THE WOOD INDUSTRY IN 2022 IS EXPECTED TO BECOME BETTER

The wood industry is fairly stable because in terms of raw materials, it is quite abundant with the demand mostly coming from the handicraft and furniture industry. Although in general the market is still under pressure from the impact of the Covid-19 pandemic, the market situation for the furniture and handicraft industry is expected to return to the pre-Covid-19 situation soon due to market dynamics that continue to change in a positive direction. Although this year is still predicted to experience a decrease, the decline is not as big as last year and the prospects for the furniture and handicraft market in the future will continue to experience growth. Research And Markets states that the global market value is expected to reach USD 850.38 billion by 2025 at a CAGR of 6%.

The positive side for the packaging sector is the abundance of wood raw materials in Indonesia which is able to ensure the fulfillment of wood raw material needs for the packaging sector.

growth of wood industry in Indonesia

The emergence of a pandemic in 2020 increases the demand for wood from the logistics and packaging sector. Demand increased in line with the implementation of large-scale Social Restrictions which caused many business players to condition their work equipment to be transported to their respective employees’ homes. In addition, the increase in online shopping also affects the need for the wood.

In 2021, the wood industry experienced an increase from the wood furniture sub-industry which reached around 8%. However, this was not enough to help restore its economic growth, so it still experienced a decrease in growth of 1.55 points to -3.71%. The decrease occurred in all components that make up Bank Indonesia’s Prompt Manufacturing Index (PMI-BI), particularly receipts of input orders, total employees, production volume and finished goods inventory volume, which were in a contraction phase.

Previously, the wood industry experienced the biggest decrease in 2019. This was due to the decreasing export value of processed wood products. The Indonesian Forest Entrepreneurs Association (APHI) stated that the total value of Indonesia’s processed wood exports in 2019 reached USD 11.64 billion, a 4% decrease from the export value in 2018 of USD 12.13 billion. The decrease was the impact of global economic conditions, namely the trade war between the United States and China which resulted in a decrease in the volume of trade in the forestry sector in 2019. This is because the largest export destination for Indonesian processed wood products is China in the top position, followed by Japan, the United States, the European Union and Korea.

However, based on its growth in recent years, VISI predicts that in 2022 the growth will still move negatively and will only be 0.39 points better than 2021. This is based on conditions that have not improved from previous years. As well as the decreasing need for logistics because many companies are starting to carry out offline activities.

However, many players believe that in 2022 the conditions will be much better. This is based on the PMI-BI in Q1/2022 of 53.83% or an increase from the achievement in Q4/2021 which was 50.17%.