Factors influencing the production of Indonesian sawnwood and plywood

The forest products industry of Indonesia grew rapidly after the establishment of the log export ban policy in May 1980. As a result, within about five years, Indonesia was transformed from the biggest exporter of tropical logs into a major exporter of processed wood products. To better understand this transition, this study presents multiple regression models of Indonesian sawnwood and plywood production and consumption based on time series data from 1970 to 1994.

This study had three main objectives: 1) to create models that can be used for projecting future production of Indonesian sawnwood and plywood, 2) to identify the relationship and establish the degree of association between production and factors that influence their trends, and 3) to analyze Indonesian forestry policies of log export ban and sawnwood export tax as they affect production of sawnwood and plywood.

Domestic sawnwood consumption was modeled as a function of population, log export policy (no log export ban vs. log export ban), and sawnwood tax policy (tax vs. no tax). Domestic plywood consumption was modeled as a function of population, consumer price index (CPI), and log export policy (ban vs. no ban). Export plywood consumption was modeled as function of exchange rate, log export policy, and sawnwood tax policy. The consumption and production of sawnwood and plywood were analyzed by multiple regression techniques. All parameters in the sawnwood and plywood equation were found to be significant. However, price did not influence the consumption or production of sawnwood and plywood significantly. All parameters in this study were found to be elastic.

It is found that, during the period under investigation (using 1970 as the base year), the production and consumption of Indonesian sawnwood and plywood increased considerably. The projection of sawnwood and plywood productions for 5 years (1995-1999) also shows an increasing trend.