next few years. The first IKEA store is worth about IDR 1.75 trillion (USD 125 million) and has been opened in Alam Sutera in Tangerang, Banten. Another two stores will be opened subsequently in Gandaria City and Pondok Indah in Jakarta.
Wooden Furniture and Handicraft Export
According to Central Statistics Agency’s data, Indonesia’s wooden furniture and handicraft exports reached IDR 28 trillion (USD 2 billion) this year. Products are exported to traditional markets in America, Europe, and China, as well as non-traditional markets in Africa, the Middle East, and Eastern Europe.
For handicraft alone, exports to these destinations account for 45% of the total trading, i.e. IDR 4.22 trillion (USD 301 million). These destinations are the United States, Japan, England, and Hong Kong. Based on raw material used in exported products, wooden furniture is still considered the largest at 59.5%, followed by metal (8.1 %), rattan (7.8%), plastic (2.3%), bamboo (0.5%), and others (21.3%).
Furthermore, the potential countries for furniture and handicraft export that are covered by SMEs facilitated by the Ministry of Cooperatives and SME, including Singapore, Australia, India, Pakistan, Saudi Arabia, Germany, Mexico, Spain, South Africa, South Korea, and Mongolia.
INDO-TLAS is arranged by a tracking system in multi-stakeholders to ensure the legality of timber traded in Indonesia. It is developed to support the implementation of applicable government regulations related to Indonesian trade. All woods from state-owned forests and private forest must hold verification of legality, to guarantee the origin of raw materials. Similarly, end-products from these materials will have to undergo the audit of legality as well.
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