The Indonesian furniture and handicraft sector, renowned for its exquisite wooden goods, is undergoing a transformative shift as it seeks alternative markets in response to stringent EU regulations aimed at curbing deforestation.
The European Union's Deforestation Regulation (EUDR) mandates stringent due diligence requirements for importers of commodities like palm oil, coffee, and cocoa, to ensure they do not originate from deforested areas. As the deadline for compliance approaches, Indonesian exporters are facing mounting pressure to adapt to these regulations or risk losing access to one of their key markets.
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Indonesia's vast forests, home to diverse flora and fauna, have faced significant depletion over the years, prompting concerns from environmental groups like Greenpeace. The implementation of the EUDR is expected to impact millions of smallholders across various sectors, including wood, cattle, cocoa, palm oil, soybeans, and rubber.
In response to the EU regulations, Trade Minister Zulkifli Hasan has criticised them as "discriminatory," vowing to negotiate and fight back. Collaborative efforts between Indonesia and Malaysia, both major palm oil producers, have underscored their opposition to regulations that they believe adversely affect small farmers.
Amidst these challenges, Indonesia's furniture and handicraft industries have experienced a decline in exports, citing geopolitical and inflationary conditions. To counteract this trend, industry leaders are exploring emerging markets beyond traditional strongholds like Europe and the United States.
Source: asia.nikkei.com