Description
The aim of the project was to improve the performance of small-scale furniture enterprises in Jepara that rely on mahogany and teak by enhancing the structure and function of the furniture industry.
Melati, Herry Purnomo and Bayuni Shantiko
Making research work for
small-scale furniture makers
Action research in the Jepara furniture industry, Indonesia
Melati, Herry Purnomo and Bayuni Shantiko
Making research work for
small-scale furniture makers
Action research in the Jepara furniture industry, Indonesia
Center for International Forestry Research
© 2013 Center for International Forestry Research
Content in this publication is licensed under a Creative Commons Attribution-NonCommercial-
NoDerivs 3.0 Unported Licensehttp://creativecommons.org/licenses/by-nc-nd/3.0/
ISBN 978-602-1504-18-5
Melati, Purnomo H and Shantiko B. 2013. Making research work for small-scale furniture makers:
Action research in the Jepara furniture industry, Indonesia. Bogor, Indonesia: CIFOR.
Cover photo by Murdani. Women sand unfnished furniture.
CIFOR
Jl. CIFOR, Situ Gede
Bogor Barat 16115
Indonesia
T +62 (251) 8622-622
F +62 (251) 8622-100
E [email protected]
cifor.org
We would like to thank all donors who supported this research through their contributions to the
CGIAR Fund. For a list of Fund donors please see:https://www.cgiarfund.org/FundDonors
Any views expressed in this publication are those of the authors. They do not necessarily represent
the views of CIFOR, the authors’ institutions or the fnancial sponsors of this publication.
Table of contents
Acknowledgements vi
Summary vii
1. Introduction to the furniture value chain project 1
1.1 Background 1
1.2 Action research and the value chain analysis 10
1.3 Project aims 17
1.4 Project funding: About ACIAR 21
2. The ‘moving up’ scenario: Improving market access
for producers 23
2.1 The furniture market 23
2.2 Market constraints 25
2.3 The buyer-driven market 28
2.4 Proft margins 30
2.5 Project activities for moving forward 31
3. The ‘collaborating down’ scenario: Improving timber supplies
for producers 37
3.1 Timber supply and demand in Jepara’s furniture industry 37
3.2 Constraints on timber acquisition 40
3.3 Proposed solutions 44
3.4 Project activities for moving forward 46
4. The Jepara Small-scale Furniture Producers Association:
Strengthening collective action 49
4.1 Strengthening SMEs in Jepara 49
4.2 Strengthening SMEs in Central Java and beyond 52
4.3 Overcoming gender constraints in the furniture value chain 53
4.4 Gender in the value chain analysis 59
5. The ‘green furniture’ scenario: Building and enhancing access
to green markets for small-scale furniture manufacturers 61
5.1 Major problems encountered by furniture makers 61
5.2 Timber certifcation 62
5.3 Project activities for moving forward 65
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Making research work for small-scale furniture makers
6. The future of Jepara’s furniture industry 69
6.1 Projections based on current conditions 69
6.2 Project achievements 71
6.3 Roadmap for the furniture industry 74
6.4 Developing industry regulations for occupational safety
and health 75
6.5 Impacts beyond the project 77
6.6 Hopes and dreams 79
6.7 Timber supply 80
6.8 Access to capital 81
6.9 Marketing 82
6.10 Human resources 83
6.11 Infrastructure 84
6.12 Institutional governance 84
6.13 How to get there 85
6.14 Action plan 86
6.15 Institutional strengthening 95
6.16 The role of stakeholders in implementing the action plan 96
References 99
Appendix: Jepara tourist map and shopping guide 105
List of fgures, tables and boxes
Figures
1 Distribution of furniture enterprises throughout Jepara district 4
2 Administrative divisions of Jepara district 7
3 Jepara’s demographics and population density 8
4 Four types of value chain governance in Jepara’s furniture industry 11
5 Cycle of refection–planning–action–monitoring, leading
to improvements 17
6 Comparison of perceptions of global buyers and small-scale furniture
manufacturers in Jepara 28
7 Distribution of areas that supply timber for the Jepara
furniture industry 39
8 Distribution of wood suppliers in Jepara district 41
Tables
1 Furniture business types in Jepara 5
2 Sources of timber for Jepara 40
3 The role of stakeholders in implementing the Jepara
Roadmap 2013–2023 97
Boxes
1 About Jepara 7
2 Business patterns among Jepara’s furniture actors 12
3 Jepara’s domestic and international furniture market structure 26
4 Timber distribution in Jepara’s furniture industry 42
5 Gender roles in Jepara’s furniture value chain 56
6 Indonesia’s timber legality assurance system 64
7 Roadmap for Jepara’s furniture industry 2012–2022 72
We would like to thank the Australian Centre for International Agricultural
Research (ACIAR) for funding the project ‘Mahogany and teak furniture:
action research to improve value chain efciency and enhance livelihoods
(FST/2007/119)’. Special thanks are due to Dr Andrew Wardell,
Gideon Suharyanto, Dina Hubudin, Gun gun Rakayana, Rika Harini
Irawati, Ramadhani Achdiawan and Bayuni Shantiko from CIFOR;
Rachman Efendi and Nunung Parlinah from the Forestry Research and
Development Agency of the Indonesian Ministry of Forestry; Dodik Ridho
Nurrohmat, Bahruni and Ef Yuliati Yovi from the Faculty of Forestry,
Bogor Agricultural University (IPB); and our other project partners from
Jepara, the Jepara Furniture Cluster Forum (FRK), the Jepara Development
Planning Agency (Bappeda), the Jepara Forestry Units and the Jepara
District Government for their support in making this book.
Additional thanks go to our colleagues and research partners who gave
up their time to review and provide feedback on the manuscript. We
welcome comments and suggestions to further improve our future research
and publications.
Acknowledgements
Tis book summarises the impacts of our furniture value chain project
on the furniture industry in Jepara, Central Java. Te project, entitled
‘Mahogany and teak furniture: action research to improve value chain
efciency and enhance livelihoods (FST/2007/119)’, was conducted
between 2008 and 2013, with the support of the Australian Centre for
International Agricultural Research (ACIAR). Te project was a collaboration
between CIFOR, the Faculty of Forestry of Bogor Agricultural University,
the Forestry Research and Development Agency of the Indonesian
Ministry of Forestry, Jepara Furniture Cluster Forum and the Jepara
District Government.
Te aim of the project was to improve the performance of small-scale
furniture enterprises in Jepara that rely on mahogany and teak by enhancing
the structure and function of the furniture industry. With improved
governance and efciency, small-scale furniture makers can assume a greater
role in the value chain, help their businesses and boost their incomes.
Te project goals are aligned with the ‘Green Economy’, as described in
the United Nations’ ‘Te future we want’, in order to help mainstream
sustainable development and poverty eradication, by promoting sustainable
patterns of consumption and production, and protecting and managing
natural resource development.
Te book describes the use of value chain analysis and participatory action
research (PAR) to understand and strengthen the role and position of
small-scale furniture makers in Jepara’s furniture value chain. Te analysis
was used to construct four scenarios for improving the role of small-scale
furniture producers: moving up the value chain to be closer to buyers,
institutionalising a small-scale furniture producers association, collaborating
Summary
viii
Making research work for small-scale furniture makers
down the value chain with timber suppliers, and developing ‘green furniture’
products. Tese scenarios, within the frame of PAR, were developed into
action plans that were then implemented and monitored. Te book also
describes the policy roadmap completed to support the future survival and
growth of small-scale furniture makers in Jepara.
Our hope is that readers will be able to take valuable lessons from this book
and be inspired to learn more.
The wooden furniture
value chain
Action research to improve
governance and livelihoods
for small-scale furniture
manufacturers in Jepara,
Indonesia
1.1. Background
1.1.1. Global furniture trade and consumption
Te global furniture market connects people and organisations from
countries across the world (Purnomo 2006). In 2011, the world’s biggest
furniture exporters were China (export value US$44.8 billion), Germany
(US$13 billion), Italy (US$11.5 billion), Poland (US$9.3 billion) and the
USA (US$6.4 billion) (UNcomtrade, 2013). Among Asian countries, China
has the biggest share of the global furniture export market, with 16.07%,
followed by Malaysia (2.91%), Indonesia (2.55%), Taiwan (1.69%) and
Tailand (1.47%) (USAID-SENADA 2007). In 2011, the world’s biggest
furniture consumer was the USA (US$35.2 billion), followed by Germany
(US$14.3 billion), France (US$8.9 billion), the UK (US$7.4 billion) and
Japan (US$6.3 billion) (UnComtrade 2013).
1.1.2. The role of Jepara in the Indonesian furniture industry
Furniture is one of Indonesia’s four biggest non-oil and gas exports, along
with palm oil, footwear and rubber. Furniture making is also the most
labour-intensive industry in the forestry sector, and its growth would
increase the number of jobs available. Further developing the industry would
then lead to better-quality jobs and give furniture workers more voice and
participation (Ewasechko 2005).
1. Introduction to the furniture
value chain project
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Making research work for small-scale furniture makers
Indonesia is one of the main furniture producers in Asia. Te industry
is dominated by small and medium enterprises (SMEs), which make a
substantial contribution to national income (Efendi and Parlinah 2009a).
Indonesia’s furniture export volume increased by 17% from 2000 to 2005,
when it was valued at US$1.78 billion. Most products exported were items of
A gigantic wooden chair stands in front of a furniture showroom in downtown Jepara.
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Melati, Herry Purnomo and Bayuni Shantiko
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wooden furniture (75%), with rattan (20%) and metal/plastic (5%) products
accounting for the rest (USAID-SENADA 2007). Te export value fell by
15% between 2007 and 2011, and has since stabilised at US$1.18 billion
in 2011. Te decline is primarily attributable to the industry’s tendency to
make products with little value added and to the weak bargaining position of
SMEs compared with bigger players (Purnomo et al. 2009).
Te Indonesian furniture industry is characterised by a long chain from
production to consumption: from raw material producers (tree growers), to
semi-fnished product manufacturers, to fnished product manufacturers,
and to retailers and exporters. Te value chain connects manufacturers in
Jepara district, at the centre of the Indonesian furniture industry with annual
exports of US$150 million, with furniture retailers in Europe, the USA,
Australia and Japan (Purnomo et al. 2009).
In 2006, a total of 55 765 736 kg of furniture that originated in Jepara
was traded, contributing US$111 842 200 to the national income (BPS
Kabupaten Jepara 2007). Cash fows generated by the furniture industry in
Jepara have been estimated at around IDR 11.971–12.255 billion per year
(Roda et al.2007).
Indeed,for the past few hundred years, Jepara’s furniture and carving industry
has been the main economic activity in the region. Te industry contributes
26% of the local economy’s income and 10% of the country’s furniture
exports. Furniture enterprises are currently concentrated in the district of
Jepara, comprising the subdistricts of Tahunan, Jepara, Mlonggo, Batealit,
Bangsri and Pakisaji (Figure 1).
In an initial study, Efendi and Parlinah (2009b) examined grouping patterns
or clusters within the Jepara furniture industry. In general, clusters within
the industry are made up of three sub-clusters: the core (furniture makers,
small, medium and large); the supporting cluster (providers of products and
services such as log traders, sawmills and drykilns); and other supporting
infrastructure and institutions (road transport, fnancial institutions, local
governments and design schools).
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Making research work for small-scale furniture makers
Figure 1. Distribution of furniture enterprises throughout Jepara district
Prestvik’s (2009) study of the Jepara furniture industry identifed seven
categories of business units: workshops, log parks, sawmills, showrooms,
warehouses, drykilns and ironmongeries (Table 1). Furniture workshops
are then further categorised according to their types of products: those that
produce unfnished items from unprocessed roundwood; those that purchase
components, pieces and sets and then assemble them into a fnished product;
those that combine both these stages of furniture making; and those that
produce only parts of furniture (Prestvik 2009).
Melati, Herry Purnomo and Bayuni Shantiko
5
Table 1. Furniture business types in Jepara
Category Number Predominant
gender of workers
Single enterprise
Log parks 726 Male
Sawmills 101 Male
Kiln and drying 20 Male
Workshops (brak) 8 080 Balanced
Ironmongeries 168 Balanced
Warehouses 528 Female
Showrooms 1 974 Female
Total single enterprises 11 597
Combined enterprises
Log parks and sawmills 137 Male
Workshops and showrooms 78 Female
Workshops and dry kiln 71 Male
Workshops and log parks 37 Male
Workshops and warehouses 15 Female
Integrated business 46 Balanced
Total multiple enterprises 2 384
Total 11 981
Source: Achdiawan and Puntodewo (2011)
A spatial survey put the number of business units in the Jepara furniture
industry in 2005 at 15 271, 92% of which were classifed as small scale
(Roda et al. 2007). A similar survey in 2010 (Achdiawan and Puntodewo
2010) put the number of business units in Jepara at 11 357 – a 25% decrease
from fve years earlier.
In a more in-depth examination of the reasons for such changes in the
industry, Prestvik (2009) observed that small-scale furniture manufacturers
encounter an array of problems. Teir problems include a weak bargaining
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Making research work for small-scale furniture makers
position with buyers, discrepancy between the high costs of raw materials
and low prices for fnished products, and heavy reliance on middlemen
who dictate unfair product prices. Faced with these factors, many
businesses choose to exit. Furthermore, almost 50% of small-scale furniture
manufacturers perceived market access to be their main problem – a
constraint that had been less of an issue fve years earlier (Prestvik 2009).
When the furniture industry is under pressure, less efcient enterprises may
be forced to exit, thus leaving the market to more skilled producers (Prestvik
2009). Although in the short run this cuts jobs and diminishes incomes, the
industry becomes more efcient and competitive in the long run. However,
it remains unclear whether the furniture industry in Jepara is indeed
becoming more efcient.
1.1.3. Value addition
Te division of labour between frms is determined by key actors along the
furniture value chain; these actors also shape participants’capacity to upgrade
their activities (Geref 2001). Geref (2001) identifed two types of value
chains based on the form of governance. Te frst type is the ‘producer-
driven commodity chain’, in which producers coordinate the value chain’s
production system; examples of this type of chain are technology-intensive
industries such as automobiles and electronics.
Te second type of chain is the ‘buyer-driven commodity chain’, in which
large dealers and retailers dominate the essential roles in the production
system. Tis type of chain often characterises labour-intensive, consumer
goods industries, where buyers dictate the design, quality and other
specifcations. Examples include industries such as apparel, garments,
footwear and toys (Geref et al. 2001). Te furniture industry also fts into
this category, as shown by the dominance of buyers in determining the fnal
product price and their ability to capture a larger share of the value added.
In Jepara’s furniture value chain also, manufacturing is generally ‘buyer-
driven’ or controlled by buyers (Efendi and Parlinah 2009c). Buyers
determine the product specifcations, design and quality. In other words,
Melati, Herry Purnomo and Bayuni Shantiko
7
Box 1. About Jepara
Jepara district sprawls over an area of 100 413.189 ha, which comprises
16 subdistricts, 183 villages and 11 kelurahan. The Java Sea lies to the north
and west of the district, and it borders Demak in the south and the districts
of Pati and Kudus in the east. More than 95% of Jepara’s administrative area
is on the island of Java, with the rest scattered over the ofshore islands of
Karimunjawa (Figure 2).
Figure 2. Administrative divisions of Jepara district
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Making research work for small-scale furniture makers
Jepara has a population of slightly over one million, with the numbers of
men and women relatively balanced. The population density is highest in the
western and southern parts of the district (Central Bureau of Statistics 2008)
(Figure 3).
Figure 3. Jepara’s demographics and population density
small-scale manufacturers’ outputs mostly depend on buyers’ orders, whether
domestic retailers or exporters. With sales, small-scale manufacturers are price
takers because the buyers had set the product specifcations. Exacerbating this
problem is the fact that buyers were found to be paying only small deposits,
leaving the manufacturers short of cash.
Retailers were found to be capturing the value added from wooden furniture
for the domestic market (52.44%), with exporters taking 35.88% for the
international market (Efendi and Parlinah 2009c). As the Jepara wooden
furniture industry is buyer-driven in nature, the leading frms are retailers
and exporters. Retailers and exporters earn large profts mainly thanks to
the asymmetric distribution of market information, where those with more
information receive greater profts.
Melati, Herry Purnomo and Bayuni Shantiko
9
Similar results were found in other studies. Although each player in the
furniture value chain contributes to the value added, the distribution of
benefts is often inequitable, largely because of the unbalanced power
relations along the value chain (Purnomo 2006; USAID-SENADA 2007;
Efendi and Parlinah 2010). Purnomo (2006) found that workers who do
kiln drying receive the smallest share of benefts in the value chain (0.2%),
with international retailers taking the largest share (46.7%). Teak growers
take 5.6%, log traders 0.9%, sawmills 0.6%, furniture producers 3.6%,
furniture fnishers 3.2%, exporters 11.4%, overseas exporters 6.1% and
international wholesalers 21.9%. Efendi and Parlinah (2010) showed that
teak growers capture 6.5% of the value added, mainly because farmers have
limited knowledge of the wood market, use subsistence farming techniques
and take a low selling price for standing trees instead for logs.
1.1.4. Power relations
In a study of the relationships and forms of governance among furniture
industry actors in Jepara, Irawati et al. (2010) observed that the imbalance
in power and information throughout the value chain is behind the uneven
distribution of gains among actors in the industry.
Drawing on Schmitz’s (2005) governance typologies, Irawati et al. (2010)
identifed three types of value chain governance within the Jepara furniture
industry: market-based, balanced network and directed network. Market-
based governance is characterised by large numbers of customers and
furniture manufacturers, repeat transactions with limited information fows
and no technical assistance given by buyers to small-scale producers. In the
balanced network, both buyers and sellers have enough information about
the market and have equal power for negotiating a price for the product.
In a directed network, one main customer takes at least 50% of the outputs,
chooses the product design and provides technical assistance, with an
unequal fow of information between customer and producer.
A fourth type is a hierarchical form of governance, characterised by vertical
integration of furniture production, with the establishment owned by the
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Making research work for small-scale furniture makers
customer and small-scale manufacturers having limited decision-making
autonomy at the local level (Irawati et al. 2010).
Te types of value chain governance identifed in Jepara’s furniture industry
are depicted in Figure 4.
1.2. Action research and the value chain analysis
Te increasing globalisation of the production of manufactured components
is opening up opportunities for developing countries to increase their rate of
industrial growth and economic prosperity. However, globalisation may also
increase the imbalances within and between countries in terms of absolute
poverty levels (Kaplinsky and Morris 2000).
To manage and ensure stable incomes, it is important to develop appropriate
strategies and insert them into the global economy, according to Kaplinsky
Jepara furniture stakeholders gather at a workshop to fnd solutions in facing regional
economic competition.
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Figure 4. Four types of value chain governance in Jepara’s furniture industry
Source: Purnomo et al. (2011a)
Domestic
retailers
Finishing
companies
and exporters
Small-scale
producers
Community-
based
agroforestry
Perum
Perhutani
Wood retailers
Sawmill
owners
Market based
Directed network
International
end
consumers
Global brokers
International
retailers
Hierachy
Directed network
Domestic
furniture
brokers
Directed network
Balanced network
Importers
Hierachy
Balanced network
Balanced network
Domestic end
consumers
Illegal sources
Balanced network
Outside Java
forests
Mechanized
furniture
producers
Wood brokers
Directed network
Directed network
Balanced network
Balanced network
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Making research work for small-scale furniture makers
Box 2. Business patterns among Jepara’s furniture actors
Efendi and Parlinah (2009c) examined Jepara’s furniture production fows
and power relations. They identifed the following actors inthe furniture
value chain: wood growers (farmers and Perhutani [timber-supplying
company]), wood traders in and outside Jepara, sawmill owners, small-
scale manufacturers, fnishing services, domestic retailers, exporters and
global buyers.
They traced the production fow as follows. Farmers and Perhutani plant
the trees. After the trees are felled, the wood, in the form of logs, is sold and
bought by wood traders. The logs are put through the sawing process, and are
then transformed into half-fnished furniture by small-scale manufacturers. The
next step is the fnishing. Finally, the fnished furniture is ready to be released
into the market. In addition to furniture from small-scale manufacturers, they
observed that furniture is also produced by bigger companies, where the
whole production process is integrated within the company.
Following is an excerpt from Efendi and Parlinah (2009c).
Farmers and wood sellers
Wood is usually sold by farmers to wood sellers (agents) when the trees are still
standing, so that the agents cover all costs of felling and permits. Payments
are made in cash. When the number of trees sold is high, the seller will make
an initial deposit, with the fnal payment made when the trees have been
cut down. Generally, when a farmer wants to sell wood, he will ofer it to the
nearest trader. If the price ofered is accepted, the transaction will take place;
if not, the farmer will approach another trader. One factor infuencing this
transaction is the extent to which the farmer needs money. Farmers are usually
subsistent and their urgent economic needs mean they do not have strong
bargaining power.
Prices for mahogany in Jepara in the form of standing trees range between
Rp 200 000 and 250 000 per tree with a diameter of 22–28 cm. Although some
negotiation takes place during the transaction, prices are usually determined
by the agent. Agents have a stronger bargaining position – and hence
larger proft margin – because of information asymmetry: buyers hold more
information about the wood market and wood quality.
Melati, Herry Purnomo and Bayuni Shantiko
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Perhutani and wood traders
Perhutani sells wood through contractual agreements, direct sales, auctions
and its timber yard. The sales price includes the base selling price, surcharge
and diferentiation. Surcharges are set by the director of Perhutani, and
diferentiation is determined by the general manager. Wood is sold by the
kavling (area of land).
Jepara wood traders and small-scale manufacturers
To obtain raw materials, small-scale manufacturers (agents) usually go to a
trader (principal). A local manufacturer’s decision to purchase wood from a
particular trader is infuenced by factors such as the type, size and price of the
wood and the distance from their workshop and the sawmill.
Traders sell wood measured in bar units or in m
3
. Small-scale manufacturers
that purchase in m
3
can choose the wood themselves. Alternatively, they
can purchase it by the kavling. Prices are usually lower under the kavling
system, but the buyer has no information about the quality of wood. Prices
of wood selected by the buyer are much higher, but information about
the wood quality is relatively reliable. For example, the price of mahogany
with a diameter of 22–28 cm is Rp 700 000/m
3
under the kavling system, but
Rp 950 000/m
3
under the selection system. The buyer usually covers the costs
of transport and loading, although some places include the loading cost in the
purchase price.
Payments are made in cash or in small instalments over a set period of time. All
new customers must use cash, although regular and trusted customers may be
allowed to pay by other means.
Small-scale manufacturers and sawmills and fnishers
Sawmills and fnishers provide services and not products for small-scale
manufacturers. The sawmill charges based on the volume of the wood sawn,
with the price per m
3
in the range of Rp 65 000–75 000. Sawmills are usually
owned by an individual or small-scale manufacturers cooperative. In some
places, someone owns both a furniture workshop and a sawmill in the same
location, to minimise transport costs.
The cost of fnishing is usually calculated based on the units/pieces of goods
to be fnished or it could be calculated based on the number of sets of goods.
The cost of fnishing varies depending on the furniture model and size, and
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Making research work for small-scale furniture makers
the kind of fnish. Kinds of fnish include burned fnish, natural fnish and antique
fnish. The more complex the process, the higher the cost of fnishing. All costs
associated with fnishing are covered by the fnishing service provider. Payments
are made in cash or by bank transfer after the fnished goods have been delivered.
Small-scale manufacturers and domestic retailers and exporters
Furniture for the domestic market is usually made to order (agent), but the price
and product specifcations are determined by the buyer (principal). The buyer of
unfnished furniture could be a retailer (showroom) or a furniture collector who
will resell the furniture to retailers from outside Jepara. Retailers usually make
deposits, of varying amounts. The fnal payment is made by post-dated cheque
after the goods have been delivered. Although collectors usually pay in cash, they
ofer lower prices. Some small-scale manufacturers make furniture without having
an order frst, using a common design to make it easier to sell.
For the export market, generally only those with access to or a direct relationship
with overseas buyers are exporters; small-scale manufacturers only have a direct
relationship with exporters. Orders from overseas are usually subcontracted to
small-scale manufacturers. This subcontracting system involves a principal–agent
relationship with two levels: frst, between the buyer and the exporter, and
second, between the exporter and the small-scale manufacturer. At the frst level,
the buyer acts as the principal and orders furniture according to predetermined
specifcations; the exporter acts as the agent receiving the order. At the
second level, the exporter (principal) authorises the small-scale manufacturer
(agent) to complete the fnishing for a furniture order (agent). New small-scale
manufacturers are recruited only when there are a lot of orders.
Exporters place orders with small-scale manufacturers with an order receipt
(Surat Perintah Kerja or SPK), setting out the type, size, model and quality of the
furniture. Payment may be made in full after the goods have been delivered, or
the manufacturer may receiv ean initial deposit, with the remainder paid one
or two weeks after the exporter has received the goods. Before the furniture is
shipped, it undergoes a quality control to make sure that everything is satisfactory.
Small-scale manufacturers usually pay the quality controller Rp 25 000–Rp 50 000
for every shipment.
If the exporter does not pay on time, small-scale manufacturers continue to make
the ordered furniture in the hope of ultimately being paid for it. On the other
hand, when small-scale manufacturers fail to meet the deadline or the expected
quality, exporters might reduce the size of orders, delay payment or switch to
another small-scale manufacturer.
Melati, Herry Purnomo and Bayuni Shantiko
15
and Morris (2000). Value chain analysis supports this goal by elucidating the
dynamics of inter-linkages within the production sector.
Te value chain method emerged in the 1990s as a novel approach for
understanding how power, benefts and costs are embodied and distributed
among actors (Purnomo et al. 2009). It describes the activities that are
required to bring a product or service from conception or design, through
production, and then to delivery to the fnal consumers and disposal after use
(Kaplinsky and Morris 2000).
Kaplinsky and Morris (2000) discuss the importance of value chain analysis
in the context of globalisation. As the division of labour continues to
advance, global distribution of components and systematic competitiveness
are also on the rise. Furthermore, with production efciency a prerequisite
for participating in the global economy, success in the global economy is
determined by policies in the fnal market and the strategic decisions of the
lead frm in the value chain. In addition, being able to seize the opportunities
ofered by globalisation requires an understanding of the dynamics
infuencing the whole value chain. Tus, value chain analysis helps to explain
income distribution.
Te value chain approach also has the potential to enhance understanding
of the global crisis and possibly to mitigate it, according to Fauzan and
Purnomo (2012). In contrast to studies of the global crisis that take a
macroeconomic perspective, the value chain approach reveals the more
detailed and specifc experience of those involved in the value-making
processes of the global economy (Fauzan and Purnomo 2012).
Value chain analysis was therefore incorporated into this project for use in
envisaging governance and institutional arrangement scenarios for more
equitable power and income as a means of making both forest management
and the furniture industry sustainable (Purnomo et al. 2009). Te value chain
analysis was performed in conjunction with action research. Researchers and
furniture industry stakeholders jointly developed plans to strengthen the
industry structure, build value addition and improve livelihoods.
16
Making research work for small-scale furniture makers
To ensure the project would have an impact at both local and national levels,
the project team collaborated with the Jepara Furniture Multi-stakeholder
Forum, the Jepara local government, the Forestry Research and Development
Agency (FORDA) of the Indonesian Ministry of Forestry, and Bogor
Agricultural University (IPB).
