Govt Overcomes Obstacles in Furniture Industry

Jakarta, InfoPublik – The Indonesian furniture industry has a huge potential to grow and develop, given the abundant raw materials and skilful craftsmen.

The government is prioritizing the development of the labor-intensive export-oriented sector to increase productivity and competitiveness through strategic policies and by reducing a number of obstacles.

"The government is putting all efforts to reduce obstacles hampering national furniture businesses in the process of production, marketing, and export," said Industry Minister Airlangga Hartarto in a press release, Tuesday (3/28), on the sidelines of Global Manufacturing and Industrialisation Summit (GMIS) 2017 in Abu Dhabi, United Arab Emirates.

He explained that one of the obstacles is the timber legality assurance system (SVLK). It demands the mandatory V-Legal document for furniture industry that is currently not advantageous, especially in terms of the acceptance of V-Legal document in export destination countries.

Currently, Indonesia has only secured agreement with the European Union (EU) has through the Forest Law Enforcement, Governance and Trade Voluntary Partnership Agreement (FLEGT VPA). Meanwhile, the SVLK policy is applied for exports to all destination countries.

In addressing the issue, Airlangga stated we need to establish coordination with EU Governments (G to G) to eliminate technical obstacles that hamper Indonesian products entering the EU market. 

“We hope Indonesian furniture industry gets a privilege to enter the EU market through Greenline and negotiation with other export destination countries in increasing the acceptance of SVLK,” he said.

An alternative measure is removing or excluding furniture and wooden handicraft products from SVLK obligation. “We ask SVLK to be simplified and disseminated to all consumers,” said Airlangga. 

The ministry also proposes that companies receiving Import Tax Waiver for Materials for Export Oriented Goods (KITE) facility to be exonerated from securing the reccomendation from Environment and Forestry Ministry to import timbers, because the process would hamper production process. 

“Nowadays, furniture industriy needs to import many raw materials including oak and poplar woods, which are not available in the country.,” he said.

Another obstacle, Airlangga added, is the quarantine process by Agriculture Ministry for furniture samples. 
The time-consuming quarantine process of furniture sample delay the furniture production process. He proposed that furniture samples require no quarantine. Furniture products are processed products that have passed the fumigation process in the country of origin before imported.

The government has also prepared tax facility such as tax allowance for furniture businesses in Indonesia. It is expected that Indonesian furniture products will be more competitive. 

“Furniture industry is one sector that could utilize the income tax deduction and  tax payment postponement policy,” said Airlangga.

The incentive is given in order to ease the companies’ cash flow and to reduce the manpower cost. “If they require the incentive, we would give the recommendation. There have been five recipient companies,” he concluded. (Translator: Erik Limantara)