| Furniture industry in Indonesia has boomed | | | | There has been no government initiative to |
| since the 1998 Asian crisis. The main reason | | | | support this industry. Furthermore, low |
| behind this boom was the weak rupiah, | | | | investment in machinery and training from |
| availability of abundant teak plantations and | | | | small manufacturers has rendered such |
| no or very little competition from outside. | | | | companies very stagnant. Most of the local |
| Furniture buyers from all over the world took | | | | manufacturers neither have marketing |
| advantage of this cheaper teakwood furniture | | | | knowledge nor top management will to present |
| prices including a lot of big global | | | | their products directly to offshore |
| hypermarkets. The result was the availability | | | | customers. The big foreign trading companies |
| of Indonesian teak furniture in almost every | | | | are exploiting this situation. They are using |
| part of the world. Plenty of small furniture | | | | local manufacturers to produce goods for them |
| manufacturing firms start entering this | | | | and market them at premium prices into their |
| furniture boom to provide cheap teak | | | | markets. These foreign companies are exerting |
| furniture to the global market, which | | | | lot of pressure on local manufacturers and |
| benefited everybody at that time. There is no | | | | demanding the cheapest price possible. This |
| denial that the growth in number of | | | | resulted in local manufacturers paying lower |
| enterprises and the number of jobs in | | | | wages to their workers, using lower quality |
| furniture sector did rose dramatically but | | | | raw materials and do everything they can to |
| since then other internal and external | | | | keep their businesses profitable. This |
| factors had slowed this Indonesian teak | | | | vicious circle has a bad effect on all |
| furniture boom. | | | | sectors of the industry: labor, investment, |
| | | | social responsibility, quality of products |
| Indonesian teak furniture industry is | | | | and so forth. |
| suffering from the scarcity and cost of the | | | | |
| raw materials. The illegally logged timber is | | | | Another challenge to Indonesian teak |
| not available the way it used to be few years | | | | furniture Industry is the competition from |
| back. This made the small furniture | | | | countries like Malaysia, Vietnam and China. |
| enterprises, which had benefited earlier with | | | | Malaysia is one of the major exporter of wood |
| the abundant use of illegal logged wood very | | | | furniture to the global market, though it |
| difficult to sustain and most of them have | | | | does not have plantation resources like |
| even stopped their operations. The prices of | | | | Indonesia, still very good amount of teak |
| teak timber for viable source (PERHUTANI) has | | | | furniture to the global market is exported |
| almost tripled in last 7- 8 years and the | | | | from Malaysia. It is because of the fact that |
| buyers from outside still want to pay the | | | | illegal logged timber from Indonesia still |
| same or even less. They don't want to | | | | goes to Malaysia. Malaysia, Vietnam, and |
| increase the prices at which they used to buy | | | | China export the teak furniture from their |
| as they are selling their goods cheaper in | | | | countries at cheaper prices than Indonesian |
| their markets compared to 7 years back. This | | | | though those countries still lack experienced |
| has forced many small enterprises to lower | | | | and skilled craftsmen. |
| down the quality of teak timber used in their | | | | |
| furniture. This has resulted in the evolution | | | | In nutshell, the Indonesian teak furniture |
| of treated teak furniture in the market. | | | | industry has benefited a lot of people in |
| Treated teak timber furniture is made of very | | | | Indonesia and abroad but the competitive |
| low quality timber which is then chemically | | | | pressures now from inside and as well as from |
| treated to make sure that furniture has the | | | | outside, are dragging the industry into the |
| homogeneous color. | | | | race to the bottom. |
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