During the fve years of the action research, the Jepara furniture value chain
analysis involved literature reviews on the distribution of value added, as well
as research on those in the furniture industry, leading frms, power relations
and existing rules.
In particular, the action research and value chain analysis were employed
as a means of understanding the role and position of small-scale
manufacturers in the Jepara teak value chain. Action research is a process
through which members of a community identify a problem, collect and
analyse information, and then seek solutions and target social and political
transformation (Selener 1997). Action research is an iterative process,
employing a cycle of refection, planning, action and monitoring (Figure 5).
In the refection phase, researchers established communication channels
with stakeholders through feld visits, during which they used surveys to
identify stakeholders, learn their problems and analyse the furniture value
chain. In this study, value chain analysis was framed as part of the refection
phase within the action research. Tis approach emerged as a novel way for
understanding how power, benefts and costs are embodied and distributed
among various actors, both men and women.
During the planning phase, stakeholders constructed scenarios in which
their problems are resolved. Te scenario planning was guided by
recommendations from the refection phase and was conducted using
participatory methods. During the action phase, stakeholders prioritised their
actions and executed the plan in a participatory way, with the aim of creating
a balanced value chain. A set of indicators devised by local stakeholders was
used in the monitoring phase, to oversee the implementation of the plans.
Melati, Herry Purnomo and Bayuni Shantiko
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Figure 5. Cycle of refection–planning–action–monitoring, leading to
improvements
Refection
Planning Action
Monitoring
Cycle
1.3. Project aims
In examining the challenges facing the Jepara furniture industry, the
furniture value chain project had three main objectives. Te frst two
objectives were to enhance the structure and function of the furniture
industry for the beneft of small-scale furniture manufacturers, and to
improve marketing by these manufacturers and their organisations. Te
third objective, important in action research, was to monitor any impacts
and early adoption of innovations from Objectives 1 and 2, and to enhance
project strategies.
1.3.1. Enhancing the structure and function of the furniture industry
for the beneft of small-scale furniture manufacturers
During the frst year of the project, several activities were conducted to build
understanding of the furniture industry. Tese included a supply chain and
cluster analysis of the teak and mahogany furniture industries to understand
and predict wooden furniture fows, as well as the value chain analysis to
identify constraints and intervention points.
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Livelihoods surveys were conducted and a spatial database of Jepara
furniture workshops was built. Researchers examined wood sources and
constraints on timber acquisition, patterns in diferent types of furniture,
the efciency of industry networking, and supply chain dynamics. Findings
were analysed to generate future scenarios for improving small-scale furniture
manufacturers’ livelihoods.
1.3.2. Improving sales and marketing by small-scale furniture
manufacturers and their organisations
As previous studies have shown, an underlying problem within the Jepara
furniture industry is the weak marketing strategies of small-scale furniture
manufacturers and their organisations. Te project therefore focused
intensively on addressing this weakness.
Analyses of domestic and international furniture markets, potential
marketing networks and premium markets for small-scale furniture
manufacturers were conducted throughout the study period to support the
development scenarios. Workshops were then held to educate the furniture
makers about market demand and certifcation. Tese workshops covered
a range of topics, including fnancial and organisational management,
marketing and business communications, access to capital, quality control,
timber legality and eco-certifcation.
In addition to individual capacity building, institutional strategies were also
employed to further strengthen small-scale furniture producer organisations.
Tese included engaging multiple stakeholders in developing a 20-year
roadmap for the Jepara furniture industry and building collective action
more broadly through the establishment of the Central Java Furniture
Producers Association.
1.3.3. Monitoring impacts and early adoption of innovations from
Objectives 1 and 2, and revising project strategies
Action research involves continuous monitoring and evaluation throughout
the fve years of the project. Results are refected upon throughout, with
Melati, Herry Purnomo and Bayuni Shantiko
19
the fndings used as a basis for future improvements to revise and enhance
project strategies.
Livelihood surveys conducted during the ffth and fnal year were compared
with baseline conditions recorded at the beginning of the project. Te aim of
this comparison was to identify and analyse any positive and negative impacts
that had occurred as a result of the project.
In addition, the project plan was regularly updated and the developments
communicated to Jepara residents and to CIFOR’s research partners through
quarterly newsletters written in both Indonesian and English. People within
the furniture industry were invited to write chapters of a book sharing their
personal experience of being involved throughout the entire project. A
photo book depicting the stages of the furniture value chain was published,
and two short movies on the conditions in Jepara’s furniture industry and
the ongoing project were released to raise awareness of issues afecting the
industry. All publications are available on CIFOR’s website for free public
access. Research outcomes were also disseminated each year at national and
international conferences, and in papers in academic journals.
All feedback from the public, project partners and the research community
on the project’s publications and conference presentations were used to
further improve project strategies.
Drawing on their early research into the problems afecting the Jepara
furniture industry, the project team has proposed several ideas for solutions.
Purnomo et al. (2009) used the fndings of the value chain analysis on
relationships and governance to construct scenarios and identify intervention
points with the aim of improving sustainability in small-scale furniture
manufacturing and the distribution of value added among actors.
Purnomo et al. (2009) propose four strategies for addressing problems related
to marketing, capital and wood acquisition. Te frst of these addresses the
horizontal dimension of the value chain, i.e. those actors at the same stage of
the value chain. Tis SME association scenario involves locally organising
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SMEs and helping them gain access to fnancial institutions and markets,
with the aim of improving manufacturers’ ability to become independent
and competitive within the global market, strengthening their bargaining
position, creating fairer market prices and facilitating access to credit.
Members of the newly formed Jepara Small-scale Furniture Producers
Association (APKJ) are expected to become ‘local champions’ or agents of
change for other SMEs in the industry, through collective marketing via web
portals, group trademarks and participation in trade exhibitions.
Melati et al. (2010) also noted the social networking potential of APKJ
members to use collective action to gain access to market information.
Eforts to improve team building and leadership skills may lead to fruitful
collaboration among members. With solid networking and hard work, APKJ
may eventually become independent of its donors.
Purnomo et al. (2009) argue that the formation of an SME association makes
it easier to achieve scenarios for addressing the vertical dimensions of the
furniture value chain – that is, actors at diferent stages of the chain.
Te frst vertical dimension scenario proposed is collaborating down the value
chain. Te aim here is to address systemic weaknesses in the value chain,
encouraging small-scale furniture manufacturers to work with log traders and
tree growers to address the inconsistencies in product delivery and quality
caused by the timber shortages. If such collaboration can secure a sufcient
timber stock for APKJ members, they can build a stronger position during
price negotiations (Purnomo et al. 2009).
Te second vertical dimension scenario is moving up the value chain, which
aims to add value for small-scale furniture manufacturers by encouraging
them to assume roles further along the value chain, such as brokering,
fnishing or exporting. By moving up the value chain, small-scale furniture
manufacturers may boost their power in lower stages of production. Tis
scenario will require members of the APKJ to be trained on brokering,
fnancing and overseas trading (Purnomo et al. 2009).
Melati, Herry Purnomo and Bayuni Shantiko
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Te fnal scenario is collaborating along the value chain, with the aim
of producing new products or services through jointly owned network
companies, and to ensure increases in value added. Trough this scenario,
APKJ members can manage their furniture products through a single
business entity, in collaboration with big furniture companies and assisted
by the government, to produce certifed, eco-labelled or ‘green’ furniture.
Producing certifed furniture requires the coordination of various stages in
the value chain. Tis can only be achieved by integrating all the players in
the value chain: Perum Perhutani (timber supplier) and community-based
agroforestry farmers for obtaining certifed timber, small-scale furniture
manufacturers for processing certifcation documents, and exporters for
opening channels to niche markets (Purnomo et al. 2009).
1.4. Project funding: About ACIAR
Te furniture value chain project was conducted over fve years supported by
funding from the Australian Centre for International Agricultural Research
(ACIAR), an Australian government body that commissions research to
improve sustainable agricultural production in developing countries.
ACIAR’s focus in Indonesia, particularly in the Jepara region, provides
fexibility in tackling rural poverty, helps improve market linkages for high-
value products sourced from smallholder production systems, and facilitates
better linkages between national and province-based research agencies.
2.1. The furniture market
OECD imports of wooden furniture reached a total value of more than
US$32 billion in the early 2000s, compared with about US$26 billion in
the mid-1990s. Te absolute annual growth in the import value is 6%,
with the most stable growth segments being wooden bedroom furniture,
‘other’ wooden furniture (that destined for living/dining rooms, shops,
miscellaneous uses) and wooden seats (IFC 2005 in Nurrochmat et al. 2009).
Te USA is the largest market for wooden furniture (purchasing 33% of all
OECD imports, to the value of US$10.7 billion), followed by Germany
(US$3.3 billion), France (US$2.6 billion), the United Kingdom (US$2.3
billion) and Japan (US$1.9 billion) (IFC 2005 in Nurrochmat et al. 2009).
With the introduction of mass-produced furniture made for export,
Indonesia’s wooden furniture industry has developed signifcantly since
1975. In the mid-1990s, large-scale furniture companies were established,
mostly by the owners of sawmills or plywood manufacturers (Nurrochmat et
al. 2009).
During the 1990s, Indonesia’s wooden furniture industry grew on average by
about 19%. Plywood is believed to have been the predominant raw material
for wooden furniture in the mid-1990s. However, by 2000 its market share
2. The ‘moving up’ scenario:
Improving market access for
producers
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Making research work for small-scale furniture makers
had decreased, and it was replaced by particle board and medium-density
fbreboard (MDF). In the mid-2000s, the preference for wood panels began
to shift towards solid wood, which remains the preferred material for wooden
furniture (Nurrochmat et al. 2009).
However, most furniture production was not destined solely for export. In
2005, more than 80% of workshops were producing for the domestic market
(Roda et al. 2007). By 2008, this had fallen to 63%, whereas the proportion
of workshops producing goods for Western markets had increased from 17%
to 42% (Prestvik 2009). Tis shift is attributable to the higher prices ofered
by Western markets. During the same period, production for the Asian
market also decreased, suggesting that manufacturers in Jepara began to lose
market share to competitors in other countries such as Vietnam and China
(Prestvik 2009).
Nevertheless, furniture production for the domestic market continues to
grow. In 2012, approximately 93% of furniture was made to fll domestic
Wooden chairs line up at a small-scale producers’ workshop.
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orders (Yovi et al. 2012). Tis is partly because small-scale furniture
businesses usually have limited capital, which prevents them from flling
large orders; domestic orders are usually quite small, whereas goods for
export are usually ordered in bulk, demanding substantial amounts of capital.
Combined with the complexity of documentation for exports and the limited
capacity of human resources, the Jepara small-scale furniture industry is
inclined to serve primarily the domestic market (Yovi et al. 2012).
Furthermore, whereas international consumers prefer the best-quality
(A-grade) furniture only, domestic consumers mostly buy B- or C-grade
furniture – their priority is afordability, not quality. As a result, small-scale
furniture manufacturers are likely to continue to serve the domestic market,
even with a decrease in the quality of wood (Yovi et al. 2012).
Jepara’s furniture market structure, at domestic and international levels, is
summarised in Box 3.
2.2. Market constraints
In a survey of how domestic and international buyers perceive furniture
from Jepara, Bahruni (2010) found that the region has strong advantages in
price and order fexibility. However, international buyers were critical of the
punctuality of shipping, design and quality – but local manufacturers did
not share these perceptions (Figure 6). Special attention should be directed
towards these factors so that producers maintain their competitiveness and
international buyers continue to buy their furniture (Bahruni 2010).
Similar problems have been observed within the Jepara furniture industry
more specifcally (Muhtaman 2009). Small-scale furniture manufacturers
face many challenges in maintaining product quality and delivering products
on time. Both exporting companies and small-scale furniture manufacturers
regard as their major constraints expensive certifcation schemes, complicated
legal requirements for business documents, uncertainty of raw material
supplies and the high cost of marketing (Muhtaman 2009).
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Box 3. Jepara’s domestic and international furniture market
structure
At the base of the market structure are the tree growers and furniture
producers (Bahruni 2010). Perum Perhutani, the main timber supplier in
Java, dominates in teak and mahogany. Despite strict limits on ofcial teak
supplies, in recent years Perum Perhutani’s market share has been challenged
by timber from private forests and, in particular, from illegal timber sources
(Nurrochmat et al. 2009).
In practice, communication between tree growers, log parks and furniture
producers is limited. Middlemen play an important role in controlling
information between upstream (tree growers) and downstream (log parks/
furniture makers) actors. Log park owners tend to entrust the management
of their wood supply to middlemen because of the complexity of handling
legal documents for transporting timber. However, for wood already in Jepara,
communication between tree growers and furniture producers is tighter
(Yovi et al. 2012).
The second layer of the market structure is the wooden furniture market, which
is more competitive because of a large number of furniture manufacturers
and exporters. The market for wooden furniture in Jepara is segmented based
on price, quality and location (Nurrochmat et al. 2009). At the artisanal level,
exporters may seek out specifc items of furniture by approaching certain
locations or clusters. At the shop or showroom level, however, exporters may
seek products based on their quality and price (Bahruni et al. 2009).
In practice, direct contact between furniture manufacturers and exporters is
very rare. Again, middlemen play a huge role in protecting market information
to ensure that small-scale manufacturers depend on the middlemen for sales.
For example, approximately 90% of small-scale manufacturers were found
to have no idea where and who bought their furniture from the middlemen
(Hadiyati 2010). Interestingly, small-scale furniture manufacturers see this
relationship as benefcial, in that it helps them save on marketing costs. They
have no need to rent a showroom because, through this form of indirect
distribution, the middleman or buyer approaches the manufacturer to buy
furniture (Yovi et al. 2012).
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27
In the third layer of the market structure, exporters and consumers interact
with each other to trade the fnal furniture products. Generally, furniture
outlets are the most efective channels for selling wooden furniture in
Indonesia. However, exhibitions for marketing furniture target higher-income
consumers, especially in big cities (Nurrochmat et al. 2009).
Most Indonesian wooden furniture products gain some competitive advantage
because of the low prices of raw materials. However,the lack of solid marketing
strategies and the failure to increase production efciency are undermining
this advantage. As a result, competitors have taken over much of the
international market share previously held by most Indonesian forest products
(Nurrochmat et al. 2009).
Because of the cost and difculty of selling their products, small-scale
furniture manufacturers tend to adopt a passive marketing strategy: they
locate their workshops in a cluster and wait for buyers to fnd them (Prestvik
2009). Tey therefore capitalise on the presence of many other workshops
nearby, especially any neighbouring workshop that may have a more active
marketing strategy that attracts buyers. Visiting warehouses to seek orders
is the second most common marketing strategy among small-scale furniture
manufacturers; media advertising, seeking buyers at tourist attractions and
Internet marketing are less common (Prestvik 2009). Very few companies
implement a complete marketing strategy such as producing marketing kits,
allocating a marketing budget, and developing and maintaining a website to
reach their target markets (Muhtaman 2009).
By contrast, export-oriented workshops distance themselves from other
furniture workshops, which indicates that they are less concerned with the
immediate benefts of being in a cluster, i.e. ‘free marketing’ (Prestvik 2009).
Successful export-oriented workshops tend to be operated on a large scale by
well-educated owners. Tat they can produce large quantities regularly and
that they have the skills and language ability to negotiate better prices with
buyers are the main factors behind their independent success (Prestvik 2009).
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2.3. The buyer-driven market
Buyers control the furniture market: they determine most of the production
process, including product design. However, many buyers do appreciate it if
manufacturers modify the product design – so long as quality is maintained –
but very few ever do so. Hence, local companies could invest more to
strengthen their design capacity as well as quality. Furthermore, most Jepara
furniture that is exported is marked not with the manufacturer’s brand but
with the buyer’s brand. Tis is a strong indicator of manufacturers’ lack of
control and product identity in the market (Muhtaman 2009).
Although foreign buyers dominate the higher value-added activities
associated with sales and exports, thus engendering resentment among local
Figure 6. Comparison of perceptions of global buyers and small-scale
furniture manufacturers in Jepara
Source: Muhtaman (2009)
Global buyers vs local producers
1
2
3
4
5
Quality
Price
Delivery time Flexibility
Design
Global buyers Local producers
Melati, Herry Purnomo and Bayuni Shantiko
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people and Indonesian producers and traders, these foreign buyers have made
a substantial contribution to the development of this local industry. Foreign
traders provide access to lucrative international markets, help upgrade the
quality of local furniture production and facilitate access to working capital
by extending partial advance payments for export transactions, thus helping
manufacturers cover the initial costs of timber and wages. Foreign buyers
have also introduced new designs with greater value added, instructed
producers on quality-control methods, standardised outputs required for the
rapid expansion of order-driven production tailored to the quickly changing
preferences of foreign buyers, and opened up new export markets for modern
Jepara furniture (Muhtaman 2009).
Nevertheless, the people of Jepara still play a major role in furniture
exports. More than 50% of business owners come from Jepara; 30% are
Indonesians from outside Jepara and only 19% are from outside Indonesia
(Muhtaman 2009).
APKJ chair, Margono, poses with an international buyer after securing a business deal at a
furniture expo.
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Outdoor furniture products are major exports to Europe and the USA,
and so have become the focus of many furniture companies in Jepara
(Muhtaman 2009). In the domestic market, the main destinations for
furniture are Sumatra and Jakarta, as well as other major cities across
Indonesia. Main items of domestic wooden furniture are indoor and outdoor
furniture, wooden handicrafts, and wooden furniture combined with other
materials such as rattan, steel or aluminium. Domestic furniture is divided
into two categories: unfnished (60%) and fnished (40%) products (Yovi et
al. 2012).
2.4. Proft margins
Te high price of teak furniture does not necessarily refect the quality of
the raw material. Medium-quality furniture made from low-quality teak
can fetch a good price after fnishing. Finishing is the fnal stage of the
production process and has a signifcant impact on sales. According to
Parlinah (2010), fnishing makes the biggest contribution to the proft
margin, accounting for 60% of the proft.
Despite these clear benefts, however, nearly all small-scale furniture
manufacturers (97%) continue to sell unfnished furniture (Hadiyati 2011).
Tis tendency is attributable to their lack of means to obtain working tools
and fnishing materials, artisans’ limited knowledge and skills, and the delay
in receiving payments because goods take longer to manufacture. Under
the Kamisan tradition, furniture workers are paid every Kamis or Tursday;
therefore, small businesses prefer to skip the fnishing process and target a
faster turn around of funds. Finishing is then mainly conducted by local
showrooms or buyers from outside Jepara who have better access to capital
(Yovi et al. 2012).
Te Jepara furniture industry is traditionally a labour-intensive industry
dominated by non-permanent workers. Small-scale workshop owners,
out of need to pay their workers cash, are driven to sell their furniture to
local buyers (predominantly owners of local showrooms in Jepara) or to
middlemen, who have stronger purchasing power. Tis system usually leads
Melati, Herry Purnomo and Bayuni Shantiko
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to a very small proft margins for small-scale manufacturers, sometimes barely
enough to cover the production cost (Yovi et al. 2012).
Indeed, the marketing margin for wooden furniture ranges from 5% to
100%. Margin svary according to the kind of marketing activity. Direct
sales contribute to a proft margin of 5–26%; acting as an agent of branded
products may generate 10–30%, while actors who conduct further
processing and re-selling may derive a marketing margin of about 50–100%
(Nurrochmat et al. 2009).
2.5. Project activities for moving forward
To help realise the ‘moving up’ scenario, several steps were developed with
the aim of improving market access for small-scale furniture manufacturers.
Of utmost importance is the issue underlying all problems: the need to
build competence and capacity through business management training.
Readily assembled furniture pieces stack up inside a large-scale factory warehouse.
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Training should primarily cover international market developments, export
mechanisms and access to capital and loans. Practical workshops should
be used to develop skills in product design and quality control. Collective
marketing could be used to overcome the constraints associated with
operating at a small scale.In addition, manufacturers should be encouraged
to engage in higher-value-added activities and conduct more cost-efective
marketing strategies, thus cutting out the middlemen. By selling their
furniture higher up in the market chain, small-scale manufacturers should be
able to increase their proft margins and thus improve their livelihoods.
According to the small-scale furniture manufacturers themselves, the fve
areas in which they most need development are quality control, fnancial
management, organisational management, marketing and business
communications (Melati 2010).
To contribute to the project objective of enhancing the structure and
function of the furniture industry, multi-stakeholder processes were
developed to support the needs of small-scale furniture manufacturers and
overcome policy constraints. Activities included workshops, research on
furniture industry policy pathways and the distribution of value addition
among furniture actors, and the development of comprehensive strategies for
enhancing the furniture industry.
Understanding the dynamics of the international wooden furniture market
may also be very useful in formulating a marketing strategy. Changes in
the market, on both demand and supply sides, will infuence the mix of
marketing strategies, namely in relation to product planning, pricing,
placement and promotion. Terefore, a pivotal task is to determine the
appropriate marketing mix to ensure efectiveness in selling Indonesian
wooden furniture on both international and domestic markets in the future
(Nurrochmat et al. 2009).
As an initial step as part of the furniture value chain project, Jepara small-
scale furniture manufacturers were invited to a workshop to discuss the
potential efects of the ASEAN–China Free Trade Area (FTA) on Indonesia’s
Melati, Herry Purnomo and Bayuni Shantiko
33
furniture industry. Te FTA, creating a zero-tarif market of more than 1.7
billion people, was scheduled to come into force in 2010 for the six original
ASEAN members (Brunei, Indonesia, Malaysia, Philippines, Singapore
and Tailand) and in 2015 for the other four (Myanmar, Cambodia,
Laos and Vietnam). Politics around the China–ASEAN deal are delicate
because ASEAN states want to avoid being dominated by China and yet
hope to build their economies by engaging with China, especially given the
slowdown in demand from the US and European markets. At the same time,
as China moves up the manufacturing value chain, it is ceasing to demand
the primary products that ASEAN states produce and has taken its search
for raw materials such as minerals, oil and wood global. Concerns about the
efects of the full-scale zero-tarif trade agreement with China after 2010 are
widespread throughout ASEAN (FVC Team 2010a).
Te Indonesian furniture industry will be afected by the FTA. Many of
those in the industry are pessimistic about whether the agreement will have
any benefts, especially with regard to manufactured products. On the other
hand, however, China is a prospective market for furniture. Competition
in this sector has intensifed since the onset of the global economic crisis
in 2008, with a fall in the value of furniture exports from Jepara of
approximately 25% from 2008 to 2009 (FVC Team 2010a).
Te workshop helped participants understand how the state of the global
furniture industry and how it works, and developed solutions for helping
local actors overcome challenges associated with the FTA.
Eighteen months after the project began, small-scale furniture manufacturers
voiced their concerns about marketing and asked how they could respond
to competition from China, Vietnam or even other places in Indonesia.
Another workshop was conducted to address these concerns, which involved
updating small-scale furniture manufacturers on research results and
working together to formulate market penetration plans. Using input from
stakeholders, steps for strengthening and improving the capacity of small-
scale manufacturers to adapt to changing market demands were agreed on
(FVC Team 2010b). Tis process led to the development of the Roadmap
for the Jepara Furniture Industry (see Chapter 6).
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Given the increasing competitiveness of the global furniture industry,
eforts to improve marketing are becoming more important than ever at
both national and international levels. One efective marketing strategy
is to participate in trade shows. However, this requiresa certain level of
preparation, in terms of both fnances and production – a prerequisite
that favours big furniture companies. To enable small-scale companies to
participate in international-scale trade shows, the project launched a series
of workshops to equip artisans with the necessary knowledge and skills
(FVC Team 2011a). Te workshops covered background information on
exporting schemes, analysis of existing trade shows and common challenges
for companies, as well as tips and tricks on how to prepare for participation
and what to do before, during and after trade shows.
To further motivate small-scale furniture manufacturers to become
innovative in sales and marketing, the project conducted business
A worker at a small-scale workshop applies a dark glaze on a furniture piece.
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management training to support them in participating in the Jakarta
International Export Exhibition in 2010. Te workshop showed small-scale
furniture manufacturers how to improve their product design and quality,
develop their networks efectively and enhance their personal business
performance (FVC Team 2011b). Troughout the project, several activities
were conducted with the aim of assisting small-scale furniture manufacturers
to participate in national and international furniture exhibitions in Indonesia
and even overseas.
Members of the Jepara Small-scale Furniture Producers Association (APKJ;
see Chapter 4) also took part in workshops on accessing capital. As a result,
many manufacturers have been able to obtain loans from the local bank,
and several members even went on to establish a cooperative to enable
business loans and savings. Te association also helped members to beneft
from government funding programmes and encouraged donors to invest in
members’ business ventures (Efendi et al. 2012).
As the project entered its third year, the facilitation of workshops and
participation in numerous tradeshows started to yield some positive
results. Small-scale furniture manufacturers had become more active in
gaining market information and seeking opportunities to further develop
their businesses. Many had also developed ambitious business plans,
including adding more products for both domestic and export markets,
collaborating with bigger companies to support production in existing
markets, and creating new product designs in response to market trends
(Nooryasyini et al. 2011b).
To involve small-scale manufacturers in cost-efective marketing strategies
that minimise or eliminate the role of middlemen, a collective marketing web
portal for APKJ members was developed (http://www.javamebel. com). As
discussed in Chapter 1, most furniture-producing SMEs in the Jepara region
are connected with buyers through directed and hierarchical governance
networks, which have either domestic brokers or exporters at their centre.
Te fragility of these centralised networks prevents SMEs from adapting to
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new conditions; indeed, the economic collapse in 1998 indicated that, to
increase the adaptive capacity of Jepara’s furniture industry, it was necessary
to remove the interconnectedness by giving SMEs more ‘autonomy’ to
govern value chains. One suggested way of doing so is through the use of
information and communications technology (Suyamto and Irawati 2011).
Te aim of the collective marketing portal is to assist SMEs in Jepara in
marketing their products and link them directly to potential buyers, with the
domestic niche market as the main target. However, 85 days after its launch,
javamebel.com had attracted relatively few SMEs and potential buyers.
Although this is quite normal for a new initiative, the ‘usefulness’ of the
portal relies on cohesiveness among SMEs, social resistance and buyer–seller
trust. Tis suggests that the ‘orgware’ of the portal should be improved, along
with the institutional settings, governing rules and incentive structures for
the development and employment of technology, which demand continual
investment and appropriate incentives (Suyamto and Irawati 2011).
Nevertheless, this collective marketing portal ofers massive potential, and its
efectiveness should be monitored in the future.
3.1. Timber supply and demand in Jepara’s furniture
industry
Te estimated timber demand for Jepara’s entire furniture industry is
862 056 m
3
per year (Achdiawan and Puntodewo 2011). Annual growth in
demand is expected to follow the growth of the furniture industry,which is
at around 7% per year (Achdiawan and Puntodewo 2011). With 82% of
furniture workshops specialising in the domestic market, timber demand
is expected to further increase, given that small-scale furniture industries
are shifting away from compliance with international market demands to
concentrate on meeting the needs of the domestic market (Achdiawan and
Puntodewo 2011; Yovi et al. 2012).
Small businesses in particular are highly dependent for their supplies on
regions outside of Jepara, which are the main suppliers of teak wood. Most
raw materials for the industry are sourced from outside Jepara, with most
teak coming from Central Java, followed by community forests in East Java
(Yovi et al. 2012) (Figure 7, Table 2). Log parks in Jepara can only meet up
to 24% of the district’s total demand (Achdiawan and Puntodewo 2011).
