The Bamboo and Rattan Sectors in Asia: an Analysis of ... - INBAR

Laborers in the semi-processing factories earn wages of approximately Rp 3 200/
day. This compares poorly to the national standard of Rp 5 600/day. The Central
Sulawesi processing industry employs approximately 9 800 workers.
The largest proportion of the semi-processed rattan produced in Sulawesi is
used in the handicrafts and furniture manufacturing industries in Java (for a discussion
of this sector please see the Java case study below).
There is a high degree of vertical integration within the PCS. The collectors
work more or less as employees, paid on a piece-work basis by the traders. The
traders tend to have strong business relationships with regular buyers. In some cases,
their function is more like a manager on behalf of a semi-processing enterprise. In
turn, the semi-processors are often partners or subsidiaries of the finished product
manufacturers.
The Indonesian Furniture and Handicraft Association (ASMINDO) encourages
linkages among semi-processors in Sulawesi. It has attempted to exercise some control
over their business. For example, the local ASMINDO pressured the Central Sulawesi
government to impose a ban in 1991 on the export of unprocessed cane from the
island to other islands. This was devised as a means to cope with the uneven
development of rattan processing facilities on Java and the outer islands (which
continued to act as raw material suppliers). Exceptions are made on specific requests,
if the requesting exporting firm is a member of ASMINDO and has obtained its
concurrence.
The industry has changed significantly over the years, partly in response to
market forces, but mainly in response to deliberate policy changes. A series of
restrictions on the trade in unprocessed and then in semi-processed cane were
implemented. This changed the market structure faced by the cane products. It also
changed the incentives to the processing industry, and they responded by increasing
domestic processing capacity. However, while the changes have resulted in increased
domestic value addition, the benefits of this value addition are not realized at the
level of the producers.
The most influential policy affecting the Sulawesi rattan PCS has been the
nationwide imposition of ban on the export of unprocessed rattan in 1979, and
subsequently on the export of treated (1986) and then on semi-finished rattan
(1988). These regulatory mechanisms were replaced in 1992 with a prohibitive
export tax of US$10-15 per kg, which has the same effect. There are also a number
of other policies of the central and local governments that impact on the industry.
The study identifies three clear periods in the history of the industry. During the
first period, before the ban on the export of raw cane, Indonesia as a whole
exported a large proportion of her cane production. Just before the ban, the figure
was 87% unprocessed and semi-processed rattan. About 13% was consumed by
the domestic processing industry and only 1.35% of the finished product was
exported.
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