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NEWS UPDATES 2 November 2009

Export decline triggers mass layoffs at Indonesian furniture firms

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The furniture and crafts industry is being battered by the global economic downturn due to slumping export demand, the closure of more than 100 companies and dismissals of up to 1 million workers, reported the Jakarta Post.

The Association of Indonesian Furniture and Handicraft Exporters (Asmindo) revealed Friday many furniture and crafts enterprises in the country relied heavily on the export market and were therefore highly affected by a slumping overseas demand.

Full-year exports are estimated to drop by 30 percent, Asmindo chairman Ambar Tjahjono said.

"When the crisis hit late last year, the export demand dropped drastically and demand remains at a low rate," Ambar told the Jakarta Post at the 24th Indonesia Trade Expo at the Jakarta Fair Arena, Central Jakarta.

According to Asmindo's 2008 data, there are 4,700 furniture companies in the country.

Of that figure, about half are exporters. "Before the global financial crisis, we recorded the furniture industry, from the downstream to the upstream, employed about 8 million workers," Ambar said.

Following the decrease in demand from foreign buyers, many furniture and crafts entrepre-neurs were forced to lay off their employees.

Dismissals have been predicted to reach 1 million by the end of this year. "I have also been informed the businesses of more than 100 furniture exporters in Jepara and Surakarta in Central Java have been paralyzed," Ambar said, referring to two major furniture centers in the country, which also operate in Cirebon, West Java, and several cities in East Java.

As of July, Indonesia's furniture and crafts exports reached $998.35 million, down from the $1.24 billion recorded during the same period last year.

Wooden furniture exports, which contribute to more than half of the country's annual total furniture exports, dropped by 21 percent to $541.02 million from 2008's $684.99 million in the same period.

Last year, furniture and crafts exports reached $2.65 billion while its domestic sales hit $700 million, Ambar said. This year, exports are expected to reach $2 billion.

"I hope this year's Indonesia trade expo can help sell more furniture to international buyers," he said.

Asmindo is aiming to export $200 million worth of furniture as a result of the expo. "At least 27 countries from the EU confirmed their commitment to help increase furniture imports from Indonesia," Ambar said.

The target, however, is lower than last year's sales from the same event, which reached about $250 million worth of exports. 



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