Te volume of timber demand exceeds the ofcial numbers of log production
issued by the Indonesian Ministry of Forestry for the whole of Java:
3. The ‘collaborating down’
scenario: Improving timber
supplies for producers
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The Jepara furniture industry source some of their raw materials from Perhutani forests, such as this
one from the neighbouring residence of Pati.
923 632 m
3
in 2004. Perum Perhutani, one of the main timber suppliers for
the furniture industry, can supply only 28–38% of the total demand for teak
and mahogany in Jepara (Yovi et al. 2012).
Te timber shortage worsened in 1998 following the illegal logging of
7.2 million teak trees across Java, enabled by national political instability
(Yovi et al. 2009). Furthermore, many working units of Perum Perhutani
across Java have been negatively afected by land-use change, indicating that
Perum Perhutani’s ability to supply furniture industries in Jepara is critically
low, a state that is likely to continue for at least the next 10 years (Yovi et
al. 2012).
Alternative sources of timber for Jepara’s furniture industry are the millions
of privately owned village plantations scattered across the islands of Java,
Sumatra, North Maluku, Kalimantan and Sulawesi (Yovi et al. 2009;
Achdiawan and Puntodewo 2011). However, rapid population growth has
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Figure 7. Distribution of areas that supply timber for the Jepara
furniture industry
led to large-scale land-use change, with these plantations being converted
into farming and housing areas. In addition, in contrast to the practices of
Perum Perhutani, traditional growers rarely apply an intensive silvicultural
system: they neglect the sustainability of tree stands, thus undermining the
sustainability of supplies of raw materials (Yovi et al. 2009).
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Combined, Perum Perhutani and community forests can supply only 60%
of Jepara’s teak demand. A further 10% can be met through the use of other
kinds of wood, such as mahogany, mindi (white cedar), sengon (Albizia) and
species from the Dipterocarpaceae family (Yovi et al. 2010).
3.2. Constraints on timber acquisition
A study showed that 20% of small-scale furniture manufacturers perceive
access to timber as a problem, with 30% regarding wood quality as poor
(Prestvik 2009). Yovi et al. (2009) found similar results: industry players
and log traders said that obtaining larger logs had become more difcult
compared with 10 years previously. Log traders in particular have noticed
the increasing scarcity of timber, which is one of the main reasons for its
higher prices.
Te shortage and soaring prices caused an obvious decrease in
wood consumption from 2005 to 2008, in both quantity and value
Table 2. Sources of timber for Jepara
Source Suppliers (units) Percentage of timber supplied
East Java 29 13.30
Central Java 66 30.28
Special Region of Yogyakarta 15 6.88
West Java 14 6.42
Perhutani I 24 11.01
Perhutani II 17 7.80
Perhutani III 27 12.39
Sulawesi 7 3.21
Sumatra 18 8.26
Banten 1 0.46
Total 218 100.00
Source: Hadiyati (2011)
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Figure 8. Distribution of wood suppliers in Jepara district
(Prestvik 2009). With small-scale manufacturers receiving lower prices
for their products, workshops became more efcient in their use of wood,
attempting to use less wood to generate more income. In response to the
increasing prices for teak and mahogany, many workshops were also found
to be experimenting with alternative species, more so than they had four
years before. Although greater efciency in the Jepara furniture industry
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Box 4. Timber distribution in Jepara’s furniture industry
Excerpt from Nurrochmat et al. (2009)
Timber used in making wooden furniture in Jepara is distributed through both
direct and indirect channels. Usually, large-scale furniture companies buy logs
directly from Perum Perhutani or from People’s Forests, whereas small-scale
manufacturers buy logs or sawnwood from agents or middlemen.
In Java, Perum Perhutani is the largest log supplier, especially teak.The
company has several channels for selling teak logs, including direct sales or
bidding at timber yards, by contract, and sales of sawnwood or other products.
Having a long-term contract with Perum Perhutani is one of the main ways
that buyers (e.g. wooden furniture manufacturers) can ensure the availability
of suitable raw materials. Usually, prices for logs sold under contract are higher
than those set in bidding because Perum Perhutani ensures the quality of logs
according to buyers’ specifcations.The log prices actually set in bidding are
usually lower than those on the price list released by Perum Perhutani. In 2004,
for instance, the average price of teak logs sold through bidding was 75% of
the listed price because it was usually sold with mixed logs of varying quality.
Small-scale wooden furniture manufacturers purchase logs to be processed
into semi-fnished or fnished products. Logs normally come through
middlemen or brokers because small-scale manufacturers tend to perceive
the supply chain of teak logs as too complicated and costly to undertake
personally. Transaction costs along the supply chain could reach 15–20% of
the log price, forcing them to raise their prices for the fnal products and thus
lose their competitive advantage.
In other circumstances, to avoid complicated procedures and gain more
benefts, some wood manufacturers purchase logs from illegal sources. Illegal
timber has become available thanks to the large excess demand of timber and
lack of law enforcement.
has positive implications for the environment, the root problems within the
forestry sector lie elsewhere.
A policy analysis of the wooden furniture industry for Indonesia in general
and Jepara in particular revealed several policy constraints, which threaten to
undermine the industry (Nurrochmat and Hadiyati 2010a).
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Several macro policies have the potential to hinder the development
of Indonesia’s furniture industry at national and international levels
(Nurrochmat and Hadiyati 2010a). Tese include: (1) weak sectoral support
for the furniture industry; (2) complexity of processes for dealing with
import samples; (3) complexity of quarantine procedures for imported
processed wood; (4) increasing competitiveness between domestic furniture
businesses; (5) a policy of minimum industrial fuel purchases, which imposes
an additional burden on small-scale furniture businesses; (6) regional policies
that inhibit trading of timber and timber products between regions; (7) local
regulations and retribution fees; and (8) the disbanding of the Indonesian
wooden product Joint Marketing Body, which weakened the bargaining
position of Indonesian furniture businesses in the international market.
A local policy that may hamper attempts by the Jepara furniture industry
to obtain raw materials is Ministry of Forestry Regulation on Allocation of
Wood for Local Needs (P.7/Menhut-II/2009). Te regulation obliges each
region to reserve a certain amount of timber for its own local needs before
selling timber to other regions. Te regulation requires that 5% of the total
volume of timber produced be set aside for local needs within each region;
this applies to logs derived from forest concessions, timber estates, wood
auctions and rehabilitation plantation forests. All timber from ‘People’s
Forests’ (hutan rakyat) is allocated to local needs within each regency and
municipality. Timber trading across regions is allowed only once local needs
have been met (Nurrochmat and Hadiyati 2010a).
As one of the largest centres for wood processing in Central Java, the Jepara
region relies heavily on surrounding regions, such as Pati and Blora, for its
timber supply. If the Regulation on Allocation of Wood for Local Needs is
fully enforced, the Jepara region may need to source its wood from regions
further away, which may lead to higher product prices and the loss of
competitive advantage.
Other policy constraints that may negatively afect the Indonesian wooden
furniture industry were revealed in a related study by Nurrochmat and
Hadiyati (2010b). Tese are mainly related to the absence of policies and
institutional arrangements to ensure the sustainability of timber sources.
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3.3. Proposed solutions
National and local policies are needed to address issues related to the
allocation of raw materials, production and marketing, as well as the internal
capacity of Jepara furniture businesses. Nurrochmat et al. (2012) propose
three strategies for improving the Jepara furniture industry.
Te frst recommendation is to develop policies that support the allocation
of wood for industries with high added value and large numbers of
employees. Small-scale furniture businesses need more attention in terms
of strengthening capacity and access to the fnancial capital they need to
scale-up production. One of the most reasonable proposals is to apply cross-
price subsidies between high-quality and lower-quality logs. Tat is, Perum
Perhutani could sell lower-quality teak at very low prices, while increasing
Community forests on the outskirts of Jepara provide future raw material sources for the
furniture industry.
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the price for premium-quality teak. To secure and increase the supply of raw
materials, the Jepara government should initiate agreements with wood-
producing regions elsewhere in the country. Te government should also
create policies that encourage the Jepara furniture industry to use alternative
wood sources, such as lesser-known species from agricultural plantations or
gardens, for example, wood from rubber, jackfruit, durian and other trees
grown outside plantation forests. Serious reforestation eforts and policies
supporting People’s Forests are also pivotal strategies for improving the
availability of raw materials.
Te second recommendation is to develop policies designed to improve
production patterns and marketing systems. To ensure continuity of wood
supply, use of ‘ superior teak’species that can produce high-quality timber in
less time should be encouraged. Seedlings of ‘ superior teak’ can be ofered
to the public at afordable or subsidised prices. To cope with the widening
gap between demand and supply, in the short term Perum Perhutani may
selectively shorten the cutting cycle, guided by solid scientifc evidence;
shorter timber cutting cycles will lead to increased stock for the industry.
Dual cutting cycles and optimisation of forest thinning are other techniques
that may prove benefcial. Developing People’s Forests will help forest
communities to meet their needs, as they will gain benefts in terms of
farming, frewood and construction timber. Applying a dual cycle will also
support the preservation of ecological functions, because it will mean an end
to clear-cutting. Perum Perhutani could also optimise the use of its timber
terminal to cut the costs of transporting timber to the processing industry.
Finally, to foster and strengthen small-scale furniture businesses, policies
that support partnerships between large- and small-scale furniture businesses
are strongly recommended. Forming and/or strengthening clusters of
furniture manufacturers to reduce the costs of transporting materials
would improve production efciency and market access. Cluster formation
and strengthening will also lead to more efective communication and
transactions between furniture manufacturers and suppliers. Consumers
will also will beneft from greater efciency and efectiveness in
obtaining furniture.
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3.4. Project activities for moving forward
Te project involved an intensive multi-stakeholder process designed to
develop the Roadmap for the Jepara Furniture Industry through policy
formulation. For further details on the project’s achievements in infuencing
policy development for the Jepara furniture industry, see Chapter 6.
International eforts to encourage sustainable forest management through
timber certifcation may also relieve Jepara’s timber supply constraints.
However, most small-scale furniture manufacturers in Jepara have very
limited knowledge of such schemes and their relevance to the sustainability
of their business (Yovi et al. 2009). To redress this lack of knowledge, the
project worked to improve small-scale manufacturers’ understanding of
timber certifcation; further details are in Chapter 5.
Log traders propose to stock up on timber when prices are low, improve
communication and cooperation among log traders, create wider networks
among log brokers outside Jepara and boost capital (Yovi et al. 2009).
Small-scale furniture manufacturers also need to develop collaborative
strategies with the growing furniture industries surrounding the region, in
order to overcome the timber shortages and increase their competitiveness
(Nurrochmat and Hadiyati 2010a). Project activities served to boost
collaborative eforts to overcome the limitations associated with operating on
a small scale both for the district of Jepara and the province of Central Java
(see Chapter 4).
In an efort to provide a model for supplying raw materials to Jepara’s
furniture industry, CIFOR and FORDA worked together to plant 1000 fast-
growing teak species as part of the furniture value chain project (Abdullah
2012). Jati Unggul Nusantara (JUN), as the fast-growing teak species is
known, is cloned from superior-quality teak samples using DNA technology.
Te species is expected to produce 0.2 m
3
of wood within fve years. At this
rate of growth, if 10 000 JUN trees were planted at the time of the project,
6000 m
3
of wood would be ready for harvest in 2020 – which amounts to
13% of Jepara’s total need for timber for furniture making. Preliminary
research indicates that private lands are the most suitable locations for
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planting these JUN trees, and both smallholder farmers and small-scale
furniture manufacturers should be able to cultivate the trees in their
own backyards.
Indeed, people in Jepara seem to be increasingly aware of the potential for
growing their own teak, as indicated by the numerous young teak plantations
scattered throughout the Jepara countryside (Yovi et al. 2009). Sopiana’s
(2011) study on community forests in Jepara found that many villages
have indeed long had planting groups as a long-term investment. Although
their eforts are not business oriented, there remains huge potential to
encourage and involve locals to further develop community forest activities
in the future.
Fast growing teak species are now widely cultivated across Jepara to fll future needs of the
furniture industry.
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4.1. Strengthening SMEs in Jepara
As small-scale furniture manufacturers often face major problems related to
marketing, capital and wood acquisition, Purnomo et al. (2009) proposed
a strategy that targeted actors along the horizontal dimension of the value
chain. As part of this approach, the project facilitated the formation of the
Jepara Small-scale Furniture Producers Association (APKJ), which helps
4. The Jepara Small-scale
Furniture Producers Association:
Strengthening collective action
Small-scale furniture producers gather at the ofcial launch of APJK in 2009.
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its members to become independent and competitive and strengthens their
bargaining position in the global market.
Te presence of this collective organisation will make it easier to implement
other strategies that aim to address vertical dimensions of the value chain
(see Chapters 2, 3 and 5). Members are invited to take part in capacity-
building workshops, which cover topics such as fnancial and organisational
management, marketing and business communications, access to capital,
quality control, timber legality and eco-certifcation. Other activities include
collective marketing through the APKJ web portal, development of a group
trademark, and support for participation in trade exhibitions.
During the fnal year of the project, several studies assessed the impacts of
the project on APKJ members and other small-scale furniture manufacturers
in Jepara. All APKJ members explicitly mentioned having derived benefts
through their involvement within the association, and most agreed that APKJ
Jepara Head of District, Hendro Martoyo, shows his suport at the ofcial launch of APKJ in 2009,
closely watched by representatives from ASMINDO, APKJ and CIFOR.
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should continue (Achdiawan 2012). Most members also felt that APKJ had
opened up opportunities that were not available to non-members, ranging
from improved market access to new marketing innovations.
Te marketing innovation referred to is the Internet portal, which members
use to promote their furniture. However, despite the portal’s potential,
members noted a need to establish clearer procedures and mechanisms
for using the tool. Improving cohesion among members was also deemed
important; few APKJ members had managed to form a new joint venture
among themselves (Achdiawan 2012).
An impact assessment study (Nooryasyini et al. 2011a) also found that
APKJ members have been able to improve their access to markets through
participation in trade exhibitions.
In addition, many members noticed that their businesses had started to
generate more income within a few years of joining the association. Several
members surveyed in 2008 and 2010 noted that their revenue had grown
from IDR 297 million in 2008 to IDR 317 million in 2010. Furthermore,
78% of APKJ members had increased their product sales within the previous
year, compared with 44% of non-members (Achdiawan 2012).
No diference was observed between APKJ champions and other APKJ
members in terms of involvement with the association. Te median gross
revenue of APKJ champions in 2011 was IDR 150 million, similar to other
members. However, this amount is slightly below the median gross revenue
of non-APKJ members. Nevertheless, about 67% of champions indicated
that sales and profts had steadily increased compared with the previous one,
three, fve, and even 10 years (Achdiawan 2012).
APKJ members and champions said that their business had improved
in several areas, namely better sales, profts and market expansion, and
an increase in the quantity of production and quantity of raw material
purchases; this was in contrast to non-members (Achdiawan 2012).
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Furthermore, better access to training and capacity building also
generated positive impacts for APKJ champions. Six out of 14
champions immediately received loans from Bank Rakyat Indonesia
(BRI) after participating in the bank’s fnancial training. Tese ranged
in size from IDR 10 million to 50 million; the producers invested the
loaned capital in their furniture businesses (Achdiawan 2012).
Nevertheless, despite some anecdotal evidence from the feld concerning
successful capital compliance by some APKJ members, accessing
capital remains the biggest problem for most small-scale furniture
manufacturers in Jepara (Yovi et al. 2012). Furthermore, most small-
scale furniture manufacturers still have no direct relationship with buyers
(Nooryasyini et al. 2011b).
It should be noted that the 200 members of APKJ account for less than
2% of all small-scale furniture manufacturers in Jepara (Yovi et al. 2012).
4.2. Strengthening SMEs in Central Java and beyond
Given the new China–ASEAN FTA, Indonesia’s furniture industry
must be prepared for intensifed competition both internationally and
nationally. In China, upstream and downstream furniture industries
are fully integrated; Indonesia’s furniture actors must similarly learn to
collaborate to make the industry strong and competitive.
One of the aims of the formation of the APKJ is for members to become
‘local champions’ or agents of change for other small-scale enterprises
throughout Jepara and its surrounding regions.
As an initial step in that direction, during the fourth year of the project,
CIFOR and the APKJ held a province-wide meeting for the industry,
with attendees including small-scale furniture business operators,
government institutions and other related stakeholders.
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Te meeting provided an opportunity for participants to learn about other
furniture business associations around Central Java and introduce the work
carried out in Jepara as part of the furniture value chain project.Te meeting
culminated with the formation of the Indonesian Small-scale Furniture
Producers Community (Komunitas Pengrajin Kecil Nusantara). Te
community is intended to function as a communication platform for small-
scale furniture manufacturers in Central Java, Yogyakarta and beyond, and
as a source of recommendations for future policy and developments within
Indonesia’s furniture industry (FVC Team 2011c).
4.3. Overcoming gender constraints in the furniture
value chain
An important aspect that is often overlooked is gender relations, even though
it plays a huge role in the economy. Gender should be incorporated into
APKJ participates for the frst time at a national furniture expo in Jakarta.
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value chain analysis because gender relations and the ways that value chains
function may afect each other; many women lack bargaining power and are
employed at low levels in the value chain to cut production costs, and their
employment may contribute to changes in gender relations in the domestic
sphere (Mayoux 2003 in Fauzan et al. 2009).
Te traditional role of women in the domestic sphere is a major determining
factor in their decision to work in the furniture industry, according to
Fauzan et al.’s (2009) study on gender relations in Jepara’s furniture value
chains. Te assumption that women are responsible for domestic work
has often prevented them from seeking out jobs in carving or additional
income opportunities from other employers in other villages. Women
skilled in woodcarving who choose to stay in their own village are faced
with three options: to continue their involvement in the industry as it is but
possibly having fewer orders in the future; to continue their involvement
in the industry at lower levels that do not require their carving skills and
thus are paid less; or shift to other areas with occasional involvement in
manufacturing the furniture if considered proftable (Fauzan et al. 2009).
Furthermore, women’s involvement in the furniture industry difers for each
type of value chain (Fauzan et al. 2009). Using Schmitz’s (2005) governance
models for the furniture value chain, four patterns of gender relations were
identifed. Te market-based value chain (suppliers and buyers remain at a
distance, the product is standardised or easily customised, level of switching
is low) is characterised by the lowest level of gender segregation in its
production process, but women’s involvement is heavily undervalued in
order to keep product prices low. A balanced chain (reciprocal dependence
between buyers and suppliers) tends to have more clearly gender-segregated
production for efciency reasons; for example, female workers might be
replaced by men if the latter can perform additional tasks outside working
hours. A directed value chain (buyers exercise greater control over other frms
in the chain, buyers have doubts about suppliers’ competence) inclines more
strongly towards gender segregation, with the ‘domestication’ of women
in the sanding process because of the lead frm’s preference for minimalist
product designs. Te hierarchical chain (lead frms take direct ownership of
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some operations in the chain) involves the most gender segregation because
of the mechanisation of its production systems,generally assumed to be the
domain of male workers (Fauzan et al. 2009).
Fauzan et al. (2009) conclude that in Jepara ‘it is “socially acceptable” that,
being women with an obligation to take care of the family, female workers
are commonly employed as daily paid workers which would enable them
to simultaneously perform their domestic responsibilities and income
Male and female workers are often assigned diferent roles throughout the Jepara furniture value
chain. Both in large-scale factories as well as small-scale furniture workshops, male workers tend to
be given the responsibility to do more technical work such as sawing, operating heavy machinery
and electronic devices, and assembling. Female workers, on the other hand, to sand, sort and clean
up, or deal with fnancial and managerial issues. However, both male and female workers in Jepara
seem to have the same opportunites to practise wood carving.
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generation’. Furthermore, ‘apart from being located at the weakest point of
the chain where their employment could be easily ended, their concentration
on this seasonal labour force also provides little opportunity to upgrade or
advance in their work’ (Fauzan et al. 2009).
Similar results emerged in Nansereko’s (2010) gender study on Jepara’s
furniture value chain. Tat study found that both male and female workers
are actively involved at every node of the value chain, conducting mainly
primary and support activities, respectively. However, more men than
women are engaged in value addition, with men making more decisions
and in better-paying jobs than women. Tis arises because women are
Box 5. Gender roles in Jepara’s furniture value chain
Excerpt from Nansereko (2010)
Both men and women are involved in all six nodes in the furniture value chain,
namely retailers, fnishing companies and exporters (furniture warehouses),
small-scale furniture workshops, sawmills, wood retailers and forest
plantations. However, women are more highly concentrated in warehouses
than anywhere else along the value chain. In the warehouses, women sand the
furniture pieces, paint them and/or varnish them by hand (rarely using a spray
gun) and then wrap them for shipping.
In furniture workshops, women also carve and source materials, mainly by
telephone. Other work done by women includes bookkeeping and record
keeping, managing cash payments and customer relations, and overseeing the
quality of the fnished products.
By contrast, men work in all six nodes, with their tasks distinct from women’s
work. They design furniture, source furniture materials in person, lift logs or
furniture pieces, saw timber, maintain sawing equipment, do carpentry, carve
and pack heavy articles. Men also sand using a sanding machine, repair cracks
and apply spray fnishes.
Women occasionally also work in some male-dominated activities, namely
marketing, pricing, making furniture catalogues and deciding where to re-
invest profts.
Melati, Herry Purnomo and Bayuni Shantiko
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seen as lacking in furniture-making skills and because some types of work,
such as operating complex machinery, are perceived as too dangerous for
women. Another reason is the cultural division of labour, where men make
money and women tend the home, feed the family and educate the children
(Nansereko 2010).
Te skills gap between male and female workers in Jepara considerably afects
their respective returns to labour. However, men’s and women’s skills can be
upgraded in order to achieve cost and diferentiation advantages, thus driving
down the costs of production and building greater competitive advantage.
However, boosting the involvement of women in the industry will require
changes to the socio-cultural environment (Nansereko 2010).
Refecting upon previous gender studies on Jepara’s furniture value chain,
Purnomo et al. (2010) attempt to understand the position of women and
their preferences in the value chain, as a step towards designing strategies to
generate greater benefts for women.
Female participants listen in on a workshop about wood characteristics.
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Purnomo et al. (2010) note that the APKJ was not aimed at either men or
women, but was set up as a gender-neutral organisation. However, social
norms in Jepara discourage women from going out on their own at night
(when most APKJ meetings are held) and women are often uncomfortable
attending predominantly male meetings (Purnomo et al. 2010).
To address this problem, women in the industry were invited to take part
in focus group discussions to examine how the project could be improved
to suit their needs. It emerged that impacts could be enhanced if actions
were specifcally designed for women. As most of the women noted, fexible
conditions within market-based value chains are preferable to other types
of chains.
As a result, the moving-up scenario, which includes training on marketing
furniture specifcally for women, is a high priority for female workers. Other
scenarios, namely the organising producers associations, collaborating down
and developing green products, are expected to generate benefts for both
women and men, but, as they are not gender-specifc, they do not contribute
to balancing gender relations. Overall, it is recommended that specifc
actions be designed for women (Purnomo et al. 2010).
Purnomo et al. (2011a)examined how the four scenarios introduced in
Chapter 1 could be adapted to beneft women. Teir analysis indicated that
a forum for women only should be established within the SME association.
Women preferred workshops or meetings to be run for no more than half
a day, rather than all day, and they function more efectively in an all-
female group than when they form a minority in a mixed-gender group
(Purnomo et al. 2011a).
As part of the project’s eforts to empower female actors within the
Jepara furniture industry, a workshop was conducted for female sanders.
In collaboration with IWAPI (the Indonesian Female Entrepreneurs
Association) and APKJ, the furniture value chain project provided special
skills training for female workers to enhance their ability to manage their
own business (FVC Team 2011d).
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One of several workshops aiming to improve small-scale furniture
manufacturers’ access to capital targeted female workers in the furniture
industry, particularly those who had worked only as casual labourers. Te
workshop, held in collaboration with IWAPI and APKJ, covered fnancial
management, simple accounting systems and bank loan management (FVC
Team 2012a).
4.4. Gender in the value chain analysis
Results from the furniture value chain project in Jepara were compared and
contrasted with fndings from other gender and value chain studies across
Asia, Africa and South America (Shackleton et al. 2012), with several key
fndings emerging.
First, value chains for forest products provide full- and part-time work for
women in many developing countries. Te jobs are poorly paid but they ofer
fexible working arrangements (Shackleton et al. 2012).
Participants engage in a business management workshop specifcally designed for female workers.
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Second, women have a low profle in these value chains because their inputs
are either informal or are perceived as having little worth. Te invisibility
of women in forest product value chains means that policy makers often
overlook women’s needs. Policy and practice rarely directly support women
and, in some cases, may even criminalise them. Broad policies that promote
women’s development seldom translate into action on the ground. Specifc
policies that support women working in forest product value chains may
substantially improve benefts for women (Shackleton et al. 2012).
Tird, socio-cultural, religious, technical, policy and institutional barriers
often prevent women from working and trading in forest product value
chains. Given the challenges involved, a prerequisite for fnding ways to
overcome these barriers is good understanding of women’s roles in forest
value chains (Shackleton et al. 2012).
As was shown to be the case in Jepara, encouraging and strengthening
collective action among women may improve their opportunities in value
chains for forest products. Women-only groups are more encouraging
for women than mixed-gender groups. Furthermore, groups for women
working in forest product value chains can build on existing women’s
self-help or social groups. However, women-only groups require additional
training in literacy and skills, as well as in technologies suited to women
(Shackleton et al. 2012).
Finally, the diversity in value chains means that there is no single way
forward. Nevertheless, better understanding of the position of women in
value chains and their preferences is a step towards devising strategies to
empower specifc groups of women, in specifc value chains in specifc
contexts (Shackleton et al. 2012).
5.1. Major problems encountered by furniture makers
Major obstacles encountered by small-scale furniture manufacturers in
Jepara include obtaining raw materials, ensuring product quality, marketing
products and sustaining business capital. Tese four problems are very much
interconnected and need to be addressed simultaneously.
Fluctuations in timber prices make it difcult for small-scale manufacturers
to purchase good-quality timber, which afects product quality. Many
producers opt for cheaper, low-quality timber from younger trees, which
compromises the sustainability of timber sources (FVC Team 2011e).
Furthermore, most small-scale manufacturers market their products not
to end consumers but mainly to middlemen, wholesalers, big furniture
companies or exporters. With no set standards for product quality, small-
scale manufacturers have a weak bargaining position and are forced to accept
whatever price buyers ofer them. As a consequence, their sales income often
does not cover their production costs, which places pressure on them to sell
as many products as possible at any price (FVC Team 2011e).
Another problem is that buyers often do not make their payments on time,
causing manufacturers to delay work. To circumvent this cash fow problem,
5. The ‘green furniture’ scenario:
Building and enhancing access
to green markets for small-scale
furniture manufacturers
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many manufacturers sell their deposit cheques at 6–7% lower than their
initial value. High-interest loans from banks ofer another avenue by which
small-scale manufacturers attempt to obtain quick cash (FVC Team 2011e).
Tese interconnected problems create a vicious cycle that leads small-scale
manufacturers deeper into poverty, along with declining timber resources
and environmental degradation, reduced market competitiveness and a poor
image for the Jepara industry.
