Arm themselves before go to war is a necessity for SME. Its weapon is SVLK to enter the export market (European Union).
If someone asks where the wooden handicraft- or wooden carving-producing region is, many will immedi- ately answer “Jepara.” Indeed Jepara is not the only wooden carving-, wooden handicraft- and furniture-producing region in Indonesia, but the popularity of Jepara cannot be separated from its history as wooden carving-, wooden handicraft- and wooden furniture-producing region. In Jepara wooden carving and handicraft are part of the daily life of its people which have been preserved until now.
In the middle of last year, my journey to a number of carving- and handicraft- producing centers in Jepara made me aware of the real condition of the in- dustry. As far as I see, the majority of the wood industry are small and medium business (SME). One of the craftsmen told me about the ups and downs of this industry in Jepara. The glory days of furniture industry occurred in 1998, and its business journey was getting heavier in 2000s. One of its reasons is low quality control of furniture, including its raw material. The craftsmen started to ignore good quality due to the flooding of furniture sales and demand from export market. While in reality, quality is the competitive key of the product.
Perhaps, this experience can become a lesson for the craftsmen in carving, handicraft and furniture industry throughout the country. Given that the competition is getting tougher and the world market is becoming more open to exporters from any country, the SME is demanded to become a competitive business entity. And other challenges will come as business and economy progresses. One of the challenges that is not less important for furniture busi nessmen and craftsmen is Wood Legality Verification System (SVLK).
The reason is very clear, without obtaining the SVLK, the trade to export market especially to the European Union will be hampered. While the European Union is one of the largest export markets for furniture, or more than 30% of Indonesia furniture export goes to the European Union. Of course, the export that has been developed so far cannot be expected to tumble down due to the barriers from the importer country. Furniture SMEs from Central Java won’t stay silent if their exports are being hampered. Furniture products made by SMEs from Central Java have a large proportion in export activities, at least 33% of the total national fur- niture export. After all the growth of furniture export from Central Java has increased significantly recently. The export growth reached 18.7% in 2010. The promising opportunity offered by the export market will not be overlooked. Thus, the wood furniture and handicraft industry must be responsive to it, given that the implementation of Forest Law Enforcement, Governance and Trade – Voluntary Partnership Agreement (FLEGT-VPA) with the European Union will become effective next year.
Certification that will guarantee the wood legality will also determine the acceptance or rejection of its derivative products, both handicraft and furniture, by the export market. Furniture and handicraft industry (should) no longer use uncertified wood raw material, or undermine this issue. Every wood no matter how little it is, must be accompanied by a certificate. The experience of several Jeparan craftsmen should become a lesson. A number of craftsmen purchase several logs due to small requirements, but without being accompanied by a valid purchase proof and only rely on trust. While the SVLK requires the completeness of document that certify the wood legality in each movement of raw material and its derivative products. Log seller must be able to show Certificate of Wood Origin to the buyer, and other certificates in each process until it become a finished product.
GROUP CERTIFICATION, THE STEP IS GETTING EASIER
SVLK principally exists not to complicate businessmen who manufacture wood derivative product. Especially those from small and medium businesses. The Regulation of Minister of Forestry Number 38 year 2009 as revised by the Regulation of Minister of Forestry Number 68 year 2011 which has been enacted last year is the solid proof. The Ministerial Regulation governs on the Standards and Guidelines of Performance Evaluation of Sustainable Forest Management (SFM) and Timber Legality Verification for Permit Holder or on Private Forest. The revision of this Ministerial Regula- tion open an easy way for SMEs in timber sector required by the SVLK.
SMEs are allowed to use certification facility in group or group certification. Group certification will become a “solution” to the problems faced by the SMEs, such as those faced by Margono from Small Craftsmen Association of Jepara (APKJ) as furniture crafstmen who experienced difficulty and felt burdened in adopting the SVLK. This scheme will reduce the cost incurred by the SMEs since it will be borne collectively (business unit). In addition, other benefit include the capability of the business unit to be further used as umbrella for applying for Registered Exporter for Forestry Industry Produk (ETPIK) for export requirement.
However, group certification requires the SMEs to have a group or association endorsed by a certificate as legal business unit under the national law. This is not a common practice among SME group or association. Even if they have already been consolidated, their group is not valid according to the law. Thus, legalization of business organization will become an initial step for SMEs who have organized themselves.
In addition to initiative from the SME, large businessmen also play a major role in facification of the SVLK implementation. In adopting the SVLK, large businessmen can serve as “foster parent”. It means that large businessmen who have many SME partners can take the initiative. This initiative is not for helping the SME only, but in a sustainable business framework, large businessmen is able to preserve their business ecosystem with the SME. Business mutualism under this scheme is not based on pity for the SME, instead it emphasizes on business relationship in the form activite initiative from large businessmen to give certainty to its business.
Ideally, the more businessmen who serve as “foster parent” of the SVLK for the SME, the stronger the business ecosystem will be. There will be no reason to reject the SME’s products in the market due to legality certainty, since it has been guaranteed by large businessmen who partnered with the SME.
NEW WAY IDEA
We will do anything to give “quality assurance” to the national products. After the SVLK has become mandatory for those being mandated then any scheme must be deployed to achieve optimal target.
Incentive through group certification has been provided to the SME as well as EPTIk and encouraging large businessmen to serve as “foster parent.” We must also think other way, given that some cases require other scheme. For instance, SMEs in Jepara who are highly dependent on wood traders. Its supply chain is not simple since it involves Perhutani and community forest. Wood traders obtained their wood from PT. Perhutani or community forest and sold them to the SME. While the process into a finished product must undergo a number of phases and involve other parties such as sawn servics, that does not take into account wood legality.
Opinions regarding a wider involvement of state-owned company such as Perhutani, as was proposed by a wood industry association should be considered by the relevant parties, including the Ministry of State-owned Enterprises. Perhutani should not only provide logs with a guaranteed legality certification, but also provide raw material and semifinished components needed by the SME. This will facilitate industrial business in obtaining raw material and semi- finished product with clear legality.
An interesting statement was uttered by Mayor of Solo Joko Widodo, who is also a furniture businessman. Jokowi, his nickname, proposed to the government to participate by establishing a kind of “Bulog” that specifically manages the timber. This state-owned enterprise will play a role in assuring the availability of raw material for the businessmen including their legality. The simplication of raw material supply source from a state-owned enterprise will ensure their legality, since the state through its business unit has issued a guarantee. The state-owned enterprise will also play an important role in controlling the price of domestic wood raw material.
Source: Wood Magazine No. 34 – July 2012, page 34 – 35
