The Directorate of Small, Medium Enterprise (SME) Development and Cooperative of Bappenas (the Ministry of National Development Planning) hosted the SME Sensitisation Webinar – Discussion with European Buyers of Indonesian Furniture Products with support from ARISE+ Indonesia. The webinar was held on August 19, 2021, and was also streamed on the ARISE+ Indonesia Youtube channel.
Almost 300 participants from Bappenas, the Ministry of Trade, the Ministry of Industry, the Ministry of Cooperatives and SMEs, the European Union Delegation (EUD), furniture export associations, entrepreneurs, and foreign buyers participated via Zoom or Youtube. The Trade Attaché at the Embassy of Indonesia in the Netherlands, Sabbat Christian Jannes Sirait, and the Trade Attaché at the Embassy of Indonesia in the UK, Rizalu Akbar, also joined the meeting.
The webinar aimed at enhancing knowledge on SME market opportunities through discussion with foreign buyers on trade-related issues for export, particularly to the EU. The discussion was also intended to inform policymakers about key challenges in exporting and how the Government can provide support.
During his welcoming remarks, the Director for SME Development and Cooperative of Bappenas, Dr Ahmad Dading Gunadi, mentioned that the Government of Indonesia is preparing a Major Project, which foresees integrated support from various ministries and agencies to promote SME development in Indonesia. Close interactions with foreign buyers are an integral element of the new approach to understand opportunities and challenges for export-oriented SMEs better.
"Through this webinar, we hope that we can explore a new market opportunities for the SMEs to participate in Global Value Chains," Mr Gunadi said.
The Head of Trade and Economic Section at EUD to Indonesia and Brunei Darussalam, Marika Jakas, said during her opening remarks, that Indonesia remained the 5th largest EU trading partner in ASEAN, even during the Covid-19 pandemic.
"Indonesia has enormous potential to improve trade performance and competitiveness in the global market and to unlock its potential for trade and investment relations with the EU," Mrs Jakas said.
Foreign furniture buyers invited to speak in the event were the directors of Jawa Meubel from the Netherlands; Epos Furniture, a-Dutch owned company based in Jepara, Indonesia; Makasi Import and Homes Direct 365 from the United Kingdom (UK).
Astrid Van Coeverden, the Co-founder of Jawa Meubel, shared her challenging experiences in setting up the company in 2010 and applying for the business licences.
"It took us three years to start and to get all the licences. I couldn't believe it. In Holland, you just go to the chamber of commerce, pay a couple of Euros and you get started," Astrid said.
One of the participants, Dika Rinakuki, a Coordinating Expert at CBI, a Centre for Promotion of Imports from Developing Countries, expressed her opinion regarding the SMEs' challenges, especially due to the Covid-19 pandemic. According to Dika, the market research capacity of SMEs is still weak, so they couldn’t get the right buyers or even couldn't find a buyer. Timber certification (SVLK) is also another challenge due to its expensive cost. However, the logistic cost is the most serious problem.
Dika said that finding an empty container is difficult during the pandemic, and the container cost to the EU skyrocketed to 5 times than usual. The highest price happened several months back when it reached ten times than usual.
"We've been trying to talk to the Chamber of Commerce of Indonesia and approaching the Ministry of Trade, but it's still a problem for us," Dika said.
Makasi Import, which set up factories in Indonesia and has been importing furniture from Indonesia for 25 years, also faced a steep surge in shipment costs. Dan Unsworth, the Director of Makasi Import, said that at the moment, he had to pay up to USD 20,000 for 40 feet container, which usually only cost USD 2,000.
Karl Ward, the Director of Home Direct 365, also commented the same thing about logistic costs being very expensive. Especially for a big company as Home Direct 365, that imports 200 containers of furniture a year, the expensive container cost is a big problem.
Responding to the shipment cost problem, Egbert Pos, the Director of Epos Furniture, shared his idea. Egbert is developing a new way of sustainable packing, made out of natural fibres to reduce packing volume by 10%-30% compared to stereo foam. Thus, reducing logistic costs.
Egbert also shared his experience dealing with SVLK certification. He said that the price is unfair because small companies pay the same price as bigger ones. Egbert said he had to give up his SVLK certification last year because he couldn't afford it.
"I think the cost should rely on the export quantity, not based on the audit. That would help a lot of small companies," Egbert said.
Astrid had a similar experience and agreed with Egbert. She has to pay up to USD 2500 for exporting three containers every two years.
"This is such a burden for a small company like us," Astrid said.
According to Astrid, another way to do it is to borrow licences, which only cost USD 500. "But that's not legal. Is it?" She said rhetorically.
Dan Unsworth suggested that the Government of Indonesia could help SMEs with the technical certification process and reduce the SVLK cost. Egbert also brought up paperwork issues and suggested that bureaucracy reforms are needed.
Responding to all suggestions from the furniture industry and buyers, Mr. Gunadi said that the Government is responsible for facilitating the logistic process. The Government would take the issues and challenges into account to feed the policymaking.
Ano Juhana, a representative from the Coordinating Ministry for Economic Affairs, said the Government had introduced new improvements to the system by issuing the Government Regulation No. 07 of 2021 concerning Empowerment and Support to SMEs. Field monitoring on implementation by local governments will be conducted.
Ari Anindya, a representative from the Ministry of SMEs and Cooperatives, emphasized that Trade Attachés play an important role in providing market intelligence to SMEs.
Several local furniture SMEs expressed their appreciation for the webinar. They hoped that the webinar would build and expand networking with European buyers since the Covid-19 pandemic impacted most SMEs' businesses.
This webinar is part of a webinar series conducted for different priority sectors, including patchouli oil, biopharma products, and coconut.