5.2. Timber certifcation
In recent decades, the idea of sustainable forest management through timber
certifcation has been promoted internationally. Furniture made from timber
certifed as coming from sustainable sources is qualifed ‘green furniture’,
and can be sold to environmentally conscious consumers at a premium price.
Te aims of schemes to encourage certifcation of furniture are to conserve
forest resources, ensure sustainability in the furniture-making industry and
improve the welfare of furniture manufacturers. A strategy that encourages
certifcation could stimulate demand for furniture from sustainable sources
and thus could help those in the Jepara furniture industry resolve some of
their problems (Purnomo et al. 2011b).
However, the initial uptake of certifcation schemes throughout the furniture
industry has been slow, even though many accredited institutions are ready
to conduct certifcation schemes in Indonesia, such as the Tropical Forest
Trust (TFT), Indonesian Ecolabel Institute (LEI) and the Forest Stewardship
Council (FSC) (Purnomo et al. 2011b).
Several factors may account for the apparent lack of interest in certifcation
schemes. First, although price for certifed furniture has increased annually
by between 6% and 30%, consumers’ willingness to pay has been moving
in the opposite direction, thus reducing the uptake of timber and furniture
certifcation schemes (Purnomo et al. 2011b). Generally, Indonesian
domestic consumers are less willing to pay for certifed furniture, whereas
international consumers from the United Kingdom and Norway have
relatively high willingness to pay, at 16% and 7.5%, respectively. Tis
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indicates that certifed furniture products should be targeted to a specifc
international niche market. From the supply side, large manufacturers
are better set up for certifcation than small-scale manufacturers
(Purnomo et al. 2011b).
In a survey of actors along the furniture value chain concerning their
perceptions of certifcation, approximately 25% of small-scale manufacturers
said they would support the certifcation scheme if timber prices were lower.
Furthermore, most log traders had little or no knowledge about timber
certifcation; 10% objected to a scheme that would further complicate
timber transactions, and 18% supported the scheme on the basis that
it would enable them to fetch higher timber prices and bigger profts
(Yovi et al. 2009).
Given these fndings and the potential value of certifcation schemes for
the industry, the project developed a strategy designed to boost capacity in
timber certifcation.
Certifed ‘green’ furniture feature in a Jepara showroom.
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Box 6. Indonesia’s timber legality assurance system
Excerpt from Yovi (2011)
Indonesia’s Timber Legality Assurance System (SVLK) is the only certifcation
scheme in which participation by industrial forest concessions, production
forest concessions and community plantation forests is made mandatory by
the government.
The system was created to ensure the legality of timber and timber products.
It guarantees that each licence holder and owner of a private forest who has
undergone VLK certifcation and met all verifcation requirements complies
with all existing government regulations related to the legality of timber and
forest products.
Introduced in 2010 as part of a move to curb illegal logging in the country, the
SVLK aims to grant Indonesian furniture manufacturers greater access to the
global market because it provides a guarantee to buyers that the timber and
timber products come from legal and environmentally sound sources.
Furthermore, the SVLK is expected not only to beneft society and the
government through its support of sustainable forest management, but also to
beneft companies by requiring them to develop better management systems.
Direct results of better management are higher measurable inputs, processes,
costs and outputs/outcomes, as well as qualifed staf competencies, all of
which will ultimately improve the company’s performance.
Following Indonesia’s commitment in 2011 to engage in legal timber trade
with the European Union under a Voluntary Partnership Agreement, the SVLK
will support Indonesia in having its timber and timber products deemed legal
upon entry into EU markets.
However, although the Indonesian government recently allocated more than
US$300 000 from the state budget to subsidise SVLK certifcation for small-
scale manufacturers, the process can still cost tens of millions of rupiah, which
manufacturers cannot aford. Small-scale manufacturers are thus encouraged
to form cooperatives and apply for group certifcation.
Poor promotion of the SVLK means that private forest owners and small-
scale furniture manufacturers often do not understand it. Lack of clarity
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5.3. Project activities for moving forward
Te ‘green furniture’ scenario forms part of the overall solutions suggested
by the project to address problems in the Jepara furniture industry. Te
introduction of certifcation schemes is expected to boost furniture makers’
proft margins by enabling them to produce premium-priced certifed green
furniture catering to a specialised niche market.
To help Jepara’s small-scale furniture makers enter the premium market,
CIFOR and PPEI (Centre for Indonesian Export Development) jointly
held a workshop for them on the‘ chain of custody for export purposes’.
Te workshop introduced participants to the basic systems and standards
involved in the timber chain-of-custody certifcation scheme and showed
of certifcation mechanisms and objectives, concerns over the high cost
of certifcation and the risk of reducing competitiveness through higher
production costs are three main reasons for actors’ lack of interest in the
scheme.
Given the variation in understanding of SVLK certifcation, helping those in the
industry before the system comes into operation is a priority. Problems persist
in the process of knowledge transformation in the SVLK. The small numbers
of competent facilitators are not comparable to the extent of existing forests,
which creates problems for plans to implement the SVLK, which is scheduled
for early 2013.
As facilitation may take a relatively long time – one to three years depending
on the level of readiness of community forest management – the availability
of continued funding is crucial. Strengthening SVLK-related competencies
will require continuous and close assistance by both government and non-
governmental organisations.
Comprehensive strategies that connect upstream industries (private forests)
with downstream industries (small-scale furniture manufacturers) are
important for the sustainability of Jepara’s furniture industry. In addition,
actors should take advantage of the certifcation subsidies for small-scale
industrial licences that were introduced by the Jepara district government.
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them how the scheme can be implemented throughout the timber and
furniture market chain, explained the requirements for documenting the
whole certifcation process, and taught them how to conduct internal
auditing. Many members of the APKJ attended this workshop.
A few months following the chain-of-custody workshop, Nooryasyini et
al. (2011c) conducted a survey to assess local APKJ champions’ progress in
pursuing the green furniture scenario. In terms of business management,
28% of the attendees said they already had a system for documenting their
raw material use and production-related purchases, and only 20% record
their fnancial fows regularly (Nooryasyini et al. 2011c). As compliance
with certifcation schemes requires consistent application of basic managerial
practices, these fndings indicate that small-scale manufacturers have a long
way to go before they will be ready to take part.
In addition, 64% ofthe small-scale manufacturers surveyed do not fully
understand the whole process of timber certifcation, stating that they
gain very basic information about certifcation from the workshop. Most
producers also described the scheme as difcult to implement, mainly
because of their lack of familiarity with the process, which they perceive
as complicated and expensive. As a result, none of the producers who
participated in the workshop has yet taken any steps towards certifcation
(Nooryasyini et al. 2011c).
Nevertheless, most producers are now at least aware of certifcation and its
potential to improve their business conditions. As certifcation has only just
been introduced to the wider small-scale furniture-making community, it is
understandable that most manufacturers are still unsure about the technical
and fnancial requirements. Ongoing support and assistance from the local
government and other actors should be provided to continue to encourage
small-scale manufacturers to adopt certifcation (Nooryasyini et al. 2011c).
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Furthermore, regional policy also should aim to boost marketing of certifed
furniture and further encourage certifcation (Purnomo et al. 2011b). For
example, the Roadmap for the Jepara Furniture Industry is part of the
project work aimed at mobilising stakeholders to support the green furniture
scenario. For more details, see Chapter 6.
6.1. Projections based on current conditions
We carried out a10-year projection (2013–2023) for Jepara’s furniture
industry to forecast future outcomes in the case of a business-as-
usual scenario.
Industrial demand for timber in Jepara was recently calculated to be
864 771 m
3
, with 24% annual growth (Achdiawan and Puntodewo 2011).
At this rate, Perhutani, which supplies 85% of the Jepara region’s timber,
will be able to fulfl only 1% of demand by 2030. To avert future shortages,
fast-growing timber species have been planted throughout the region.
Even with these plantations, however, the total potential volume of teak
throughout Jepara will not be able to meet the soaring industrial demand.
Forecasts indicate that, by 2030, Jepara district will be able to meet only
2% of total timber demand. Tese fgures indicate a worrying trend for the
sustainability of Jepara’s teak furniture industry (CIFOR et al. 2012).
Total export value is forecast to reach US$3.77 per kilogram furniture
weight in 2022, compared with US$2.16 per kilogram in 2003. Increases
in export value will need to be matched by an increase in furniture quality,
and continuous innovation to stimulate export demand may be required.
If quality standards can be maintained, growth in the annual export value
6. The future of Jepara’s
furniture industry
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may reach at least 1.37% (CIFOR et al. 2012), which is still well below the
national growth target for annual furniture exports of 8–10% and the Jepara
target of 7%.
Capital demand also is projected to increase in the next 10 years. According
to Prestvik (2008), if 68% of furniture businesses apply for loans at a total
annual infation rate of 10%, IDR 356 billion will need to be made available
from formal fnancial institutions, with IDR 87 billion of that allocated for
small businesses. Local cooperatives will also need to provide IDR 34 billion
for members’ loans, with informal loans between family and friends to reach
approximately IDR 4 billion (CIFOR et al. 2012). Given this huge potential
demand for capital, fnancial institutions and the government must prepare
carefully to fnd ways to give small businesses access to the capital they
greatly need.
Sustainable supplies of good quality timber is needed to ensure the future survival of Jepara’s
furniture industry.
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6.2. Project achievements
Monitoring and evaluation of the project’s impacts on people’s livelihoods is
an integral part of action research. An impact assessment survey (Achdiawan
2012) was conducted in February and March 2012, during the fourth year of
the furniture value chain project. Te assessment used the same questionnaire
and method as in Prestvik (2008), with additional questions on the impacts
of CIFOR’s research project.
Survey respondents included a subset of the sample in Prestvik (2008), as
well as representative members and champions of the Jepara Small-Scale
Furniture Producers Association (APKJ). Questionnaires aimed to elicit
respondents’ views of the changes experienced by manufacturers and APKJ
members and champions relative to households in Jepara not engaged in
making furniture. APKJ ‘champions’ are core members or those who perform
key roles in the association (Achdiawan 2012).
Te survey found that approximately 10% of furniture workshops visited
in 2008 had closed by 2012, because of a lack of capital and orders from
buyers. Most had shifted into activities such as trading and agriculture. Te
median gross revenue of those who continued in the furniture trade was
IDR 222 million (USD 24 000) in 2012, compared with IDR 210 million
(22 500 USD) per active workshop in 2008 (Achdiawan 2012). Furniture
manufacturers’ incomes were consistently higher compared with non-
producers and ex-producers (Achdiawan and Puntodewo 2011).
A shift in the market saw manufacturers serving more domestic consumers
in 2012: 75% of workshops that served the export market in 2008 have
since moved into the domestic market. Tis shift may be related to the
recent global crisis, which caused international markets to shrink slightly
(Achdiawan 2012).
Furthermore, respondents no longer cited marketing as their main problem,
thanks to the CIFOR project. Rather, for 80% of APKJ champions, the
availability of equipment for furniture processing (i.e. dry kilns) has now
become their main problem. Furniture makers who are not APKJ members
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Box 7. Roadmap for Jepara’s furniture industry 2012–2022
Excerpt from CIFOR et al. (2012)
Jepara’s furniture export market is growing at the slow rate of 1.39% per year.
By contrast, the central government has set a targetof 8–10% growth for
national furniture exports, and the Jepara district government has a target of
7% for regional growth in 2022.
To enhance the local furniture industry, the Jepara district government, in
collaboration with stakeholders, developed a comprehensive roadmap for
use in guiding the implementation of industry-related action plans between
2012 and 2022. The plans cover several sectors of the industry, including raw
material supplies, access to capital, marketing, human resources, institutions
and physical and non-physical infrastructure. The following paragraphs
highlight the details of each plan:
1. Raw materials: extensive introduction of fast-growing tree species,
extensive implementation of the SVLK (Timber Legality Assurance
System), diversifcation of the use of tree species, intensive collaboration
between upstream and downstream industries in ensuring the provision
of timber either from within or outside the Jepara region, development of
a comprehensive database on raw material needs throughout the region,
intensive research on alternative timber sources, efcient management of
industrial waste and establishment of a centralised timber market within
the region.
2. Access to capital: improve access to capital for small-scale furniture
manufacturers, establish grants for certain production tools and machinery
and for access to marketing channels and raw material sources, develop
regulations that support access to capital, collaborate with non-
governmental organisations or the private sector to open up opportunities
for corporate social responsibility programmes that target small-scale
industries, and increase the implementation of small-scale credit schemes
(Kredit Usaha Rakyat).
3. Marketing: establish a distinct brand for Jepara’s furniture products,
eliminate market barriers, diversify market niches, establish an
institution that can monitor domestic market transactions, and use
information technology and trade shows for local and international
marketing channels.
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4. Human resources: provide training for small-scale furniture manufacturers
in business management, wood processing, marketing, information
technology, fnance, entrepreneurship, product design, communications,
administration documentation, taxation, production, occupational health
and safety, and exports–imports.
5. Infrastructure development: establish quality roads, timber terminals,
warehouses, international seaports, airports, energy sources, international
trade show centres, information centres, accommodation, industrial
centres, industrial tourism centres and industrial museums.
6. Institutional strengthening: encourage close collaboration with education
and research institutions, professional associations and government
bodies; and develop regulations that support Jepara’s export market.
continue to experience problems with market access, equipment, wood
quality and wood supply (Achdiawan 2012).
Te survey also revealed aspects of project initiatives requiring improvement.
Clear rules and consensus must be established to maintain cohesion among
APKJ members, especially to ensure equal access to resources (Achdiawan
2012). Similarly, Nooryasyini et al. (2011c) found that 42.9% of APKJ
members were not fully satisfed with the association, mainly because its
programmes had failed to reach all small-scale manufacturers.
Furthermore, several innovations introduced through the APKJ, such as
the collective marketing web portal, had not been immediately adopted by
all members. Tus, external interventions may be needed to accelerate the
adoption (Achdiawan 2012).
In summary, after four years, the FVC project had several achievements,
notably the formation of the Jepara furniture roadmap and improved
capacity of small-scale furniture manufacturers. However, although the
project generated benefts for APKJ members and champions, these did not
extend to furniture manufacturers in the wider Jepara area. As the project
enters its fnal year, it must expand its reach to the wider community, by
encouraging members of the association to spread their success to non-
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members. APKJ members and champions could act as agents of change, as
they now have the capacity to share their business innovations and improve
conditions throughout the industry (Achdiawan 2012).
6.3. Roadmap for the furniture industry
Ongoing research indicates that stakeholders in the Jepara furniture value
chain are not well connected and rarely collaborate. Seeing potential to
improve the efciency of the furniture industry, the project proposed that
the Jepara local government develop a comprehensive roadmap to support
collaboration in the industry. Te aim of this approach is to empower less
connected and more vulnerable stakeholders and to minimise conficts
between parties (Irawati and Purnomo 2012).
Strategic workshops to support furniture makers in dealing with the
increasingly competitive market were also conducted as part of the project. In
the frst of these, furniture makers from Jepara and government ofcials from
Central Java were invited to discuss existing policies that afect the furniture
industry and the livelihoods of those within it. Te workshop created an
opportunity for stakeholders to engage in intense dialogue and to give
feedback to improve policy (FVC Team 2010c).
In several subsequent workshops throughout 2011 and 2012, the idea
of developing a comprehensive roadmap specifcally for Jepara’s wooden
furniture industry was examined further. A bottom-up approach was adopted
to develop strategic guidelines for future developments within the industry
between 2013 and 2023. Participants included government ofces, industry
associations, small-scale manufacturer representatives, higher education
bodies and other related stakeholders. An initial draft of the roadmap, which
incorporated existing functions of government bodies as well as aspirations
of other stakeholders, was released in early 2011 and ultimately made into a
Jepara district regulation in 2012 (FVC Team 2011f, 2011g, 2012b).
Te Jepara Furniture Industry Roadmap 2013–2023 is a positive output
resulting from a long process of refecting, planning, acting and monitoring
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throughout the lifetime of the project. Te roadmap has strong potential to
strengthen small-scale furniture makers’ bargaining position, connect them
to wider market networks, improve trust in and support from government
bodies and contribute to the sustainability of the furniture industry. It
also has the potential to redress the power imbalance among actors in the
furniture value chain, and improve both livelihoods and furniture value
chain governance with the onset ofthe ASEAN–China Free Trade Agreement
(Purnomo and Irawati 2012).
6.4. Developing industry regulations for occupational
safety and health
A similar process to that used for the roadmap is underwayto develop a legal
framework covering occupational safety and health (OSH) practices for
A factory worker uses a face mask during a potentially hazardous fnishing technique. Proper
occupational safety and health practices are mostly conducted by big furniture companies. Small-
scale furniture makers are yet to comply to such standards.
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workers in the furniture industry. Work practices along Jepara’s furniture
value chain were found to barely comply with basic OSH standards, such as
the use of personal protective equipment (Yovi and Sidiq 2012). Although
many people in the industry acknowledge the need for health and safety
at work, few possess sufcient understanding of the importance of OSH
protection or of the rights and obligations of company management and
government institutions.
Most small-scale furniture businesses in Jepara do not provide their
employees with safety equipment such as goggles, helmets, gloves or
protective jackets because of limited funds and unfamiliarity with their use
(Nooryasyini et al. 2011c). Furthermore, work insurance is non-existent,
with most businesses considering that existing wages are sufcient for
workers’ livelihood needs (Nooryasyini et al. 2011c).
Te government had provided OSH guidelines and supervision for less than
1% of the units in the industry; this was confned to furniture production
stage and failed to reach workers and managers in log yards (Yovi and
Sidiq 2012). Te failure among management to implement OSH systems
for workers in small workshops has compounded the high risk of work-
related accidents and health efects. Incidents have been reported frequently,
including fnger loss from use of machines, hernia, hearing loss or reduction,
lung illness, and possibly also kidney dysfunction (Yovi and Sidiq 2012).
During a focus group discussion in early 2012, stakeholders agreed to
a proposal to conduct an OSH pilot project in a small-scale furniture
production centre in Jepara. An ad hoc team was established to involve
stakeholders in each stage of the planning, implementation, development
and supervision of OSH protection. Further eforts are underway to increase
the role of local government in OSH guidance and supervision through
involvement of related local sets of working units. Ultimately, there is a
critical need for regulation at the district level to create a local budget for
implementing OSH protection in Jepara (Yovi and Sidiq 2012).
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6.5. Impacts beyond the project
Te project also generated several impacts beyond its initial target of small-
scale furniture manufacturers and the Jepara region. Te project team has
shared information on the use of value chain methods with project partners,
university students and the international scientifc community throughout
the duration of the project. As a result, the value chain approach has been
adopted within several studies conducted by project partners,particularly
FORDA’s REDD and REDD+ studies in Kalimantan, Jambi and South
Sumatra; ACIAR’s palm and pig commodity chains project in East Nusa
Tenggara and non-timber forest product market chain study in Burkina
Faso; and CIFOR’s impact assessment on the rattan value chain in
Kalimantan and Java.
Te value chain approach has been taught to hundreds of undergraduate and
postgraduate students at IPB in Bogor, West Java, and Jepara’s STTDNU.
Furthermore, students from across Indonesia, as well as from Norway, the
Jepara Head of District, Hendro Martoyo shows his support for the development of the Jepara
Furniture Roadmap.
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Netherlands, New Zealand and the United Kingdom, did internships with
the project. APKJ also attracted many people to Jepara, including students
from Gadjah Mada University (UGM) in Yogyakarta, to learn from the
organisation’s experiences.
Several papers published during the project lifespan have been quoted
in other scientifc articles, including ‘Value chain approach of furniture:
action research to improve power balance and enhance livelihoods of small
and medium enterprises’ (Purnomo et al. 2009), ‘Value chain governance
and gender in the furniture industry’ (Purnomo et al. 2010), ‘Roles of
information technologies for SME furniture business’ and ‘How does the
marketing portal work for SME furniture producers?’ (Suyamto and Irawati
2011). A presentation on green furniture during a national conference on
green business also raised the interest of many scholars and businesses in
the project’s publications; the presentation was later published in IPB’s
national journal.
Te project work also supported the skills development of research
partners, university students, actors in the local furniture industry and
local government agencies. Research partners and university students from
Indonesia and overseas received all necessary support to implement the value
chain analysis in their own studies. Students from local universities STDNU
and STIENU were also trained in conducting surveys using a variety of
research tools such as GPS tracking, interviews and questionnaires.
Local furniture industry actors who were asked to document their personal
stories as part of the project were given guidance in writing. After their stories
had been published, many of the writers expressed their appreciation for the
project and for being given the skills to share their personal narratives on
Jepara’s furniture industry.
Te project also supported the Jepara Government Planning Agency
in strategic planning for the furniture industry and provided it with an
introduction to health and safety at work.
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Community impacts from the project emerged in terms of economic, social
and environmental changes. Some readers of the furniture photo book later
contacted furniture buyers. Local students whose involvement in project
surveys raised their awareness of furniture makers’ living conditions were
inspired to organise a flm festival with the aim of supporting Jepara’s
furniture industry and carving culture. APKJ also established internships for
local college students interested in issues afecting the furniture industry.
CIFOR’s short flm entitled ‘Survival of Javanese furniture’ increased
public awareness of the struggles of small-scale furniture manufacturers and
improved understanding of the diferences between cheap mass-produced
furniture and more expensive high-quality furniture. Furthermore, the
flm increased stakeholder understanding of various issues afecting the
furniture business.
Te Jepara Furniture Tourism Map also enhanced the district’s commercial
advantages by improving access between producers and consumers in both
domestic and international markets.
On a more long-term scale, if the furniture industry is more sustainably
managed, demand for wood resources may increase even further, possibly
encouraging people to grow trees and improve environmental conditions.
6.6. Hopes and dreams
Te furniture industry is highly dynamic, largely because of its sensitivity to
copyright infringements, new entrants, substitute products and consumer
preferences. Industry players must react to global business competition
not only by being aware of the industry’s structure, but also by analysing
their own resources and combining strategies for premium competence
and competitiveness. Tis section describes the ideal state for the furniture
industry in 2023, looking at timber supplies, access to capital, marketing,
human resources, infrastructure and institutional governance.
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6.7. Timber supply
Te Jepara furniture industry embodies distinctive cultural values in the form
of solid wood carving. Several copyrighted carving designs have strengthened
Jepara’s identity in the international furniture market. Tus, without
neglecting current furniture trends, which favour minimalist designs, ideally,
in 2023, distinctive carving designs will continue to be developed.
With a target of 7% annual growth, the Jepara furniture industry is estimated
to generate more than USD 250 million by 2023. Tis will be accompanied
by an increase in demand for raw materials, in terms of both quality
and quantity.
Timber quality must be prioritised, because Jepara’s high-quality carving
designs require the use of mature teak wood. Perum Perhutani is expected
to continue to supply the high-quality timber needed. Modern minimalist
furniture designs that do not require high-quality teak wood could use
alternative wood species or medium-quality teak wood.
Although Jepara’s community forests can meet only 5% of the industry’s
timber demand at the moment, they should be producing larger quantities by
2023. Terefore, if community forests in Jepara receive the support they need
to cultivate teak and alternative wood species, timber scarcity will hopefully
be less of a problem in 10 years. By integrating government programmes at
local and national levels, timber farming could become a lucrative economic
activity that contributes to improved livelihoods for community farmers.
Ease of access in obtaining raw materials also will hopefully be greater by
2023. Tis change encompasses simpler administrative processes for timber
purchasing, improved accessibility of timber grown by community farmers
outside Jepara, and the establishment of a timber terminal for Jepara’s
furniture industry. With strong commitment from stakeholders, the timber
terminal will be able to operate over the long term, and thus provide various
types of timber at afordable prices while benefting community farmers. In
addition, by 2023, timber producers associations in Jepara will ideally have
built strong networks with timber producers from outside the Jepara region.
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81
Given the importance of consumer trust for the industry, industry players
must support the Timber Legality Assurance System (SVLK), which the
national government is developing to respond to international requirements.
Group certifcation schemes, collaborations between small-scale and large-
scale enterprises, and the establishment of cooperatives are other options for
helping industry players obtain certifcation. Te Indonesian government
is planning for the SVLK to be accepted by the international market so
that it replaces existing certifcation schemes. A target is to have 10% of
those in Indonesia’s furniture industry using raw materials certifed under
the SVLK by 2023. Te SVLK uses a ‘one step only’ model, certifying the
main management unit but not conducting chain-of-custody certifcation.
Terefore, it would be highly desirable to ensure a solid supply of certifed
timber by 2023. Encouraging collaboration between certifed timber
suppliers and those in the furniture industry would be a useful strategy for
ensuring the production of certifed furniture.
Using design as a means of strengthening the industry is a major challenge
given the complex dynamics of furniture trends. Collaboration between
furniture enterprises and designers from design schools in Jepara will ideally
help meet this challenge. Designs could also respond to international
consumer trends by integrating diferent materials into the furniture. Te use
of technology to improve productivity and timber efciency will hopefully be
integrated into furniture operations in Jepara by 2023.
Ideally, the government would support these goals by regularly providing
accurate data on current and projected developments in the furniture
industry, to make it easier to predict dynamics in timber demand and supply.
6.8. Access to capital
Giving small-scale furniture enterprises greater access to capital by 2023 is a
central target. Local government and related associations have a major role
in securing such access. It is projected that in the next 10 years, demand
for capital to fund furniture manufacturing operations will reach IDR 500
million a year, and funding will be accessible through banks, money lenders,
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friends and cooperatives. Ideally, various capital funding schemes will have
been established by 2023, including soft loans, corporate social responsibility
grants and cooperatives. To date, small-scale furniture enterprises have
had government-supported schemes such as Kredit Usaha Rakyat (KUR),
Program Nasional Pemberdayaan Masyarakat (PNPM) and Koperasi Serba
Usaha (KSU).
Achieving this will require frm commitment from the local government,
which will need to be closely monitored. Terefore, future policies will rely
on active inputs from furniture enterprises and from the central government.
Further capital could be generated from sectors outside the furniture
industry, such as tourism. Te development in 2011 of the Jepara Furniture
Shopping and Tourism Map should support this aim.
6.9. Marketing
Given Indonesia’s size (the national population exceeds 260 million), the
market for Jepara’s furniture will hopefully be well developed by 2023.
Ideally, an institution that can maintain data on domestic transactions
will have been established, making it easier for all to understand the
dynamics of the industry. Te same institution could also generate data on
international market dynamics, including consumer trends, making those
data accessible for all industry players, so that they can respond appropriately
to consumer trends.
Te local government will also, hopefully, be carefully supervising furniture
export transactions by 2023, in order to ensure consistent product quality, to
build market trust and to protect furniture makers. Te full operation of the
SVLK will ideally have contributed to design enhancement, quality control,
consumer service improvements, stronger negotiation skills and greater
competitiveness in the international market.
Furniture from Jepara needs to be promoted through active participation in
national and international trade exhibitions. Internet marketing portals that
are designed to meet consumer demands will hopefully have been built by
Melati, Herry Purnomo and Bayuni Shantiko
83
2023. Strategies such as this will not only extend business networks among
furniture producers and consumers but may also shorten the distribution
channel and reduce costs. If these goals are achieved, the industry’s target of
7% annual growth by 2023 would be more feasible.
6.10. Human resources
A comprehensive inventory of existing human resources will ideally be
available by 2023. Te use of professional certifcation schemes will guarantee
staf competence, especially artisans and carvers, which in the long run may
improve furniture quality.
