The Indonesian wood products industry

This paper analyses the development of Indonesia's wood products industry, particularly the plywood industry, which from a small base emerged in the 1980s as one of Indonesia's major manufacturing industries. This account is of interest since it provides a good example of ‘export substitution’, that is, the enforced development of the wood products industry by limiting the exports of logs through prohibitive export taxes and subsequently by a partial and later by a total ban on log exports. However, because of the difficulties which the wood products industry, particularly the plywood industry, has experienced over the past decade, the question arises whether export substitution provides the proper incentives to develop an efficient manufacturing industry.