To boost staf competence, stakeholders will hopefully provide training
on business management, production techniques (timber preservation and
Diferent actors along the furniture value chain are approached ad encouraged to share their
personal stories and involvement within the industry. Home interviews and writing workshops are
conducted to improve their capacity in writing these stories.
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drying), marketing, information technology, fnance, entrepreneurship,
design, fnishing technology, communication, administration, taxation and
administrative processes for exports and imports. Ideally, for efciency,
a body will have been created to centralise the training programmes and
support the use of professional certifcation schemes.
6.11. Infrastructure
Hopefully, by 2023, major improvements will have been made to
infrastructure, including public roads, timber terminals, warehouses, energy
sources, international trade exhibition facilities, information centres, hotels,
tourist apartments and restaurants, industrial centres, industrial tourism
villages and a furniture industry museum. Plans to develop Jepara’s main
transport facilities, including an export-oriented airport and seaport, should
continue in the near future.
Te establishment of a timber terminal or auction centre is also high on the
agenda as a means of ensuring that furniture makers can obtain competitively
priced raw materials. Te existence of such terminals may also reduce the
unnecessary role of brokers and middlemen.
6.12. Institutional governance
By 2023, synergised collaborations among institutional groups within and
outside Jepara ideally will have been forged. Related research and educational
institutions include SMKs, CIFOR, FORDA, BPPT, Dewan Riset Daerah
(DRD), STDNU, STIENU and APEPSI. Professional associations also
play a crucial role in improving the Jepara furniture industry. Tese include
ASMINDO, APKJ, HPKJ, IWAPI, ASEPHI, HIMPI, HIPMI, KADIN,
DEKRANASDA, APINDO, ORGANDA, HIPPI and PHRI.
Central and local government will need to be actively involved in managing
the performance of the industry. Governments could help resolve conficts
between stakeholders through policies that support the industry and
Melati, Herry Purnomo and Bayuni Shantiko
85
encourage the close involvement of related institutions. Both levels of
government should be responsible for policy implementation and evaluation,
to ensure policies contribute to a fruitful business climate.
Another hope is that, by 2023, Jepara will have achieved long-term market
competitiveness, to be made possible through the identifcation of relevant
resources, selection of resources needed to meet future market demand,
measurement of intangible resources (particularly knowledge), introduction
of programmes that enhance emerging competence and capabilities, rapid
response to external challenges, and constant development, extension,
protection, conservation and renewal of resources.
If these actions are taken, it is hoped that by 2023 the Jepara furniture
industry will have achieved higher economic growth, with better employment
opportunities and a better-designed eco-centric development scheme.
6.13. How to get there
To realise the vision and mission for Jepara’s furniture industry, several plans
have been developed to deal with raw material supplies, access to capital,
human resources, institutional governance, and physical and non-physical
infrastructure.
Indonesia’s national economy is growing at a rate of 7% per annum, and
Jepara is growing at 5%. Te furniture industry is growing nationally at a
rate of 8–10% per annum.
Jepara has set a target growth rate of 7% per annum for the furniture
industry. In reality, however, the current growth rate is 1.39% per
annum. Achieving the targeted goal will require efective support of
furniture manufacturing and product sales. In sustaining the industry’s
competitiveness and uniqueness, the Jepara district government must
prioritise the development of its furniture industry above other wood-
based industries.
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6.14. Action plan
6.14.1. Timber supply
Timber in demand by the Jepara furniture industry falls into three groups:
mahogany, teak and mixed wood. It is expected that Perhutani will be
unable to meet growing demand in the future. Initiatives such as support
for community forests, silvicultural training by Perhutani and the Ministry
of Forestry, and wood marketing are needed to deal with the shortage.
Reforestation and plantation of green belts are also needed to ensure an
ongoing supply of raw materials. Central and local governments must also
support eforts to obtain chain-of-custody certifcation for community forest
timber. Te following actions are recommended to ensure that furniture
makers in Jepara continue to have an adequate supply of raw materials.
Cultivation of fast-growing timber species
Fast-growing timber species have the physical, mechanical and chemical
characteristics ideal for use in furniture making. Several fast-growing timber
species have been developed under various commercial products and plans.
One timber species promoted by the government is Jati Unggul Nusantara
(JUN), which is planned for cultivation outside forest reserves or private
forests. As a premium species, JUN requires intensive management and
supervision from Perhutani and the Ministry of Forestry throughout each of
its growth stages. Te government should provide land in community areas
and use cultivation techniques to facilitate better access to premium seedlings
at an afordable price.
JUN can be felled at the age of 10 years. Although its physical, chemical and
mechanical characteristics are similar to those of conventional teak species,
it is categorised as a second-class type of timber that is vulnerable to termite
attacks when it is young. Te older the timber, the more likely it will survive
termite attacks and other pests and diseases.
If 250 ha of land or 100 000 seedlings are planted each year, approximately
30 000 m
3
of timber will be available by 2026, or even up to 120 000 m
3
by 2030. Tis projection is based on an area less than that of conventional
plantations in community forests in 2007, which covered 715 ha of
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87
land. If 715 ha of JUN species were planted each year, approximately
85 000– 429 000 m
3
of timber would be available by 2030.
Implementation of the SVLK (Timber Legality Assurance System)
To guarantee that timber is sourced from verifed management units, the
national government introduced the SVLK under Ministry of Forestry
Decree No. P38/Menhut-II/2009. Te aims of the scheme are to control
timber management and increase timber prices.
In its National Forestry Plan 2012–2030, the Ministry of Forestry set a
target of nationwide timber certifcation and verifcation. Additional targets
include obtaining SVLK certifcation for at least 50% of forestry units
between 2010 and 2014. If all furniture enterprises, from timber suppliers to
furniture manufacturers, obtain SVLK certifcation, sale prices may improve.
All furniture enterprises should therefore be fully certifed as a step towards
achieving the target growth rate.
Existing studies indicate that Jepara’s furniture export growth will reach
only 1.39% by 2020, far below the national growth rate of 8–10%. Setting
a target of full certifcation for at least 5–10% of furniture enterprises should
enable export prices for furniture to rise.
Diversifcation of products and raw materials
Diversifcation of products and the raw materials used is an important factor
in eforts to boost production. Furniture manufacturers are challenged to
continuously innovate and create new furniture products. Another reason to
use a variety of raw materials,whether timber or synthetic substances, is to
be sure that there is a sufcient and afordable supply of materials for small-
scale manufacturers.
Stakeholder engagement in the supply of raw materials
Ensuring a supply of raw materials requires stakeholders to work together
extensively. One option is to build agreements with timber-producing
regions. Logs from timber-producing regions can be processed exclusively
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into furniture in Jepara, further boosting the industry’s performance in the
domestic market.
Availability of data on the timber supply–demand gap
Tere is known to be a huge gap between the demand for timber and the
available supply. However, quantitative data are difcult to obtain because
of issues such as inaccuracies in data on the timber supply and demand
and diferences in the types and sizes of timber. To make such data readily
available, timber management and timber distribution systems must be well
planned and implemented, closely controlled and regularly evaluated.
To obtain accurate data on raw material consumption, existing data on
timber entering Jepara district can be utilised. Documents on Transportation
of Timber and Logs (Surat Angkutan Kayu Olahan atau Kayu Bulat) need to
refect existing conditions to ensure the availability of accurate data on the
types and volume of timber needed for the entire Jepara furniture industry.
Using other wood species as raw materials
Diferent timber species have diferent physical, chemical and mechanical
characteristics, and these are factors when categorising timber according to its
type and use. Certain timber species are used only for woodwork, frewood
or construction, for example. However, timber scarcity may force people to
ignore the traditional uses of certain wood species, because the higher price of
good-quality timber increases production costs, whereas use of other types of
wood for making furniture, such as merbau from Papua, mango and jackfruit
may reduce the supply–demand gap.
Collaboration with tree farmers in cultivating species to supply timber
Tree farmers in community forests should be encouraged to engage in
plantation and intensive cultivation in order to supply timber, which will be
allocated to Jepara furniture manufacturers. Farmers will be given incentives
to manage sustainable timber plantations and training in silvicultural
practices to ensure timber quality.
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89
Industry players must lobby the government to ensure they receive the
necessary policy support at the macro and micro levels. Subsidies for
machinery and equipment, technical training and other supporting functions
are needed to ensure continuous innovation and quality management
throughout the industry.
Efcient management of industrial waste
Technological solutions can be used to minimise the amount of industrial
waste generated during furniture production. As only a small proportion of
the industry use their industrial waste, all those in the industry need to be
instructed in optimum use of raw materials.
Collaboration with tree farmers from outside Jepara
Out of the total supply of raw materials, 11.47% is sourced from regions
outside Java, 31.20% is supplied by Perhutani and 55.00% comes from
community forests across Java (Hadiyati 2011). Timber from within Jepara
district accounts for only 0.46% of the total demand, because the district
ofers little good-quality timber (Hadiyati 2011). Excluding timber sourced
from Perhutani, this means that two thirds of the timber supply comes
from outside Jepara. Given this heavy dependence on outside regions,
it is important to build relationships with tree farmers in Maluku and
Southeast Sulawesi.
Establishment of timber terminals
For better monitoring of timber transactions, a designated meeting place
for timber buyers and sellers is needed. Te formation of a timber terminal
may lead to better timber management and encourage more transparency in
timber pricing.
6.14.2. Access to capital
Te following recommendations aim to ensure that capital is readily available
to those in the Jepara furniture industry in 10 years.
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Provide accessible capital for small- and medium-scale furniture
manufacturers
With increasing prices of raw materials and other items required for
manufacturing furniture, production costs will continue to soar, placing
pressure on small- and medium-scale furniture manufacturers. Giving
these SMEs support in accessing capital should be a priority in the near
future.
Provide accessible soft loans
Capital is required not only for furniture manufacturing, but also for
storage, timber collection and marketing. State fnancial institutions or
the private sector should extend more soft loans to meet the industry’s
need for capital.
Provide grants to small- and medium-scale furniture manufacturers
Grants in the form of production tools and accessories, marketing
assistance and access to free raw materials are useful for reducing the need
for capital among manufacturers and artisans.
Develop regulations that support the availability of capital
Te national target growth rate for industry of 8–10% in the next
10 years, as outlined in the National Furniture Roadmap, requires
giving SMEs full support in terms of access to capital and marketing.
Government intervention at local and national levels is needed to ensure
that capital is widely available.
Encourage companies from outside the furniture industry to ofer
support through corporate social responsibility programmes
Engagement with corporate social responsibility programmes from state-
owned enterprises and the private sector (national and international) that
are not directly related to the furniture industry could provide a solution
to the industry’s problems regarding the supply of timber and tools,
development of technology, access to capital and product marketing.
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91
Ofer credit schemes for small- and medium-scale furniture manufacturers
Kredit Usaha Rakyat (KUR) was launched in 2007 as a credit scheme
targeting SMEs and cooperatives, ofering capital and fnancial investments
underwritten by the government.
Te aims of the state programme are to (1) fast-forward the development
of the real sector and empower SMEs, (2) improve SMEs’ access to capital
and (3) alleviate poverty and enhance employment opportunities. Te
government guarantees up to 70% of KUR’s fnancial risks, with the other
30% guaranteed by six fnancial institutions, namely Mandiri, BRI, BNI,
Bukopin, BTN and BSM.
SMEs and cooperatives can access KUR under the following terms and
conditions: (1) loans of up to IDR 5 million are charged an annual interest
rate of 24% and (2) loans of IDR 5 million–500 million are charged an
annual interest rate of 16%.
Additional programmes are required to complement KUR, such as: (1) the
establishment of cooperatives to enable capital loans and savings among
members; (2) better access to government programmes such as Lembaga
Penyaluran Dana Bergulir (LPDB) and Program Kementrian Bina
Lingkungan (PKBL) and (3) collaboration with fnancial institutions in
supervision of fnancial management.
Provide direct assistance through the local government
Te local government should allocate funds from the state budget for
assisting SMEs with cash funding, facilities, production-related infrastructure
and marketing.
6.14.3. Marketing
Create a Jepara furniture brand
To build market competitiveness, initiatives for branding the industry are
required. Branding can be achieved through careful development of the
Jepara Furniture Carving geographical indicators. Te geographical indicator
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will function as a common copyright protector for furniture workshops in
Jepara and may boost competitiveness if product quality is maintained.
Increase the number of export destinations
Te Jepara furniture industry exported products to 102 destinations in 2009,
a great increase compared with fve years earlier. An even greater increase in
the number export destinations should be encouraged over the next 10 years.
Diversify market and furniture products
A small proportion of Jepara furniture manufacturers sell their products
exclusively to certain markets and buyers. To strengthen their bargaining
position and boost their prices, these businesses need to expand their
market. To do this, they need useful information on market conditions and
alternative sales avenues.
Establish a body dedicated to monitoring domestic sales
Documentation of domestic sales of furniture is inadequate and
unsystematic. A government body or independent institution needs to
be tasked with monitoring, documenting and reporting domestic sales of
furniture, particularly for premium products. Te information on patterns in
these transactions will be of use in predicting market trends and developing
product designs for the domestic market.
Use information technology and trade shows for local and international
marketing
It is essential for businesses to efectively use information technology to
extend their reach to the global market, monitor trends and create product
designs. A comprehensive database on export destinations, importers and
product specifcations is also required. Information on local and international
sales, buyers and sellers should be made available online. Tese steps are very
important for comparing export and import values for other countries and
for boosting competitiveness.
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93
6.14.4. Human resources
Te Jepara furniture industry can be most efectively developed through its
human resources. A comprehensive map of those employed in the industry
is needed. Workers should receive training to ensure they are qualifed and
certifed, and the use of technology should be encouraged among furniture
producers. Technological difusions may form geographical distributions
of specifc furniture products, in accordance with existing potential
human resources.
Well-planned, regular training is need to develop staf capacity. Training
should cover the following topics:
1. Management: Training is needed to improve the managerial skills of
SMEs without ignoring existing local knowledge. Training should cover
appropriate and cost-efective business planning, capital funding, human
resource management, supervision and evaluation of production, and
product marketing.
2. Production (wood conservation and drying): High-quality furniture
begins with efective treatment of raw materials; SMEs should therefore
receive training in wood conservation and kiln drying.
3. Marketing: As marketing, promotion and packaging are key
determinants of the success of product sales, training in marketing is
important for ensuring the sustainability of Jepara’s furniture industry.
4. Information technology: SMEs should be trained in the use of
information technology, which can be used to improve product
development, production processes and marketing.
5. Finance: Financial management throughout all stages of production and
marketing is important for maintaining a healthy business cash fow.
6. Entrepreneurship: SMEs should receive training in innovations,
promotions, business development and access to capital so they are
better equipped to deal in the global furniture market.
7. Design and fnishing: Furniture produced in Jepara is usually sent
to other regions for further development and fnishing. If they are
trained in furniture design and technical fnishing processes, furniture
workshops will be able to add value by developing ready-to-use products
and directly access end consumers.
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8. Communication: Training in communications may lead to improved
social relations between furniture manufacturers, tree farmers
and consumers.
9. Documentation and administration: If SMEs can properly document
their product designs, market distribution channels and raw material
needs, their businesses will be better equipped to survive.
10. Taxation: SMEs should receive training to ensure they understand their
tax obligations and can calculate and include taxes as part of their total
production costs.
11. Production: Training is needed to enhance SMEs’ use of production
technology so that their products satisfy market requirements.
12. Occupational health and safety: OHS training is important to ensure
productivity. Government regulation is also needed.
13. Administration on exports and imports: Training on administrative
aspects of timber supply and fnished products will help SMEs
understand the formal process of exporting and importing.
6.14.5. Infrastructure
Appropriate public infrastructure is very important for supporting furniture
manufacturing and product marketing. Particular attention is needed in the
following areas:
1. Roads: Public roads connect timber suppliers with furniture
manufacturers, and manufacturers with markets and consumers. High
road connectivity ensures the ease of doing business.
2. Inter-island seaports: An inter-island seaport needs to be developed in
Jepara to improve product shipping.
3. Energy security: Furniture production requires a lot of energy,
including electricity and fuel, making energy security important for the
sustainability of the furniture industry. Terefore, the Jepara district
government should work closely with the Tanjung Jati Natural Gas
Power Station to ensure a sustainable supply of energy.
4. International trade show facilities: To facilitate widespread marketing, an
international-standard trade show facility should be constructed within
the Jepara region.
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95
5. Information centre: A specially designed information centre that
provides information on diferent types and designs of furniture needs
to be established to assist consumers in choosing furniture and provide
manufacturers with better information on consumer trends.
6. Hotels and tourism infrastructure: Accommodation for consumers
visiting from outside the Jepara region is necessary. Te development of
such infrastructure may also help boost tourism to Jepara more generally.
Tourism services and hotels must display a distinctive Jepara character.
7. Industrial centres: Industrial centres, that is, clusters of certain types of
product manufacturers, will both enable consumers to fnd products and
assist manufacturers in better positioning themselves in the market.
8. Industrial tourism villages: To motivate consumers, industrial tourism
villages should be developed with exhibitions on the diferent types of
products and how they are made.
9. Furniture museum: A dedicated museum that holds exhibitions on
various aspects of the furniture industry will stimulate consumers to seek
further information and possibly order furniture.
6.15. Institutional strengthening
Strengthening ties among institutions related to the furniture industry may
result in improved outcomes in Jepara. Te following institutions play an
important role in future developments of the industry:
1. Education and research institutions: SMK, CIFOR, FORDA
Education and research institutions play an important role in developing
innovative product designs, identifying opportunities and fnding
solutions to industry-related problems, as well as providing policy
recommendations.
2. Professional associations and NGOs: ASMINDO, APKJ, HPKJ, IWAPI,
ASEPHI, HIMPI, HIPMI, KADIN, DPKJ, DEKRANASDA, APINDO,
ORGANDA, PHRI, HIPPI, LAKPESDAM NU, FEDEP, FLP, FRK-IFJ
Inter-institutional collaboration needs to be fostered to ensure continuity
of industrial production in terms of marketing, production and
timber supplies.
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3. Education and technological development institutions: BPPT, DRD,
STTDNU, STIENU, SMKN 2 and ABPEPSI
Cutting-edge technology and industrial innovations will always be
available if education and technological development institutions
continue to update their research and communicate their fndings to
those in the industry.
4. Government institutions: Ministry of Industry, Ministry of Trade,
Ministry of Forestry, Bappeda, BKPMD, Local Economic Bureau, SMEs
and tourism industry, DPRD and DEKOPIN
Intensive collaboration between local and central government bodies and
fnancial institutions are expected to encourage industrial growth at the local
and global scales.
Regulations and policies designed to support Jepara’s furniture production
and exports must help SMEs gain better access to raw materials, tools and
technologies, as well as improve their technical and managerial skills. In
addition, market information, marketing opportunities and access to capital
must be readily available to ensure sustainability of the industry.
6.16. The role of stakeholders in implementing the action
plan
Without strong commitment from all stakeholders in the industry, achieving
the ideal conditions for 2023 may not be feasible. Te main roles of
institutions in Jepara in carrying out the Roadmap are set out in Table 3.
As the table shows, securing timber supplies requires available land,
scheduled plantings and cultivation, as well as good forest management.
Meeting timber demand involves not only sourcing the timber, but also
collaborating with local institutions and other timber-producing regions.
Timber certifcation schemes must be encouraged as a step towards fetching
higher prices for furniture. Te Ministry of Forestry and Perhutani also
need to collaborate in implementing the SVLK, with full support from
government policies. Both institutions are also responsible for technical
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97
Table 3. The role of stakeholders in implementing the Jepara Roadmap
2013–2023
Rawmaterials
Action plan
Access to
capital
Marketing
Human
resources
Infrastructure
Institutional
strengthening
I
N
S
T
I
T
U
T
I
O
N
S
DISHUT BUN V
DPRD V
DISKOP. UKMPP V V V
Bappeda V
DISPERINDAG V V V
Perhutani V
FRK V
JFDC V
APKJ V
HPKJ V
ASMINDO V
STIENU V
STTDNU V
SMKN 2 V
Financial
institutions/banks
V
DISOSNAKERTRANS V
GAPOKTAN V
DISHUBKOMINFO V V
PU-ESDM V
DINAS CIPTA KARYA
and TATA RUANG
V
DISPARBUD V
DISDIKPORA
SETDA
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supervision of planting, tree maintenance, cultivation and capacity building
of tree farmers. Ways to encourage the diversifcation of raw materials
through the use of alternative timber species and the minimisation of
industrial waste also need to be considered.
Financial institutions should also become involved in facilitating soft loans,
grants and credit schemes in order to strengthen furniture producers’ and tree
farmers’ access to capital. Te Ministry for Small and Medium Enterprises is
expected to supervise this.
Together with the Ministry of Industry, Ministry of Trade, APKJ and
ASMINDO, the Ministry for Small and Medium Enterprises will be
responsible for supporting marketing by providing market information,
managing furniture clusters and providing insights into consumer trends,
with the aim of better guiding SMEs in developing production plans. Market
diversifcation, monitoring of domestic transactions and use of information
technologies are also steps that will help SMEs cope with market conditions.
Training programmes for up-skilling workers are the responsibility of
educational institutions such as STIENU, STDNU and JFDC. Bappeda
too plays an important role as the main planning authority for future
infrastructure developments in Jepara.
All of the suggested plans can be implemented if the institutional setting
is appropriate. Although all stakeholders are responsible for institutional
governance, the DPRD is expected to facilitate relations between institutions
to ensure that the entire action plan is implemented appropriately. Finally,
local regulations and policies should fully support the action plan by clearly
defning responsibilities.
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Appendix:
Jepara tourist map
and shopping guide
The Jepara Furniture Value Chain Project is funded by the
Australian Centre for International Agricultural Research
(ACIAR) and implemented by the Center for International
Forestry Research (CIFOR) in collaboration with the Forum
Rembuk Kluster (FRK), the Government of Jepara District,
Forestry Research and Development Agency (Balitbanghut),
The Ministry of Forestry and the Faculty of Forestry, Bogor
Agricultural University (IPB).
www.cifor.org/furniture
Data sources
• CIFOR 2010 Jepara road network map at a scale of 1:50 000
and a census report of small-scale furniture producers
• BAPPEDA 2008 Thematic map of the district of Jepara, used
for administrative boundary data and road network
• BAKOSURTANAL Digital topographic base map of Indonesia
(RBI) with the basic scale of 1:50 000, sheet numbers 1409-
313, -314, -331, -332 and -334, used for the road network
and settlement data
• Tourism and Culture Unit, District of Jepara. Map of Jepara’s
tourism interest points.
The boundaries shown on this map are not an
ofcial reference.
Photographs by Taufq Istiqlal, Murdani Usman and Diana Vela
Betawi chair
Marlboro chair
Fish chair
www.javamebel.com is a marketplace connecting buyers
and sellers, using the Internet to increase outreach at low
cost. This joint marketing portal has been developed to help
small and medium enterprises in Jepara thrive. Members
of the Jepara Small Craft Association (APKJ) market their
products through the site, directly connecting with
potential buyers.
javamebel.com
Lounger
Atie Puntodewo, Melati, Ramadhani Achdiawan,
Rika Harini Irawati and Herry Purnomo
Dressing table
Crab chair
Mirror frame
Jepara Furniture
Tourist map and shopping guide
The carving city of Jepara
The region of Jepara has been renowned since the reign of Queen
Kalinyamat (1549–1579). At that time, Jepara was the main commercial
port on the island of Java and a naval base. Queen Kalinyamat was
instrumental in the development of a sculpture tradition, which is
still an economic mainstay of Jepara. Jepara-style carving has unique
characteristics because it marries features of the carving styles of the
Majapahit Kingdom with a contemporary style of Chinese origin.
Queen Kalinyamat made Jepara into both a prosperous and a powerful,
famous region. To commemorate her reign, the anniversary of Jepara
is celebrated on the day she was crowned as ruler of Jepara, the 12th
day of Rabiul Awal 956H or 10 April 1549. Her coronation was marked
with the four-word slogan, ‘Trus karya tataning bumi,’ which can be
interpreted as ‘Keep working hard to build the region.’
Reviving the Jepara furniture
industry
Although Jepara is located outside the main economic and tourism
corridor of Java, it has its own special advantage, which makes it a
unique and valuable destination for tourists and other guests. For a long
time, Jepara has been recognised for its master carvers and carpenters,
and this Central Javanese city has come to be known as ‘The Carving
City of Jepara’.
Unfortunately the Jepara furniture industry has been in decline since the
2000s; similar industries have developed in other places and teak wood
sources are depleted. The local government has therefore decided to try
to revive the glory of the furniture industry and of Jepara carving.
Although the Jepara furniture industry has been known for hundreds
of years, tourists or buyers who come to Jepara have trouble fnding
furniture of the type and quality they desire. This is because there is no
reliable guide for fnding the many furniture workshops and stores.
This map benefts tourists, buyers and furniture artisans alike. Tourists
can easily fnd the type of product they are looking for, with the price
and quality of their choice. Carpenters and carvers scattered across
Jepara have the opportunity to interact directly with buyers.
Apart from the wood furniture industry, Jepara has various other
manufacturing industries that support the local economy, some of
which have been included in this guide.
This is the gateway to the
district of Jepara, either
from Demak or Kudus.
The industry in this region
is dominated by ofcial
industrial centres set up by
the local government.
Mayong
Mayong is the centre for
clay roof tiles. The sales
area is located on the right
of the main road from
Jepara to Kudus .
Products ofered here
include roof tiles such as
Mantili, Supersoka,
plastered roof ridges and
shingle. Through
marketing, products have
reached many areas in
Indonesia and Malaysia.
Gemiring Lor
These shops, on the
eastern edge of the map,
are close to the Kudus
District . Products
ofered here include
gebyog, carved wooden
walls and doors, and jamb
carvings for traditional
Javanese wooden houses.
Kriyan
This area is specifed by the
local government as a
centre for white steel
(monel) manufacture.
Usually sold as jewellry or
How to use this map
For the sake of efciency, woodworkers who make
similar products usually cluster in one location.
This practice has made it easy to identify groups by
the products they sell. The clusters described here
include both ofcial industrial centres set up by
the government and informal groups of producers.
The clusters are named according to the main
product they ofer. For ease of use, several clusters
are grouped by location and shown on detailed
maps. The main map covers the entire region. On
this map, each cluster boundary is depicted with
a diferent colour. For orientation purposes the
map is set in a three by three kilometres grid with
the rows labelled A, B, C, etc and the columns 1,
2, 3, etc starting from the bottom left corner. The
detailed maps are not all drawn to the same scale,
but each is equipped with the corresponding
labels and grid.
Krasak–Gemiring area
home decorations, Indonesians who have
made the hajj wear white steel bracelets
produced in this area as a status symbol .
Telukwetan
The village of Telukwetan is the centre of the
rattan industry, where you can buy many
types of furniture made from rattan or a
combination of rattan and wood .
Nearby, in the village of Pelemkerep, Mayong
District, on the right of Mayong District ofce,
is the monument that marks the birthplace
of R. A. Kartini, the Indonesian women’s
emancipation heroine (B6).
Several groups of artisans work in this region.
Mulyoharjo
From the Ratu Shima main road heading towards
Mulyoharjo, turn left on Belakang Gunung Street
. This area has been set up as a centre of wood
sculpture by the district government. The statues
are made from various types of wood including
rain tree wood, cofee wood, teak root, wood
waste and fossilized or recycled wood.
Bandengan
Bandengan is north of Mulyoharjo. Go north on
the Ratu Shima main road and turn left at the sign
for Bandengan . The unique products ofered
here include furniture shaped like boats, as well as
chairs and bookcases. These export quality
products, made from old teak salvaged from
boats, are produced for the European and North
African markets.
Kedungcino
The northernmost furniture shops in this area are
at Kedungcino. From the Ratu Shima main road
turn left on the Wonorojo–Bandengan road that
goes to Kedungcino . The speciality in this
location is garden furniture including the grape
chair, a chair carved with a grape ornament on the
back of the seat, and the betawi chair, of Batavian
traditional design. Made from local teak, the
products are targeted at the domestic market and
sold in an unfnished state.
Kedungcino–Mulyoharjo area
This area includes the districts of
Mlonggo, Bangsri and Pakisaji.
Several furniture production
centres are located here.
Karanggondang
From the main road that
connects Jepara to Pati, turn left
at Mlonggo. Follow the road
towards Karanggondang .
Products sold here include
folding chairs and lounge chairs.
Sekuro
The main product produced
here is the extendable table ,
which is made from local teak
and targeted at the
domestic market.
Slagi
Slagi, located south of Sekuro, is
the centre for the slatted,
outdoor Marlboro bench, a
chair with a high backrest,
horizontal stripes and a curved
armrest on each side .
Products are made for export to
the United States, Germany,
Brunei Darussalam and Africa.
Bondo–Sekuro area
This area covers the subdistricts of Tahunan
and Batealit. Several groups of carpenters
and carvers work here.
Ngabul
Ngabul is well known for antique, wooden
furniture with ancient designs and carving,
and products made from older, recycled
wood . Both indoor and outdoor
Ngabul–Mindahan area
products are produced to meet export
standards. Products are targeted at the
domestic market, as well as for export to
destinations such as Malaysia, France and
Australia.
Ngasem
Daybeds and baby cots can be found in
the Ngasem area . Other products
include sofas, dressers, kitchen sets, gebyog
and gazebos.
Mindahan
To the east in Batealit, Mindahan is the
sales centre for nightstands and divans .
Made from local teak and targeted at the
domestic market, these products are on
sale as unfnished products.
Bawu
Located in the northern area of the map
, Bawu is the place to fnd wooden
easels made from teak and mahogany for
both local and export markets.
Pekalongan
Pekalongan, to the west of Bawu , is
where you can fnd coat racks made of
mahogany and intended for the domestic
market. Outside this area, products from
Pekalongan can be found in Jepara,
Yogyakarta and Surakarta (Solo).
The Bulakbaru–Dongos area includes the
subdistricts of Tahunan, Pecangaan and Kedung.
Troso
The district government has designated Troso as
the centre of the weaving industry, located on the
main road from Demak to Jepara. Turn left on to
the road leading to Bulakbaru . Products ofered
here include tablecloths, pillowcases, curtains,
gloves, long cloths and mats.
Dongos
Northwest of Troso is Dongos, which covers quite a
large area . Here you can fnd a special piece of
furniture known as the eagle and stair chair.
Products are made from mahogany and targeted
at both domestic and export markets.
Bugel
Bugel is located to the west of Dongos . This
area is famous for the crab chair (kursi yuyu), a chair
designed in the shape of a crab. It has four curved
legs without a backrest and its armrest has seven
stripes. The products here are made from local teak
and intended for domestic and export markets.
Menganti
Menganti is located northwest of Bugel. From the
Bulakbaru road, turn right at the Bugel–Mantingan
junction. Products include the Roman style chair
and the balero chair, a dining chair with a high
backrest and fve stripes . Besides these two
items, other products found here are the salina
chairs, which consist of four dining chairs and one
Bulakbaru–Dongos area
Kawak–Plajan area
The Kawak–Plajan area includes the subdistricts
of Pakisaji, Mlonggo and Bangsri.
Kawak
This area can be reached via the main road from
Mlonggo to Bangsri; turn right at the road that
goes to Guyangan. After about 1.5 km, turn right
again . The fagship item in this area is the
rekal, a stand for the Qur’an or any other book.
Plajan
From Kawak, go southeast to Guyangan. The
selling location is quite extensive, following the
Guyangan to Plajan road . Plajan is the place
to buy stackable ofce chairs and the peanut
bench, an outdoor chair shaped like a peanut.
round dining table, the basket chair and
various tables.
Kerso
Kerso is north of Menganti . In this area you can
fnd betawi and salina chairs, the balero chair,
various dining chairs, and the box seat, a chair with
box motifs.
Jondang
Jondang is located south of the Bulakbaru road.
From Menganti, go south, past the crossroads at
Kedung, and you will arrive at Jondang .
Specialities from this area include pot chairs, made
for fower pots, and Roman style chairs. Carved
from local teakwood, these products are
manufactured specifcally for the domestic market.
Bulakbaru
Located on the western edge of the map ,
Bulakbaru is famous for one product, the
nightstand or bedside table. Terawangan
transparent carvings are also found here, along
with sideboards and cabinets.
Mantingan–Sukosono area
The Mantingan–Sukosono area is located close to downtown
Jepara, about 3 km from the centre on the main street from Jepara
to Demak.
Tendok
Along Tendoksari Street there are many types of frames for paintings
and mirrors . The products are usually for export to the East Asian
market, especially to China and Korea. A pigura is a wooden picture
frame.
Langon
Not far from Tendok, on Sidodadi Street, there is a ketapang centre
. Tables and beds made in ketapang style have distinctive legs
that curve inwards and are usually made from teak, mahogany or
durian. These products are exported to destinations such as Korea,
Japan and France.
Still around Langon but further south at the crossroads of Sidodadi
and Sultan Hadlirin streets, you will fnd a centre for cofn
manufacture . Items are made from teak or mahogany and sold
on the domestic market.
Sukosono
From Langon, follow the road that connects Dongos to Sukodono
and you will arrive at the centre for furniture made in shapes
inspired by plants and animals . The best known products from
this area are chairs with carvings of crabs, dragons, fsh and roses.
These products are intended for sale on domestic and export
markets.
Rau
Rau, at the southwestern corner of the map, is the centre for corner
seats . Products are made from teak and mahogany and
intended for the domestic market.
Mantingan
Mantingan, in the northwest of the map, is the centre for sideboards,
bookcases and display cabinets . Products are exported,
especially to Belgium. Miniature furniture for children and dolls can
also be found here.
Sukodono
In the vicinity of Sukodono, there is a centre for salina seats ,
Tegalsambi–Sukosono area
The Tegalsambi–Sukosono area covers the subdistricts
of Sukosono, Tahunan and Jepara. There are fewer
workshops and showrooms in this area but there is
still variety.
Demaan
Demaan, in the north of the map , is well known for its corner seats.
This item is made from a combination of teak and rosewood, which
results in a gradation of two colours of wood. Products are targeted at
the domestic market.
Krapyak
Going south along Kalinyamat Road and turning right at Randusampit
Street, you arrive at the centre for chair production, in particular the
minimalist Hong Kong chair, a chair with Chinese style ornamentation
. Products are produced for the domestic market and sold as
unfnished furniture.
Tegalsambi
Further down the road going south to Mantingan Kalinyamat, turn right
towards Tegalsambi, and there are centres for dresser manufacture .
Frames for mirrors and various types of table can also be found here.
Mangunan
In this area the bale-bale, a wooden daybed, is manufactured . Other
products, which are sold on the domestic market, include cabinets and
laundry baskets.
Demangan
Demangan is the centre for sideboards, nightstands, lawn chairs and
krapyak, which are wooden blinds for indoor use . Products are
exported to destinations such as Taiwan, Singapore and Germany.
Semat
As in Demaan, furniture produced in this area combines teak and
rosewood, and includes dining chairs, guest chairs, patio chairs, display
cases, wardrobes and desks . The historical point of interest in this
area is the statue of R. A. Kartini, located at the intersection of KS Tubun,
HOS Cokroaminoto, Kartini and Pemuda streets.
This area is located near Jepara city centre, and
extends into the subdistricts of Jepara, Pakisaji,
Tahunan and Batealit.
Senenan
On the main Jepara–Pati road, slightly north of
Senenan and on the left is a centre for wooden
relief carving . Immediately east of Senenan is a
production centre for Roman and Monaco style
furniture .
Kecapi
Kecapi is the centre for carved partitions and room
dividers. The showrooms are along Citrosono Street
up to Sosrokartono crossroads on the northwest
side .
Bulungan
This is the centre for cabinet manufacture. The
showrooms extend along Sosrokartono street; turn
left to go north on the road heading to Bulungan
. You can fnd any kind of cabinetry here, from
wardrobes and bookcases to shelving units, chests
of drawers and sideboards.
Bawu
Bawu is located southeast of Kecapi, on the
Kuwasen–Kecapi area
crossroads of two streets, Kecapi–Bawu and Rukmini . This area is the
centre for the king’s chair, named as such because it replicates the kind of
chair used in palaces in England.
which have a wide variety of shapes and ornaments,
including carved roses. Salina seats are generally
produced for the domestic market.
Randusari Bendo
In the north, especially around Jayadi Rojo Street, you
will fnd a centre for sofas. The area is known as
Randusari . Bedroom sets and door frames are also
made and sold here.
You can visit some historical sites in this
neighbourhood, including the Mantingan mosque
complex. This ancient mosque was built during the
reign of the Sultanate of Demak, in the Saka year
1481 or 1559 AD, by Emperor Hadlirin, the husband
of Queen Kalinyamat and brother-in-law of Sultan
Trenggono, the last ruler of the Sultanate of Demak.
This was the second mosque built in Indonesia, and
became the centre of Islamic proselytising on the
north coast of Java. In this complex you can also fnd
the graves of Sultan Hadlirin and Waliulah Bah Abdul
Jalil, also known as Sheikh Siti Jenar.
Teak forest in Jepara
Ofoading logs
Carrying the log
Using a chainsaw to shape the wood
Assembling a chair
Sanding the furniture
FRK - IFJ
javamebel.com
The Jepara region in Central Java is one of Indonesia’s largest furniture-making centres,
providinga livelihood for thousands of small-scale furniture manufacturers and their
families. Like other stakeholders along the Indonesian furniture industry value chain,
these producers are afected and challenged by a range of dynamic changes.
To strengthen Jepara furniture makers’ potential to enter the global market, a multi-
stakeholder project, ‘Mahogany and teak furniture: action research to improve value
chain efciency and enhance livelihoods’, was conducted with the support of the
Australian Centre for International Agricultural Research (ACIAR).
This book outlines the research process and the outcomes that were achieved
throughout the fve-year project. The project laid some crucial foundations for small-scale
furniture makers to build on, including the formation of the Association of Jepara Small-
scale Furniture Producers (APKJ) and the development of a furniture industry roadmap
for 2013–2023.
cifor.org/furniture
cifor.org blog.cifor.org
Center for International Forestry Research
CIFOR advances human well-being, environmental conservation and equity by
conducting research to help shape policies and practices that afect forests in
developing countries. CIFOR is a member of the CGIAR Consortium. Our headquarters
are in Bogor, Indonesia, with ofces in Asia, Africa and South America.
This research was carried out by CIFOR as part of the CGIAR
Research Program on Forests, Trees and Agroforestry (CRP-FTA). This
collaborative program aims to enhance the management and use of
forests, agroforestry and tree genetic resources across the landscape
from forests to farms. CIFOR leads CRP-FTA in partnership with
Bioversity International, CIRAD, the International Center for Tropical
Agriculture and the World Agroforestry Centre.
doc_762764503.pdf
The aim of the project was to improve the performance of small-scale furniture enterprises in Jepara that rely on mahogany and teak by enhancing the structure and function of the furniture industry.
Melati, Herry Purnomo and Bayuni Shantiko
Making research work for
small-scale furniture makers
Action research in the Jepara furniture industry, Indonesia
Melati, Herry Purnomo and Bayuni Shantiko
Making research work for
small-scale furniture makers
Action research in the Jepara furniture industry, Indonesia
Center for International Forestry Research
© 2013 Center for International Forestry Research
Content in this publication is licensed under a Creative Commons Attribution-NonCommercial-
NoDerivs 3.0 Unported Licensehttp://creativecommons.org/licenses/by-nc-nd/3.0/
ISBN 978-602-1504-18-5
Melati, Purnomo H and Shantiko B. 2013. Making research work for small-scale furniture makers:
Action research in the Jepara furniture industry, Indonesia. Bogor, Indonesia: CIFOR.
Cover photo by Murdani. Women sand unfnished furniture.
CIFOR
Jl. CIFOR, Situ Gede
Bogor Barat 16115
Indonesia
T +62 (251) 8622-622
F +62 (251) 8622-100
E [email protected]
cifor.org
We would like to thank all donors who supported this research through their contributions to the
CGIAR Fund. For a list of Fund donors please see:https://www.cgiarfund.org/FundDonors
Any views expressed in this publication are those of the authors. They do not necessarily represent
the views of CIFOR, the authors’ institutions or the fnancial sponsors of this publication.
Table of contents
Acknowledgements vi
Summary vii
1. Introduction to the furniture value chain project 1
1.1 Background 1
1.2 Action research and the value chain analysis 10
1.3 Project aims 17
1.4 Project funding: About ACIAR 21
2. The ‘moving up’ scenario: Improving market access
for producers 23
2.1 The furniture market 23
2.2 Market constraints 25
2.3 The buyer-driven market 28
2.4 Proft margins 30
2.5 Project activities for moving forward 31
3. The ‘collaborating down’ scenario: Improving timber supplies
for producers 37
3.1 Timber supply and demand in Jepara’s furniture industry 37
3.2 Constraints on timber acquisition 40
3.3 Proposed solutions 44
3.4 Project activities for moving forward 46
4. The Jepara Small-scale Furniture Producers Association:
Strengthening collective action 49
4.1 Strengthening SMEs in Jepara 49
4.2 Strengthening SMEs in Central Java and beyond 52
4.3 Overcoming gender constraints in the furniture value chain 53
4.4 Gender in the value chain analysis 59
5. The ‘green furniture’ scenario: Building and enhancing access
to green markets for small-scale furniture manufacturers 61
5.1 Major problems encountered by furniture makers 61
5.2 Timber certifcation 62
5.3 Project activities for moving forward 65
iv
Making research work for small-scale furniture makers
6. The future of Jepara’s furniture industry 69
6.1 Projections based on current conditions 69
6.2 Project achievements 71
6.3 Roadmap for the furniture industry 74
6.4 Developing industry regulations for occupational safety
and health 75
6.5 Impacts beyond the project 77
6.6 Hopes and dreams 79
6.7 Timber supply 80
6.8 Access to capital 81
6.9 Marketing 82
6.10 Human resources 83
6.11 Infrastructure 84
6.12 Institutional governance 84
6.13 How to get there 85
6.14 Action plan 86
6.15 Institutional strengthening 95
6.16 The role of stakeholders in implementing the action plan 96
References 99
Appendix: Jepara tourist map and shopping guide 105
List of fgures, tables and boxes
Figures
1 Distribution of furniture enterprises throughout Jepara district 4
2 Administrative divisions of Jepara district 7
3 Jepara’s demographics and population density 8
4 Four types of value chain governance in Jepara’s furniture industry 11
5 Cycle of refection–planning–action–monitoring, leading
to improvements 17
6 Comparison of perceptions of global buyers and small-scale furniture
manufacturers in Jepara 28
7 Distribution of areas that supply timber for the Jepara
furniture industry 39
8 Distribution of wood suppliers in Jepara district 41
Tables
1 Furniture business types in Jepara 5
2 Sources of timber for Jepara 40
3 The role of stakeholders in implementing the Jepara
Roadmap 2013–2023 97
Boxes
1 About Jepara 7
2 Business patterns among Jepara’s furniture actors 12
3 Jepara’s domestic and international furniture market structure 26
4 Timber distribution in Jepara’s furniture industry 42
5 Gender roles in Jepara’s furniture value chain 56
6 Indonesia’s timber legality assurance system 64
7 Roadmap for Jepara’s furniture industry 2012–2022 72
We would like to thank the Australian Centre for International Agricultural
Research (ACIAR) for funding the project ‘Mahogany and teak furniture:
action research to improve value chain efciency and enhance livelihoods
(FST/2007/119)’. Special thanks are due to Dr Andrew Wardell,
Gideon Suharyanto, Dina Hubudin, Gun gun Rakayana, Rika Harini
Irawati, Ramadhani Achdiawan and Bayuni Shantiko from CIFOR;
Rachman Efendi and Nunung Parlinah from the Forestry Research and
Development Agency of the Indonesian Ministry of Forestry; Dodik Ridho
Nurrohmat, Bahruni and Ef Yuliati Yovi from the Faculty of Forestry,
Bogor Agricultural University (IPB); and our other project partners from
Jepara, the Jepara Furniture Cluster Forum (FRK), the Jepara Development
Planning Agency (Bappeda), the Jepara Forestry Units and the Jepara
District Government for their support in making this book.
Additional thanks go to our colleagues and research partners who gave
up their time to review and provide feedback on the manuscript. We
welcome comments and suggestions to further improve our future research
and publications.
Acknowledgements
Tis book summarises the impacts of our furniture value chain project
on the furniture industry in Jepara, Central Java. Te project, entitled
‘Mahogany and teak furniture: action research to improve value chain
efciency and enhance livelihoods (FST/2007/119)’, was conducted
between 2008 and 2013, with the support of the Australian Centre for
International Agricultural Research (ACIAR). Te project was a collaboration
between CIFOR, the Faculty of Forestry of Bogor Agricultural University,
the Forestry Research and Development Agency of the Indonesian
Ministry of Forestry, Jepara Furniture Cluster Forum and the Jepara
District Government.
Te aim of the project was to improve the performance of small-scale
furniture enterprises in Jepara that rely on mahogany and teak by enhancing
the structure and function of the furniture industry. With improved
governance and efciency, small-scale furniture makers can assume a greater
role in the value chain, help their businesses and boost their incomes.
Te project goals are aligned with the ‘Green Economy’, as described in
the United Nations’ ‘Te future we want’, in order to help mainstream
sustainable development and poverty eradication, by promoting sustainable
patterns of consumption and production, and protecting and managing
natural resource development.
Te book describes the use of value chain analysis and participatory action
research (PAR) to understand and strengthen the role and position of
small-scale furniture makers in Jepara’s furniture value chain. Te analysis
was used to construct four scenarios for improving the role of small-scale
furniture producers: moving up the value chain to be closer to buyers,
institutionalising a small-scale furniture producers association, collaborating
Summary
viii
Making research work for small-scale furniture makers
down the value chain with timber suppliers, and developing ‘green furniture’
products. Tese scenarios, within the frame of PAR, were developed into
action plans that were then implemented and monitored. Te book also
describes the policy roadmap completed to support the future survival and
growth of small-scale furniture makers in Jepara.
Our hope is that readers will be able to take valuable lessons from this book
and be inspired to learn more.
The wooden furniture
value chain
Action research to improve
governance and livelihoods
for small-scale furniture
manufacturers in Jepara,
Indonesia
1.1. Background
1.1.1. Global furniture trade and consumption
Te global furniture market connects people and organisations from
countries across the world (Purnomo 2006). In 2011, the world’s biggest
furniture exporters were China (export value US$44.8 billion), Germany
(US$13 billion), Italy (US$11.5 billion), Poland (US$9.3 billion) and the
USA (US$6.4 billion) (UNcomtrade, 2013). Among Asian countries, China
has the biggest share of the global furniture export market, with 16.07%,
followed by Malaysia (2.91%), Indonesia (2.55%), Taiwan (1.69%) and
Tailand (1.47%) (USAID-SENADA 2007). In 2011, the world’s biggest
furniture consumer was the USA (US$35.2 billion), followed by Germany
(US$14.3 billion), France (US$8.9 billion), the UK (US$7.4 billion) and
Japan (US$6.3 billion) (UnComtrade 2013).
1.1.2. The role of Jepara in the Indonesian furniture industry
Furniture is one of Indonesia’s four biggest non-oil and gas exports, along
with palm oil, footwear and rubber. Furniture making is also the most
labour-intensive industry in the forestry sector, and its growth would
increase the number of jobs available. Further developing the industry would
then lead to better-quality jobs and give furniture workers more voice and
participation (Ewasechko 2005).
1. Introduction to the furniture
value chain project
2
Making research work for small-scale furniture makers
Indonesia is one of the main furniture producers in Asia. Te industry
is dominated by small and medium enterprises (SMEs), which make a
substantial contribution to national income (Efendi and Parlinah 2009a).
Indonesia’s furniture export volume increased by 17% from 2000 to 2005,
when it was valued at US$1.78 billion. Most products exported were items of
A gigantic wooden chair stands in front of a furniture showroom in downtown Jepara.
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Melati, Herry Purnomo and Bayuni Shantiko
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wooden furniture (75%), with rattan (20%) and metal/plastic (5%) products
accounting for the rest (USAID-SENADA 2007). Te export value fell by
15% between 2007 and 2011, and has since stabilised at US$1.18 billion
in 2011. Te decline is primarily attributable to the industry’s tendency to
make products with little value added and to the weak bargaining position of
SMEs compared with bigger players (Purnomo et al. 2009).
Te Indonesian furniture industry is characterised by a long chain from
production to consumption: from raw material producers (tree growers), to
semi-fnished product manufacturers, to fnished product manufacturers,
and to retailers and exporters. Te value chain connects manufacturers in
Jepara district, at the centre of the Indonesian furniture industry with annual
exports of US$150 million, with furniture retailers in Europe, the USA,
Australia and Japan (Purnomo et al. 2009).
In 2006, a total of 55 765 736 kg of furniture that originated in Jepara
was traded, contributing US$111 842 200 to the national income (BPS
Kabupaten Jepara 2007). Cash fows generated by the furniture industry in
Jepara have been estimated at around IDR 11.971–12.255 billion per year
(Roda et al.2007).
Indeed,for the past few hundred years, Jepara’s furniture and carving industry
has been the main economic activity in the region. Te industry contributes
26% of the local economy’s income and 10% of the country’s furniture
exports. Furniture enterprises are currently concentrated in the district of
Jepara, comprising the subdistricts of Tahunan, Jepara, Mlonggo, Batealit,
Bangsri and Pakisaji (Figure 1).
In an initial study, Efendi and Parlinah (2009b) examined grouping patterns
or clusters within the Jepara furniture industry. In general, clusters within
the industry are made up of three sub-clusters: the core (furniture makers,
small, medium and large); the supporting cluster (providers of products and
services such as log traders, sawmills and drykilns); and other supporting
infrastructure and institutions (road transport, fnancial institutions, local
governments and design schools).
4
Making research work for small-scale furniture makers
Figure 1. Distribution of furniture enterprises throughout Jepara district
Prestvik’s (2009) study of the Jepara furniture industry identifed seven
categories of business units: workshops, log parks, sawmills, showrooms,
warehouses, drykilns and ironmongeries (Table 1). Furniture workshops
are then further categorised according to their types of products: those that
produce unfnished items from unprocessed roundwood; those that purchase
components, pieces and sets and then assemble them into a fnished product;
those that combine both these stages of furniture making; and those that
produce only parts of furniture (Prestvik 2009).
Melati, Herry Purnomo and Bayuni Shantiko
5
Table 1. Furniture business types in Jepara
Category Number Predominant
gender of workers
Single enterprise
Log parks 726 Male
Sawmills 101 Male
Kiln and drying 20 Male
Workshops (brak) 8 080 Balanced
Ironmongeries 168 Balanced
Warehouses 528 Female
Showrooms 1 974 Female
Total single enterprises 11 597
Combined enterprises
Log parks and sawmills 137 Male
Workshops and showrooms 78 Female
Workshops and dry kiln 71 Male
Workshops and log parks 37 Male
Workshops and warehouses 15 Female
Integrated business 46 Balanced
Total multiple enterprises 2 384
Total 11 981
Source: Achdiawan and Puntodewo (2011)
A spatial survey put the number of business units in the Jepara furniture
industry in 2005 at 15 271, 92% of which were classifed as small scale
(Roda et al. 2007). A similar survey in 2010 (Achdiawan and Puntodewo
2010) put the number of business units in Jepara at 11 357 – a 25% decrease
from fve years earlier.
In a more in-depth examination of the reasons for such changes in the
industry, Prestvik (2009) observed that small-scale furniture manufacturers
encounter an array of problems. Teir problems include a weak bargaining
6
Making research work for small-scale furniture makers
position with buyers, discrepancy between the high costs of raw materials
and low prices for fnished products, and heavy reliance on middlemen
who dictate unfair product prices. Faced with these factors, many
businesses choose to exit. Furthermore, almost 50% of small-scale furniture
manufacturers perceived market access to be their main problem – a
constraint that had been less of an issue fve years earlier (Prestvik 2009).
When the furniture industry is under pressure, less efcient enterprises may
be forced to exit, thus leaving the market to more skilled producers (Prestvik
2009). Although in the short run this cuts jobs and diminishes incomes, the
industry becomes more efcient and competitive in the long run. However,
it remains unclear whether the furniture industry in Jepara is indeed
becoming more efcient.
1.1.3. Value addition
Te division of labour between frms is determined by key actors along the
furniture value chain; these actors also shape participants’capacity to upgrade
their activities (Geref 2001). Geref (2001) identifed two types of value
chains based on the form of governance. Te frst type is the ‘producer-
driven commodity chain’, in which producers coordinate the value chain’s
production system; examples of this type of chain are technology-intensive
industries such as automobiles and electronics.
Te second type of chain is the ‘buyer-driven commodity chain’, in which
large dealers and retailers dominate the essential roles in the production
system. Tis type of chain often characterises labour-intensive, consumer
goods industries, where buyers dictate the design, quality and other
specifcations. Examples include industries such as apparel, garments,
footwear and toys (Geref et al. 2001). Te furniture industry also fts into
this category, as shown by the dominance of buyers in determining the fnal
product price and their ability to capture a larger share of the value added.
In Jepara’s furniture value chain also, manufacturing is generally ‘buyer-
driven’ or controlled by buyers (Efendi and Parlinah 2009c). Buyers
determine the product specifcations, design and quality. In other words,
Melati, Herry Purnomo and Bayuni Shantiko
7
Box 1. About Jepara
Jepara district sprawls over an area of 100 413.189 ha, which comprises
16 subdistricts, 183 villages and 11 kelurahan. The Java Sea lies to the north
and west of the district, and it borders Demak in the south and the districts
of Pati and Kudus in the east. More than 95% of Jepara’s administrative area
is on the island of Java, with the rest scattered over the ofshore islands of
Karimunjawa (Figure 2).
Figure 2. Administrative divisions of Jepara district
8
Making research work for small-scale furniture makers
Jepara has a population of slightly over one million, with the numbers of
men and women relatively balanced. The population density is highest in the
western and southern parts of the district (Central Bureau of Statistics 2008)
(Figure 3).
Figure 3. Jepara’s demographics and population density
small-scale manufacturers’ outputs mostly depend on buyers’ orders, whether
domestic retailers or exporters. With sales, small-scale manufacturers are price
takers because the buyers had set the product specifcations. Exacerbating this
problem is the fact that buyers were found to be paying only small deposits,
leaving the manufacturers short of cash.
Retailers were found to be capturing the value added from wooden furniture
for the domestic market (52.44%), with exporters taking 35.88% for the
international market (Efendi and Parlinah 2009c). As the Jepara wooden
furniture industry is buyer-driven in nature, the leading frms are retailers
and exporters. Retailers and exporters earn large profts mainly thanks to
the asymmetric distribution of market information, where those with more
information receive greater profts.
Melati, Herry Purnomo and Bayuni Shantiko
9
Similar results were found in other studies. Although each player in the
furniture value chain contributes to the value added, the distribution of
benefts is often inequitable, largely because of the unbalanced power
relations along the value chain (Purnomo 2006; USAID-SENADA 2007;
Efendi and Parlinah 2010). Purnomo (2006) found that workers who do
kiln drying receive the smallest share of benefts in the value chain (0.2%),
with international retailers taking the largest share (46.7%). Teak growers
take 5.6%, log traders 0.9%, sawmills 0.6%, furniture producers 3.6%,
furniture fnishers 3.2%, exporters 11.4%, overseas exporters 6.1% and
international wholesalers 21.9%. Efendi and Parlinah (2010) showed that
teak growers capture 6.5% of the value added, mainly because farmers have
limited knowledge of the wood market, use subsistence farming techniques
and take a low selling price for standing trees instead for logs.
1.1.4. Power relations
In a study of the relationships and forms of governance among furniture
industry actors in Jepara, Irawati et al. (2010) observed that the imbalance
in power and information throughout the value chain is behind the uneven
distribution of gains among actors in the industry.
Drawing on Schmitz’s (2005) governance typologies, Irawati et al. (2010)
identifed three types of value chain governance within the Jepara furniture
industry: market-based, balanced network and directed network. Market-
based governance is characterised by large numbers of customers and
furniture manufacturers, repeat transactions with limited information fows
and no technical assistance given by buyers to small-scale producers. In the
balanced network, both buyers and sellers have enough information about
the market and have equal power for negotiating a price for the product.
In a directed network, one main customer takes at least 50% of the outputs,
chooses the product design and provides technical assistance, with an
unequal fow of information between customer and producer.
A fourth type is a hierarchical form of governance, characterised by vertical
integration of furniture production, with the establishment owned by the
10
Making research work for small-scale furniture makers
customer and small-scale manufacturers having limited decision-making
autonomy at the local level (Irawati et al. 2010).
Te types of value chain governance identifed in Jepara’s furniture industry
are depicted in Figure 4.
1.2. Action research and the value chain analysis
Te increasing globalisation of the production of manufactured components
is opening up opportunities for developing countries to increase their rate of
industrial growth and economic prosperity. However, globalisation may also
increase the imbalances within and between countries in terms of absolute
poverty levels (Kaplinsky and Morris 2000).
To manage and ensure stable incomes, it is important to develop appropriate
strategies and insert them into the global economy, according to Kaplinsky
Jepara furniture stakeholders gather at a workshop to fnd solutions in facing regional
economic competition.
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Figure 4. Four types of value chain governance in Jepara’s furniture industry
Source: Purnomo et al. (2011a)
Domestic
retailers
Finishing
companies
and exporters
Small-scale
producers
Community-
based
agroforestry
Perum
Perhutani
Wood retailers
Sawmill
owners
Market based
Directed network
International
end
consumers
Global brokers
International
retailers
Hierachy
Directed network
Domestic
furniture
brokers
Directed network
Balanced network
Importers
Hierachy
Balanced network
Balanced network
Domestic end
consumers
Illegal sources
Balanced network
Outside Java
forests
Mechanized
furniture
producers
Wood brokers
Directed network
Directed network
Balanced network
Balanced network
12
Making research work for small-scale furniture makers
Box 2. Business patterns among Jepara’s furniture actors
Efendi and Parlinah (2009c) examined Jepara’s furniture production fows
and power relations. They identifed the following actors inthe furniture
value chain: wood growers (farmers and Perhutani [timber-supplying
company]), wood traders in and outside Jepara, sawmill owners, small-
scale manufacturers, fnishing services, domestic retailers, exporters and
global buyers.
They traced the production fow as follows. Farmers and Perhutani plant
the trees. After the trees are felled, the wood, in the form of logs, is sold and
bought by wood traders. The logs are put through the sawing process, and are
then transformed into half-fnished furniture by small-scale manufacturers. The
next step is the fnishing. Finally, the fnished furniture is ready to be released
into the market. In addition to furniture from small-scale manufacturers, they
observed that furniture is also produced by bigger companies, where the
whole production process is integrated within the company.
Following is an excerpt from Efendi and Parlinah (2009c).
Farmers and wood sellers
Wood is usually sold by farmers to wood sellers (agents) when the trees are still
standing, so that the agents cover all costs of felling and permits. Payments
are made in cash. When the number of trees sold is high, the seller will make
an initial deposit, with the fnal payment made when the trees have been
cut down. Generally, when a farmer wants to sell wood, he will ofer it to the
nearest trader. If the price ofered is accepted, the transaction will take place;
if not, the farmer will approach another trader. One factor infuencing this
transaction is the extent to which the farmer needs money. Farmers are usually
subsistent and their urgent economic needs mean they do not have strong
bargaining power.
Prices for mahogany in Jepara in the form of standing trees range between
Rp 200 000 and 250 000 per tree with a diameter of 22–28 cm. Although some
negotiation takes place during the transaction, prices are usually determined
by the agent. Agents have a stronger bargaining position – and hence
larger proft margin – because of information asymmetry: buyers hold more
information about the wood market and wood quality.
Melati, Herry Purnomo and Bayuni Shantiko
13
Perhutani and wood traders
Perhutani sells wood through contractual agreements, direct sales, auctions
and its timber yard. The sales price includes the base selling price, surcharge
and diferentiation. Surcharges are set by the director of Perhutani, and
diferentiation is determined by the general manager. Wood is sold by the
kavling (area of land).
Jepara wood traders and small-scale manufacturers
To obtain raw materials, small-scale manufacturers (agents) usually go to a
trader (principal). A local manufacturer’s decision to purchase wood from a
particular trader is infuenced by factors such as the type, size and price of the
wood and the distance from their workshop and the sawmill.
Traders sell wood measured in bar units or in m
3
. Small-scale manufacturers
that purchase in m
3
can choose the wood themselves. Alternatively, they
can purchase it by the kavling. Prices are usually lower under the kavling
system, but the buyer has no information about the quality of wood. Prices
of wood selected by the buyer are much higher, but information about
the wood quality is relatively reliable. For example, the price of mahogany
with a diameter of 22–28 cm is Rp 700 000/m
3
under the kavling system, but
Rp 950 000/m
3
under the selection system. The buyer usually covers the costs
of transport and loading, although some places include the loading cost in the
purchase price.
Payments are made in cash or in small instalments over a set period of time. All
new customers must use cash, although regular and trusted customers may be
allowed to pay by other means.
Small-scale manufacturers and sawmills and fnishers
Sawmills and fnishers provide services and not products for small-scale
manufacturers. The sawmill charges based on the volume of the wood sawn,
with the price per m
3
in the range of Rp 65 000–75 000. Sawmills are usually
owned by an individual or small-scale manufacturers cooperative. In some
places, someone owns both a furniture workshop and a sawmill in the same
location, to minimise transport costs.
The cost of fnishing is usually calculated based on the units/pieces of goods
to be fnished or it could be calculated based on the number of sets of goods.
The cost of fnishing varies depending on the furniture model and size, and
14
Making research work for small-scale furniture makers
the kind of fnish. Kinds of fnish include burned fnish, natural fnish and antique
fnish. The more complex the process, the higher the cost of fnishing. All costs
associated with fnishing are covered by the fnishing service provider. Payments
are made in cash or by bank transfer after the fnished goods have been delivered.
Small-scale manufacturers and domestic retailers and exporters
Furniture for the domestic market is usually made to order (agent), but the price
and product specifcations are determined by the buyer (principal). The buyer of
unfnished furniture could be a retailer (showroom) or a furniture collector who
will resell the furniture to retailers from outside Jepara. Retailers usually make
deposits, of varying amounts. The fnal payment is made by post-dated cheque
after the goods have been delivered. Although collectors usually pay in cash, they
ofer lower prices. Some small-scale manufacturers make furniture without having
an order frst, using a common design to make it easier to sell.
For the export market, generally only those with access to or a direct relationship
with overseas buyers are exporters; small-scale manufacturers only have a direct
relationship with exporters. Orders from overseas are usually subcontracted to
small-scale manufacturers. This subcontracting system involves a principal–agent
relationship with two levels: frst, between the buyer and the exporter, and
second, between the exporter and the small-scale manufacturer. At the frst level,
the buyer acts as the principal and orders furniture according to predetermined
specifcations; the exporter acts as the agent receiving the order. At the
second level, the exporter (principal) authorises the small-scale manufacturer
(agent) to complete the fnishing for a furniture order (agent). New small-scale
manufacturers are recruited only when there are a lot of orders.
Exporters place orders with small-scale manufacturers with an order receipt
(Surat Perintah Kerja or SPK), setting out the type, size, model and quality of the
furniture. Payment may be made in full after the goods have been delivered, or
the manufacturer may receiv ean initial deposit, with the remainder paid one
or two weeks after the exporter has received the goods. Before the furniture is
shipped, it undergoes a quality control to make sure that everything is satisfactory.
Small-scale manufacturers usually pay the quality controller Rp 25 000–Rp 50 000
for every shipment.
If the exporter does not pay on time, small-scale manufacturers continue to make
the ordered furniture in the hope of ultimately being paid for it. On the other
hand, when small-scale manufacturers fail to meet the deadline or the expected
quality, exporters might reduce the size of orders, delay payment or switch to
another small-scale manufacturer.
Melati, Herry Purnomo and Bayuni Shantiko
15
and Morris (2000). Value chain analysis supports this goal by elucidating the
dynamics of inter-linkages within the production sector.
Te value chain method emerged in the 1990s as a novel approach for
understanding how power, benefts and costs are embodied and distributed
among actors (Purnomo et al. 2009). It describes the activities that are
required to bring a product or service from conception or design, through
production, and then to delivery to the fnal consumers and disposal after use
(Kaplinsky and Morris 2000).
Kaplinsky and Morris (2000) discuss the importance of value chain analysis
in the context of globalisation. As the division of labour continues to
advance, global distribution of components and systematic competitiveness
are also on the rise. Furthermore, with production efciency a prerequisite
for participating in the global economy, success in the global economy is
determined by policies in the fnal market and the strategic decisions of the
lead frm in the value chain. In addition, being able to seize the opportunities
ofered by globalisation requires an understanding of the dynamics
infuencing the whole value chain. Tus, value chain analysis helps to explain
income distribution.
Te value chain approach also has the potential to enhance understanding
of the global crisis and possibly to mitigate it, according to Fauzan and
Purnomo (2012). In contrast to studies of the global crisis that take a
macroeconomic perspective, the value chain approach reveals the more
detailed and specifc experience of those involved in the value-making
processes of the global economy (Fauzan and Purnomo 2012).
Value chain analysis was therefore incorporated into this project for use in
envisaging governance and institutional arrangement scenarios for more
equitable power and income as a means of making both forest management
and the furniture industry sustainable (Purnomo et al. 2009). Te value chain
analysis was performed in conjunction with action research. Researchers and
furniture industry stakeholders jointly developed plans to strengthen the
industry structure, build value addition and improve livelihoods.
16
Making research work for small-scale furniture makers
To ensure the project would have an impact at both local and national levels,
the project team collaborated with the Jepara Furniture Multi-stakeholder
Forum, the Jepara local government, the Forestry Research and Development
Agency (FORDA) of the Indonesian Ministry of Forestry, and Bogor
Agricultural University (IPB).
During the fve years of the action research, the Jepara furniture value chain
analysis involved literature reviews on the distribution of value added, as well
as research on those in the furniture industry, leading frms, power relations
and existing rules.
In particular, the action research and value chain analysis were employed
as a means of understanding the role and position of small-scale
manufacturers in the Jepara teak value chain. Action research is a process
through which members of a community identify a problem, collect and
analyse information, and then seek solutions and target social and political
transformation (Selener 1997). Action research is an iterative process,
employing a cycle of refection, planning, action and monitoring (Figure 5).
In the refection phase, researchers established communication channels
with stakeholders through feld visits, during which they used surveys to
identify stakeholders, learn their problems and analyse the furniture value
chain. In this study, value chain analysis was framed as part of the refection
phase within the action research. Tis approach emerged as a novel way for
understanding how power, benefts and costs are embodied and distributed
among various actors, both men and women.
During the planning phase, stakeholders constructed scenarios in which
their problems are resolved. Te scenario planning was guided by
recommendations from the refection phase and was conducted using
participatory methods. During the action phase, stakeholders prioritised their
actions and executed the plan in a participatory way, with the aim of creating
a balanced value chain. A set of indicators devised by local stakeholders was
used in the monitoring phase, to oversee the implementation of the plans.
Melati, Herry Purnomo and Bayuni Shantiko
17
Figure 5. Cycle of refection–planning–action–monitoring, leading to
improvements
Refection
Planning Action
Monitoring
Cycle
1.3. Project aims
In examining the challenges facing the Jepara furniture industry, the
furniture value chain project had three main objectives. Te frst two
objectives were to enhance the structure and function of the furniture
industry for the beneft of small-scale furniture manufacturers, and to
improve marketing by these manufacturers and their organisations. Te
third objective, important in action research, was to monitor any impacts
and early adoption of innovations from Objectives 1 and 2, and to enhance
project strategies.
1.3.1. Enhancing the structure and function of the furniture industry
for the beneft of small-scale furniture manufacturers
During the frst year of the project, several activities were conducted to build
understanding of the furniture industry. Tese included a supply chain and
cluster analysis of the teak and mahogany furniture industries to understand
and predict wooden furniture fows, as well as the value chain analysis to
identify constraints and intervention points.
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Making research work for small-scale furniture makers
Livelihoods surveys were conducted and a spatial database of Jepara
furniture workshops was built. Researchers examined wood sources and
constraints on timber acquisition, patterns in diferent types of furniture,
the efciency of industry networking, and supply chain dynamics. Findings
were analysed to generate future scenarios for improving small-scale furniture
manufacturers’ livelihoods.
1.3.2. Improving sales and marketing by small-scale furniture
manufacturers and their organisations
As previous studies have shown, an underlying problem within the Jepara
furniture industry is the weak marketing strategies of small-scale furniture
manufacturers and their organisations. Te project therefore focused
intensively on addressing this weakness.
Analyses of domestic and international furniture markets, potential
marketing networks and premium markets for small-scale furniture
manufacturers were conducted throughout the study period to support the
development scenarios. Workshops were then held to educate the furniture
makers about market demand and certifcation. Tese workshops covered
a range of topics, including fnancial and organisational management,
marketing and business communications, access to capital, quality control,
timber legality and eco-certifcation.
In addition to individual capacity building, institutional strategies were also
employed to further strengthen small-scale furniture producer organisations.
Tese included engaging multiple stakeholders in developing a 20-year
roadmap for the Jepara furniture industry and building collective action
more broadly through the establishment of the Central Java Furniture
Producers Association.
1.3.3. Monitoring impacts and early adoption of innovations from
Objectives 1 and 2, and revising project strategies
Action research involves continuous monitoring and evaluation throughout
the fve years of the project. Results are refected upon throughout, with
Melati, Herry Purnomo and Bayuni Shantiko
19
the fndings used as a basis for future improvements to revise and enhance
project strategies.
Livelihood surveys conducted during the ffth and fnal year were compared
with baseline conditions recorded at the beginning of the project. Te aim of
this comparison was to identify and analyse any positive and negative impacts
that had occurred as a result of the project.
In addition, the project plan was regularly updated and the developments
communicated to Jepara residents and to CIFOR’s research partners through
quarterly newsletters written in both Indonesian and English. People within
the furniture industry were invited to write chapters of a book sharing their
personal experience of being involved throughout the entire project. A
photo book depicting the stages of the furniture value chain was published,
and two short movies on the conditions in Jepara’s furniture industry and
the ongoing project were released to raise awareness of issues afecting the
industry. All publications are available on CIFOR’s website for free public
access. Research outcomes were also disseminated each year at national and
international conferences, and in papers in academic journals.
All feedback from the public, project partners and the research community
on the project’s publications and conference presentations were used to
further improve project strategies.
Drawing on their early research into the problems afecting the Jepara
furniture industry, the project team has proposed several ideas for solutions.
Purnomo et al. (2009) used the fndings of the value chain analysis on
relationships and governance to construct scenarios and identify intervention
points with the aim of improving sustainability in small-scale furniture
manufacturing and the distribution of value added among actors.
Purnomo et al. (2009) propose four strategies for addressing problems related
to marketing, capital and wood acquisition. Te frst of these addresses the
horizontal dimension of the value chain, i.e. those actors at the same stage of
the value chain. Tis SME association scenario involves locally organising
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SMEs and helping them gain access to fnancial institutions and markets,
with the aim of improving manufacturers’ ability to become independent
and competitive within the global market, strengthening their bargaining
position, creating fairer market prices and facilitating access to credit.
Members of the newly formed Jepara Small-scale Furniture Producers
Association (APKJ) are expected to become ‘local champions’ or agents of
change for other SMEs in the industry, through collective marketing via web
portals, group trademarks and participation in trade exhibitions.
Melati et al. (2010) also noted the social networking potential of APKJ
members to use collective action to gain access to market information.
Eforts to improve team building and leadership skills may lead to fruitful
collaboration among members. With solid networking and hard work, APKJ
may eventually become independent of its donors.
Purnomo et al. (2009) argue that the formation of an SME association makes
it easier to achieve scenarios for addressing the vertical dimensions of the
furniture value chain – that is, actors at diferent stages of the chain.
Te frst vertical dimension scenario proposed is collaborating down the value
chain. Te aim here is to address systemic weaknesses in the value chain,
encouraging small-scale furniture manufacturers to work with log traders and
tree growers to address the inconsistencies in product delivery and quality
caused by the timber shortages. If such collaboration can secure a sufcient
timber stock for APKJ members, they can build a stronger position during
price negotiations (Purnomo et al. 2009).
Te second vertical dimension scenario is moving up the value chain, which
aims to add value for small-scale furniture manufacturers by encouraging
them to assume roles further along the value chain, such as brokering,
fnishing or exporting. By moving up the value chain, small-scale furniture
manufacturers may boost their power in lower stages of production. Tis
scenario will require members of the APKJ to be trained on brokering,
fnancing and overseas trading (Purnomo et al. 2009).
Melati, Herry Purnomo and Bayuni Shantiko
21
Te fnal scenario is collaborating along the value chain, with the aim
of producing new products or services through jointly owned network
companies, and to ensure increases in value added. Trough this scenario,
APKJ members can manage their furniture products through a single
business entity, in collaboration with big furniture companies and assisted
by the government, to produce certifed, eco-labelled or ‘green’ furniture.
Producing certifed furniture requires the coordination of various stages in
the value chain. Tis can only be achieved by integrating all the players in
the value chain: Perum Perhutani (timber supplier) and community-based
agroforestry farmers for obtaining certifed timber, small-scale furniture
manufacturers for processing certifcation documents, and exporters for
opening channels to niche markets (Purnomo et al. 2009).
1.4. Project funding: About ACIAR
Te furniture value chain project was conducted over fve years supported by
funding from the Australian Centre for International Agricultural Research
(ACIAR), an Australian government body that commissions research to
improve sustainable agricultural production in developing countries.
ACIAR’s focus in Indonesia, particularly in the Jepara region, provides
fexibility in tackling rural poverty, helps improve market linkages for high-
value products sourced from smallholder production systems, and facilitates
better linkages between national and province-based research agencies.
2.1. The furniture market
OECD imports of wooden furniture reached a total value of more than
US$32 billion in the early 2000s, compared with about US$26 billion in
the mid-1990s. Te absolute annual growth in the import value is 6%,
with the most stable growth segments being wooden bedroom furniture,
‘other’ wooden furniture (that destined for living/dining rooms, shops,
miscellaneous uses) and wooden seats (IFC 2005 in Nurrochmat et al. 2009).
Te USA is the largest market for wooden furniture (purchasing 33% of all
OECD imports, to the value of US$10.7 billion), followed by Germany
(US$3.3 billion), France (US$2.6 billion), the United Kingdom (US$2.3
billion) and Japan (US$1.9 billion) (IFC 2005 in Nurrochmat et al. 2009).
With the introduction of mass-produced furniture made for export,
Indonesia’s wooden furniture industry has developed signifcantly since
1975. In the mid-1990s, large-scale furniture companies were established,
mostly by the owners of sawmills or plywood manufacturers (Nurrochmat et
al. 2009).
During the 1990s, Indonesia’s wooden furniture industry grew on average by
about 19%. Plywood is believed to have been the predominant raw material
for wooden furniture in the mid-1990s. However, by 2000 its market share
2. The ‘moving up’ scenario:
Improving market access for
producers
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Making research work for small-scale furniture makers
had decreased, and it was replaced by particle board and medium-density
fbreboard (MDF). In the mid-2000s, the preference for wood panels began
to shift towards solid wood, which remains the preferred material for wooden
furniture (Nurrochmat et al. 2009).
However, most furniture production was not destined solely for export. In
2005, more than 80% of workshops were producing for the domestic market
(Roda et al. 2007). By 2008, this had fallen to 63%, whereas the proportion
of workshops producing goods for Western markets had increased from 17%
to 42% (Prestvik 2009). Tis shift is attributable to the higher prices ofered
by Western markets. During the same period, production for the Asian
market also decreased, suggesting that manufacturers in Jepara began to lose
market share to competitors in other countries such as Vietnam and China
(Prestvik 2009).
Nevertheless, furniture production for the domestic market continues to
grow. In 2012, approximately 93% of furniture was made to fll domestic
Wooden chairs line up at a small-scale producers’ workshop.
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orders (Yovi et al. 2012). Tis is partly because small-scale furniture
businesses usually have limited capital, which prevents them from flling
large orders; domestic orders are usually quite small, whereas goods for
export are usually ordered in bulk, demanding substantial amounts of capital.
Combined with the complexity of documentation for exports and the limited
capacity of human resources, the Jepara small-scale furniture industry is
inclined to serve primarily the domestic market (Yovi et al. 2012).
Furthermore, whereas international consumers prefer the best-quality
(A-grade) furniture only, domestic consumers mostly buy B- or C-grade
furniture – their priority is afordability, not quality. As a result, small-scale
furniture manufacturers are likely to continue to serve the domestic market,
even with a decrease in the quality of wood (Yovi et al. 2012).
Jepara’s furniture market structure, at domestic and international levels, is
summarised in Box 3.
2.2. Market constraints
In a survey of how domestic and international buyers perceive furniture
from Jepara, Bahruni (2010) found that the region has strong advantages in
price and order fexibility. However, international buyers were critical of the
punctuality of shipping, design and quality – but local manufacturers did
not share these perceptions (Figure 6). Special attention should be directed
towards these factors so that producers maintain their competitiveness and
international buyers continue to buy their furniture (Bahruni 2010).
Similar problems have been observed within the Jepara furniture industry
more specifcally (Muhtaman 2009). Small-scale furniture manufacturers
face many challenges in maintaining product quality and delivering products
on time. Both exporting companies and small-scale furniture manufacturers
regard as their major constraints expensive certifcation schemes, complicated
legal requirements for business documents, uncertainty of raw material
supplies and the high cost of marketing (Muhtaman 2009).
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Making research work for small-scale furniture makers
Box 3. Jepara’s domestic and international furniture market
structure
At the base of the market structure are the tree growers and furniture
producers (Bahruni 2010). Perum Perhutani, the main timber supplier in
Java, dominates in teak and mahogany. Despite strict limits on ofcial teak
supplies, in recent years Perum Perhutani’s market share has been challenged
by timber from private forests and, in particular, from illegal timber sources
(Nurrochmat et al. 2009).
In practice, communication between tree growers, log parks and furniture
producers is limited. Middlemen play an important role in controlling
information between upstream (tree growers) and downstream (log parks/
furniture makers) actors. Log park owners tend to entrust the management
of their wood supply to middlemen because of the complexity of handling
legal documents for transporting timber. However, for wood already in Jepara,
communication between tree growers and furniture producers is tighter
(Yovi et al. 2012).
The second layer of the market structure is the wooden furniture market, which
is more competitive because of a large number of furniture manufacturers
and exporters. The market for wooden furniture in Jepara is segmented based
on price, quality and location (Nurrochmat et al. 2009). At the artisanal level,
exporters may seek out specifc items of furniture by approaching certain
locations or clusters. At the shop or showroom level, however, exporters may
seek products based on their quality and price (Bahruni et al. 2009).
In practice, direct contact between furniture manufacturers and exporters is
very rare. Again, middlemen play a huge role in protecting market information
to ensure that small-scale manufacturers depend on the middlemen for sales.
For example, approximately 90% of small-scale manufacturers were found
to have no idea where and who bought their furniture from the middlemen
(Hadiyati 2010). Interestingly, small-scale furniture manufacturers see this
relationship as benefcial, in that it helps them save on marketing costs. They
have no need to rent a showroom because, through this form of indirect
distribution, the middleman or buyer approaches the manufacturer to buy
furniture (Yovi et al. 2012).
Melati, Herry Purnomo and Bayuni Shantiko
27
In the third layer of the market structure, exporters and consumers interact
with each other to trade the fnal furniture products. Generally, furniture
outlets are the most efective channels for selling wooden furniture in
Indonesia. However, exhibitions for marketing furniture target higher-income
consumers, especially in big cities (Nurrochmat et al. 2009).
Most Indonesian wooden furniture products gain some competitive advantage
because of the low prices of raw materials. However,the lack of solid marketing
strategies and the failure to increase production efciency are undermining
this advantage. As a result, competitors have taken over much of the
international market share previously held by most Indonesian forest products
(Nurrochmat et al. 2009).
Because of the cost and difculty of selling their products, small-scale
furniture manufacturers tend to adopt a passive marketing strategy: they
locate their workshops in a cluster and wait for buyers to fnd them (Prestvik
2009). Tey therefore capitalise on the presence of many other workshops
nearby, especially any neighbouring workshop that may have a more active
marketing strategy that attracts buyers. Visiting warehouses to seek orders
is the second most common marketing strategy among small-scale furniture
manufacturers; media advertising, seeking buyers at tourist attractions and
Internet marketing are less common (Prestvik 2009). Very few companies
implement a complete marketing strategy such as producing marketing kits,
allocating a marketing budget, and developing and maintaining a website to
reach their target markets (Muhtaman 2009).
By contrast, export-oriented workshops distance themselves from other
furniture workshops, which indicates that they are less concerned with the
immediate benefts of being in a cluster, i.e. ‘free marketing’ (Prestvik 2009).
Successful export-oriented workshops tend to be operated on a large scale by
well-educated owners. Tat they can produce large quantities regularly and
that they have the skills and language ability to negotiate better prices with
buyers are the main factors behind their independent success (Prestvik 2009).
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Making research work for small-scale furniture makers
2.3. The buyer-driven market
Buyers control the furniture market: they determine most of the production
process, including product design. However, many buyers do appreciate it if
manufacturers modify the product design – so long as quality is maintained –
but very few ever do so. Hence, local companies could invest more to
strengthen their design capacity as well as quality. Furthermore, most Jepara
furniture that is exported is marked not with the manufacturer’s brand but
with the buyer’s brand. Tis is a strong indicator of manufacturers’ lack of
control and product identity in the market (Muhtaman 2009).
Although foreign buyers dominate the higher value-added activities
associated with sales and exports, thus engendering resentment among local
Figure 6. Comparison of perceptions of global buyers and small-scale
furniture manufacturers in Jepara
Source: Muhtaman (2009)
Global buyers vs local producers
1
2
3
4
5
Quality
Price
Delivery time Flexibility
Design
Global buyers Local producers
Melati, Herry Purnomo and Bayuni Shantiko
29
people and Indonesian producers and traders, these foreign buyers have made
a substantial contribution to the development of this local industry. Foreign
traders provide access to lucrative international markets, help upgrade the
quality of local furniture production and facilitate access to working capital
by extending partial advance payments for export transactions, thus helping
manufacturers cover the initial costs of timber and wages. Foreign buyers
have also introduced new designs with greater value added, instructed
producers on quality-control methods, standardised outputs required for the
rapid expansion of order-driven production tailored to the quickly changing
preferences of foreign buyers, and opened up new export markets for modern
Jepara furniture (Muhtaman 2009).
Nevertheless, the people of Jepara still play a major role in furniture
exports. More than 50% of business owners come from Jepara; 30% are
Indonesians from outside Jepara and only 19% are from outside Indonesia
(Muhtaman 2009).
APKJ chair, Margono, poses with an international buyer after securing a business deal at a
furniture expo.
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Outdoor furniture products are major exports to Europe and the USA,
and so have become the focus of many furniture companies in Jepara
(Muhtaman 2009). In the domestic market, the main destinations for
furniture are Sumatra and Jakarta, as well as other major cities across
Indonesia. Main items of domestic wooden furniture are indoor and outdoor
furniture, wooden handicrafts, and wooden furniture combined with other
materials such as rattan, steel or aluminium. Domestic furniture is divided
into two categories: unfnished (60%) and fnished (40%) products (Yovi et
al. 2012).
2.4. Proft margins
Te high price of teak furniture does not necessarily refect the quality of
the raw material. Medium-quality furniture made from low-quality teak
can fetch a good price after fnishing. Finishing is the fnal stage of the
production process and has a signifcant impact on sales. According to
Parlinah (2010), fnishing makes the biggest contribution to the proft
margin, accounting for 60% of the proft.
Despite these clear benefts, however, nearly all small-scale furniture
manufacturers (97%) continue to sell unfnished furniture (Hadiyati 2011).
Tis tendency is attributable to their lack of means to obtain working tools
and fnishing materials, artisans’ limited knowledge and skills, and the delay
in receiving payments because goods take longer to manufacture. Under
the Kamisan tradition, furniture workers are paid every Kamis or Tursday;
therefore, small businesses prefer to skip the fnishing process and target a
faster turn around of funds. Finishing is then mainly conducted by local
showrooms or buyers from outside Jepara who have better access to capital
(Yovi et al. 2012).
Te Jepara furniture industry is traditionally a labour-intensive industry
dominated by non-permanent workers. Small-scale workshop owners,
out of need to pay their workers cash, are driven to sell their furniture to
local buyers (predominantly owners of local showrooms in Jepara) or to
middlemen, who have stronger purchasing power. Tis system usually leads
Melati, Herry Purnomo and Bayuni Shantiko
31
to a very small proft margins for small-scale manufacturers, sometimes barely
enough to cover the production cost (Yovi et al. 2012).
Indeed, the marketing margin for wooden furniture ranges from 5% to
100%. Margin svary according to the kind of marketing activity. Direct
sales contribute to a proft margin of 5–26%; acting as an agent of branded
products may generate 10–30%, while actors who conduct further
processing and re-selling may derive a marketing margin of about 50–100%
(Nurrochmat et al. 2009).
2.5. Project activities for moving forward
To help realise the ‘moving up’ scenario, several steps were developed with
the aim of improving market access for small-scale furniture manufacturers.
Of utmost importance is the issue underlying all problems: the need to
build competence and capacity through business management training.
Readily assembled furniture pieces stack up inside a large-scale factory warehouse.
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Training should primarily cover international market developments, export
mechanisms and access to capital and loans. Practical workshops should
be used to develop skills in product design and quality control. Collective
marketing could be used to overcome the constraints associated with
operating at a small scale.In addition, manufacturers should be encouraged
to engage in higher-value-added activities and conduct more cost-efective
marketing strategies, thus cutting out the middlemen. By selling their
furniture higher up in the market chain, small-scale manufacturers should be
able to increase their proft margins and thus improve their livelihoods.
According to the small-scale furniture manufacturers themselves, the fve
areas in which they most need development are quality control, fnancial
management, organisational management, marketing and business
communications (Melati 2010).
To contribute to the project objective of enhancing the structure and
function of the furniture industry, multi-stakeholder processes were
developed to support the needs of small-scale furniture manufacturers and
overcome policy constraints. Activities included workshops, research on
furniture industry policy pathways and the distribution of value addition
among furniture actors, and the development of comprehensive strategies for
enhancing the furniture industry.
Understanding the dynamics of the international wooden furniture market
may also be very useful in formulating a marketing strategy. Changes in
the market, on both demand and supply sides, will infuence the mix of
marketing strategies, namely in relation to product planning, pricing,
placement and promotion. Terefore, a pivotal task is to determine the
appropriate marketing mix to ensure efectiveness in selling Indonesian
wooden furniture on both international and domestic markets in the future
(Nurrochmat et al. 2009).
As an initial step as part of the furniture value chain project, Jepara small-
scale furniture manufacturers were invited to a workshop to discuss the
potential efects of the ASEAN–China Free Trade Area (FTA) on Indonesia’s
Melati, Herry Purnomo and Bayuni Shantiko
33
furniture industry. Te FTA, creating a zero-tarif market of more than 1.7
billion people, was scheduled to come into force in 2010 for the six original
ASEAN members (Brunei, Indonesia, Malaysia, Philippines, Singapore
and Tailand) and in 2015 for the other four (Myanmar, Cambodia,
Laos and Vietnam). Politics around the China–ASEAN deal are delicate
because ASEAN states want to avoid being dominated by China and yet
hope to build their economies by engaging with China, especially given the
slowdown in demand from the US and European markets. At the same time,
as China moves up the manufacturing value chain, it is ceasing to demand
the primary products that ASEAN states produce and has taken its search
for raw materials such as minerals, oil and wood global. Concerns about the
efects of the full-scale zero-tarif trade agreement with China after 2010 are
widespread throughout ASEAN (FVC Team 2010a).
Te Indonesian furniture industry will be afected by the FTA. Many of
those in the industry are pessimistic about whether the agreement will have
any benefts, especially with regard to manufactured products. On the other
hand, however, China is a prospective market for furniture. Competition
in this sector has intensifed since the onset of the global economic crisis
in 2008, with a fall in the value of furniture exports from Jepara of
approximately 25% from 2008 to 2009 (FVC Team 2010a).
Te workshop helped participants understand how the state of the global
furniture industry and how it works, and developed solutions for helping
local actors overcome challenges associated with the FTA.
Eighteen months after the project began, small-scale furniture manufacturers
voiced their concerns about marketing and asked how they could respond
to competition from China, Vietnam or even other places in Indonesia.
Another workshop was conducted to address these concerns, which involved
updating small-scale furniture manufacturers on research results and
working together to formulate market penetration plans. Using input from
stakeholders, steps for strengthening and improving the capacity of small-
scale manufacturers to adapt to changing market demands were agreed on
(FVC Team 2010b). Tis process led to the development of the Roadmap
for the Jepara Furniture Industry (see Chapter 6).
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Given the increasing competitiveness of the global furniture industry,
eforts to improve marketing are becoming more important than ever at
both national and international levels. One efective marketing strategy
is to participate in trade shows. However, this requiresa certain level of
preparation, in terms of both fnances and production – a prerequisite
that favours big furniture companies. To enable small-scale companies to
participate in international-scale trade shows, the project launched a series
of workshops to equip artisans with the necessary knowledge and skills
(FVC Team 2011a). Te workshops covered background information on
exporting schemes, analysis of existing trade shows and common challenges
for companies, as well as tips and tricks on how to prepare for participation
and what to do before, during and after trade shows.
To further motivate small-scale furniture manufacturers to become
innovative in sales and marketing, the project conducted business
A worker at a small-scale workshop applies a dark glaze on a furniture piece.
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management training to support them in participating in the Jakarta
International Export Exhibition in 2010. Te workshop showed small-scale
furniture manufacturers how to improve their product design and quality,
develop their networks efectively and enhance their personal business
performance (FVC Team 2011b). Troughout the project, several activities
were conducted with the aim of assisting small-scale furniture manufacturers
to participate in national and international furniture exhibitions in Indonesia
and even overseas.
Members of the Jepara Small-scale Furniture Producers Association (APKJ;
see Chapter 4) also took part in workshops on accessing capital. As a result,
many manufacturers have been able to obtain loans from the local bank,
and several members even went on to establish a cooperative to enable
business loans and savings. Te association also helped members to beneft
from government funding programmes and encouraged donors to invest in
members’ business ventures (Efendi et al. 2012).
As the project entered its third year, the facilitation of workshops and
participation in numerous tradeshows started to yield some positive
results. Small-scale furniture manufacturers had become more active in
gaining market information and seeking opportunities to further develop
their businesses. Many had also developed ambitious business plans,
including adding more products for both domestic and export markets,
collaborating with bigger companies to support production in existing
markets, and creating new product designs in response to market trends
(Nooryasyini et al. 2011b).
To involve small-scale manufacturers in cost-efective marketing strategies
that minimise or eliminate the role of middlemen, a collective marketing web
portal for APKJ members was developed (http://www.javamebel. com). As
discussed in Chapter 1, most furniture-producing SMEs in the Jepara region
are connected with buyers through directed and hierarchical governance
networks, which have either domestic brokers or exporters at their centre.
Te fragility of these centralised networks prevents SMEs from adapting to
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new conditions; indeed, the economic collapse in 1998 indicated that, to
increase the adaptive capacity of Jepara’s furniture industry, it was necessary
to remove the interconnectedness by giving SMEs more ‘autonomy’ to
govern value chains. One suggested way of doing so is through the use of
information and communications technology (Suyamto and Irawati 2011).
Te aim of the collective marketing portal is to assist SMEs in Jepara in
marketing their products and link them directly to potential buyers, with the
domestic niche market as the main target. However, 85 days after its launch,
javamebel.com had attracted relatively few SMEs and potential buyers.
Although this is quite normal for a new initiative, the ‘usefulness’ of the
portal relies on cohesiveness among SMEs, social resistance and buyer–seller
trust. Tis suggests that the ‘orgware’ of the portal should be improved, along
with the institutional settings, governing rules and incentive structures for
the development and employment of technology, which demand continual
investment and appropriate incentives (Suyamto and Irawati 2011).
Nevertheless, this collective marketing portal ofers massive potential, and its
efectiveness should be monitored in the future.
3.1. Timber supply and demand in Jepara’s furniture
industry
Te estimated timber demand for Jepara’s entire furniture industry is
862 056 m
3
per year (Achdiawan and Puntodewo 2011). Annual growth in
demand is expected to follow the growth of the furniture industry,which is
at around 7% per year (Achdiawan and Puntodewo 2011). With 82% of
furniture workshops specialising in the domestic market, timber demand
is expected to further increase, given that small-scale furniture industries
are shifting away from compliance with international market demands to
concentrate on meeting the needs of the domestic market (Achdiawan and
Puntodewo 2011; Yovi et al. 2012).
Small businesses in particular are highly dependent for their supplies on
regions outside of Jepara, which are the main suppliers of teak wood. Most
raw materials for the industry are sourced from outside Jepara, with most
teak coming from Central Java, followed by community forests in East Java
(Yovi et al. 2012) (Figure 7, Table 2). Log parks in Jepara can only meet up
to 24% of the district’s total demand (Achdiawan and Puntodewo 2011).
Te volume of timber demand exceeds the ofcial numbers of log production
issued by the Indonesian Ministry of Forestry for the whole of Java:
3. The ‘collaborating down’
scenario: Improving timber
supplies for producers
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The Jepara furniture industry source some of their raw materials from Perhutani forests, such as this
one from the neighbouring residence of Pati.
923 632 m
3
in 2004. Perum Perhutani, one of the main timber suppliers for
the furniture industry, can supply only 28–38% of the total demand for teak
and mahogany in Jepara (Yovi et al. 2012).
Te timber shortage worsened in 1998 following the illegal logging of
7.2 million teak trees across Java, enabled by national political instability
(Yovi et al. 2009). Furthermore, many working units of Perum Perhutani
across Java have been negatively afected by land-use change, indicating that
Perum Perhutani’s ability to supply furniture industries in Jepara is critically
low, a state that is likely to continue for at least the next 10 years (Yovi et
al. 2012).
Alternative sources of timber for Jepara’s furniture industry are the millions
of privately owned village plantations scattered across the islands of Java,
Sumatra, North Maluku, Kalimantan and Sulawesi (Yovi et al. 2009;
Achdiawan and Puntodewo 2011). However, rapid population growth has
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Figure 7. Distribution of areas that supply timber for the Jepara
furniture industry
led to large-scale land-use change, with these plantations being converted
into farming and housing areas. In addition, in contrast to the practices of
Perum Perhutani, traditional growers rarely apply an intensive silvicultural
system: they neglect the sustainability of tree stands, thus undermining the
sustainability of supplies of raw materials (Yovi et al. 2009).
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Combined, Perum Perhutani and community forests can supply only 60%
of Jepara’s teak demand. A further 10% can be met through the use of other
kinds of wood, such as mahogany, mindi (white cedar), sengon (Albizia) and
species from the Dipterocarpaceae family (Yovi et al. 2010).
3.2. Constraints on timber acquisition
A study showed that 20% of small-scale furniture manufacturers perceive
access to timber as a problem, with 30% regarding wood quality as poor
(Prestvik 2009). Yovi et al. (2009) found similar results: industry players
and log traders said that obtaining larger logs had become more difcult
compared with 10 years previously. Log traders in particular have noticed
the increasing scarcity of timber, which is one of the main reasons for its
higher prices.
Te shortage and soaring prices caused an obvious decrease in
wood consumption from 2005 to 2008, in both quantity and value
Table 2. Sources of timber for Jepara
Source Suppliers (units) Percentage of timber supplied
East Java 29 13.30
Central Java 66 30.28
Special Region of Yogyakarta 15 6.88
West Java 14 6.42
Perhutani I 24 11.01
Perhutani II 17 7.80
Perhutani III 27 12.39
Sulawesi 7 3.21
Sumatra 18 8.26
Banten 1 0.46
Total 218 100.00
Source: Hadiyati (2011)
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Figure 8. Distribution of wood suppliers in Jepara district
(Prestvik 2009). With small-scale manufacturers receiving lower prices
for their products, workshops became more efcient in their use of wood,
attempting to use less wood to generate more income. In response to the
increasing prices for teak and mahogany, many workshops were also found
to be experimenting with alternative species, more so than they had four
years before. Although greater efciency in the Jepara furniture industry
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Box 4. Timber distribution in Jepara’s furniture industry
Excerpt from Nurrochmat et al. (2009)
Timber used in making wooden furniture in Jepara is distributed through both
direct and indirect channels. Usually, large-scale furniture companies buy logs
directly from Perum Perhutani or from People’s Forests, whereas small-scale
manufacturers buy logs or sawnwood from agents or middlemen.
In Java, Perum Perhutani is the largest log supplier, especially teak.The
company has several channels for selling teak logs, including direct sales or
bidding at timber yards, by contract, and sales of sawnwood or other products.
Having a long-term contract with Perum Perhutani is one of the main ways
that buyers (e.g. wooden furniture manufacturers) can ensure the availability
of suitable raw materials. Usually, prices for logs sold under contract are higher
than those set in bidding because Perum Perhutani ensures the quality of logs
according to buyers’ specifcations.The log prices actually set in bidding are
usually lower than those on the price list released by Perum Perhutani. In 2004,
for instance, the average price of teak logs sold through bidding was 75% of
the listed price because it was usually sold with mixed logs of varying quality.
Small-scale wooden furniture manufacturers purchase logs to be processed
into semi-fnished or fnished products. Logs normally come through
middlemen or brokers because small-scale manufacturers tend to perceive
the supply chain of teak logs as too complicated and costly to undertake
personally. Transaction costs along the supply chain could reach 15–20% of
the log price, forcing them to raise their prices for the fnal products and thus
lose their competitive advantage.
In other circumstances, to avoid complicated procedures and gain more
benefts, some wood manufacturers purchase logs from illegal sources. Illegal
timber has become available thanks to the large excess demand of timber and
lack of law enforcement.
has positive implications for the environment, the root problems within the
forestry sector lie elsewhere.
A policy analysis of the wooden furniture industry for Indonesia in general
and Jepara in particular revealed several policy constraints, which threaten to
undermine the industry (Nurrochmat and Hadiyati 2010a).
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Several macro policies have the potential to hinder the development
of Indonesia’s furniture industry at national and international levels
(Nurrochmat and Hadiyati 2010a). Tese include: (1) weak sectoral support
for the furniture industry; (2) complexity of processes for dealing with
import samples; (3) complexity of quarantine procedures for imported
processed wood; (4) increasing competitiveness between domestic furniture
businesses; (5) a policy of minimum industrial fuel purchases, which imposes
an additional burden on small-scale furniture businesses; (6) regional policies
that inhibit trading of timber and timber products between regions; (7) local
regulations and retribution fees; and (8) the disbanding of the Indonesian
wooden product Joint Marketing Body, which weakened the bargaining
position of Indonesian furniture businesses in the international market.
A local policy that may hamper attempts by the Jepara furniture industry
to obtain raw materials is Ministry of Forestry Regulation on Allocation of
Wood for Local Needs (P.7/Menhut-II/2009). Te regulation obliges each
region to reserve a certain amount of timber for its own local needs before
selling timber to other regions. Te regulation requires that 5% of the total
volume of timber produced be set aside for local needs within each region;
this applies to logs derived from forest concessions, timber estates, wood
auctions and rehabilitation plantation forests. All timber from ‘People’s
Forests’ (hutan rakyat) is allocated to local needs within each regency and
municipality. Timber trading across regions is allowed only once local needs
have been met (Nurrochmat and Hadiyati 2010a).
As one of the largest centres for wood processing in Central Java, the Jepara
region relies heavily on surrounding regions, such as Pati and Blora, for its
timber supply. If the Regulation on Allocation of Wood for Local Needs is
fully enforced, the Jepara region may need to source its wood from regions
further away, which may lead to higher product prices and the loss of
competitive advantage.
Other policy constraints that may negatively afect the Indonesian wooden
furniture industry were revealed in a related study by Nurrochmat and
Hadiyati (2010b). Tese are mainly related to the absence of policies and
institutional arrangements to ensure the sustainability of timber sources.
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3.3. Proposed solutions
National and local policies are needed to address issues related to the
allocation of raw materials, production and marketing, as well as the internal
capacity of Jepara furniture businesses. Nurrochmat et al. (2012) propose
three strategies for improving the Jepara furniture industry.
Te frst recommendation is to develop policies that support the allocation
of wood for industries with high added value and large numbers of
employees. Small-scale furniture businesses need more attention in terms
of strengthening capacity and access to the fnancial capital they need to
scale-up production. One of the most reasonable proposals is to apply cross-
price subsidies between high-quality and lower-quality logs. Tat is, Perum
Perhutani could sell lower-quality teak at very low prices, while increasing
Community forests on the outskirts of Jepara provide future raw material sources for the
furniture industry.
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the price for premium-quality teak. To secure and increase the supply of raw
materials, the Jepara government should initiate agreements with wood-
producing regions elsewhere in the country. Te government should also
create policies that encourage the Jepara furniture industry to use alternative
wood sources, such as lesser-known species from agricultural plantations or
gardens, for example, wood from rubber, jackfruit, durian and other trees
grown outside plantation forests. Serious reforestation eforts and policies
supporting People’s Forests are also pivotal strategies for improving the
availability of raw materials.
Te second recommendation is to develop policies designed to improve
production patterns and marketing systems. To ensure continuity of wood
supply, use of ‘ superior teak’species that can produce high-quality timber in
less time should be encouraged. Seedlings of ‘ superior teak’ can be ofered
to the public at afordable or subsidised prices. To cope with the widening
gap between demand and supply, in the short term Perum Perhutani may
selectively shorten the cutting cycle, guided by solid scientifc evidence;
shorter timber cutting cycles will lead to increased stock for the industry.
Dual cutting cycles and optimisation of forest thinning are other techniques
that may prove benefcial. Developing People’s Forests will help forest
communities to meet their needs, as they will gain benefts in terms of
farming, frewood and construction timber. Applying a dual cycle will also
support the preservation of ecological functions, because it will mean an end
to clear-cutting. Perum Perhutani could also optimise the use of its timber
terminal to cut the costs of transporting timber to the processing industry.
Finally, to foster and strengthen small-scale furniture businesses, policies
that support partnerships between large- and small-scale furniture businesses
are strongly recommended. Forming and/or strengthening clusters of
furniture manufacturers to reduce the costs of transporting materials
would improve production efciency and market access. Cluster formation
and strengthening will also lead to more efective communication and
transactions between furniture manufacturers and suppliers. Consumers
will also will beneft from greater efciency and efectiveness in
obtaining furniture.
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3.4. Project activities for moving forward
Te project involved an intensive multi-stakeholder process designed to
develop the Roadmap for the Jepara Furniture Industry through policy
formulation. For further details on the project’s achievements in infuencing
policy development for the Jepara furniture industry, see Chapter 6.
International eforts to encourage sustainable forest management through
timber certifcation may also relieve Jepara’s timber supply constraints.
However, most small-scale furniture manufacturers in Jepara have very
limited knowledge of such schemes and their relevance to the sustainability
of their business (Yovi et al. 2009). To redress this lack of knowledge, the
project worked to improve small-scale manufacturers’ understanding of
timber certifcation; further details are in Chapter 5.
Log traders propose to stock up on timber when prices are low, improve
communication and cooperation among log traders, create wider networks
among log brokers outside Jepara and boost capital (Yovi et al. 2009).
Small-scale furniture manufacturers also need to develop collaborative
strategies with the growing furniture industries surrounding the region, in
order to overcome the timber shortages and increase their competitiveness
(Nurrochmat and Hadiyati 2010a). Project activities served to boost
collaborative eforts to overcome the limitations associated with operating on
a small scale both for the district of Jepara and the province of Central Java
(see Chapter 4).
In an efort to provide a model for supplying raw materials to Jepara’s
furniture industry, CIFOR and FORDA worked together to plant 1000 fast-
growing teak species as part of the furniture value chain project (Abdullah
2012). Jati Unggul Nusantara (JUN), as the fast-growing teak species is
known, is cloned from superior-quality teak samples using DNA technology.
Te species is expected to produce 0.2 m
3
of wood within fve years. At this
rate of growth, if 10 000 JUN trees were planted at the time of the project,
6000 m
3
of wood would be ready for harvest in 2020 – which amounts to
13% of Jepara’s total need for timber for furniture making. Preliminary
research indicates that private lands are the most suitable locations for
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planting these JUN trees, and both smallholder farmers and small-scale
furniture manufacturers should be able to cultivate the trees in their
own backyards.
Indeed, people in Jepara seem to be increasingly aware of the potential for
growing their own teak, as indicated by the numerous young teak plantations
scattered throughout the Jepara countryside (Yovi et al. 2009). Sopiana’s
(2011) study on community forests in Jepara found that many villages
have indeed long had planting groups as a long-term investment. Although
their eforts are not business oriented, there remains huge potential to
encourage and involve locals to further develop community forest activities
in the future.
Fast growing teak species are now widely cultivated across Jepara to fll future needs of the
furniture industry.
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4.1. Strengthening SMEs in Jepara
As small-scale furniture manufacturers often face major problems related to
marketing, capital and wood acquisition, Purnomo et al. (2009) proposed
a strategy that targeted actors along the horizontal dimension of the value
chain. As part of this approach, the project facilitated the formation of the
Jepara Small-scale Furniture Producers Association (APKJ), which helps
4. The Jepara Small-scale
Furniture Producers Association:
Strengthening collective action
Small-scale furniture producers gather at the ofcial launch of APJK in 2009.
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its members to become independent and competitive and strengthens their
bargaining position in the global market.
Te presence of this collective organisation will make it easier to implement
other strategies that aim to address vertical dimensions of the value chain
(see Chapters 2, 3 and 5). Members are invited to take part in capacity-
building workshops, which cover topics such as fnancial and organisational
management, marketing and business communications, access to capital,
quality control, timber legality and eco-certifcation. Other activities include
collective marketing through the APKJ web portal, development of a group
trademark, and support for participation in trade exhibitions.
During the fnal year of the project, several studies assessed the impacts of
the project on APKJ members and other small-scale furniture manufacturers
in Jepara. All APKJ members explicitly mentioned having derived benefts
through their involvement within the association, and most agreed that APKJ
Jepara Head of District, Hendro Martoyo, shows his suport at the ofcial launch of APKJ in 2009,
closely watched by representatives from ASMINDO, APKJ and CIFOR.
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should continue (Achdiawan 2012). Most members also felt that APKJ had
opened up opportunities that were not available to non-members, ranging
from improved market access to new marketing innovations.
Te marketing innovation referred to is the Internet portal, which members
use to promote their furniture. However, despite the portal’s potential,
members noted a need to establish clearer procedures and mechanisms
for using the tool. Improving cohesion among members was also deemed
important; few APKJ members had managed to form a new joint venture
among themselves (Achdiawan 2012).
An impact assessment study (Nooryasyini et al. 2011a) also found that
APKJ members have been able to improve their access to markets through
participation in trade exhibitions.
In addition, many members noticed that their businesses had started to
generate more income within a few years of joining the association. Several
members surveyed in 2008 and 2010 noted that their revenue had grown
from IDR 297 million in 2008 to IDR 317 million in 2010. Furthermore,
78% of APKJ members had increased their product sales within the previous
year, compared with 44% of non-members (Achdiawan 2012).
No diference was observed between APKJ champions and other APKJ
members in terms of involvement with the association. Te median gross
revenue of APKJ champions in 2011 was IDR 150 million, similar to other
members. However, this amount is slightly below the median gross revenue
of non-APKJ members. Nevertheless, about 67% of champions indicated
that sales and profts had steadily increased compared with the previous one,
three, fve, and even 10 years (Achdiawan 2012).
APKJ members and champions said that their business had improved
in several areas, namely better sales, profts and market expansion, and
an increase in the quantity of production and quantity of raw material
purchases; this was in contrast to non-members (Achdiawan 2012).
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Furthermore, better access to training and capacity building also
generated positive impacts for APKJ champions. Six out of 14
champions immediately received loans from Bank Rakyat Indonesia
(BRI) after participating in the bank’s fnancial training. Tese ranged
in size from IDR 10 million to 50 million; the producers invested the
loaned capital in their furniture businesses (Achdiawan 2012).
Nevertheless, despite some anecdotal evidence from the feld concerning
successful capital compliance by some APKJ members, accessing
capital remains the biggest problem for most small-scale furniture
manufacturers in Jepara (Yovi et al. 2012). Furthermore, most small-
scale furniture manufacturers still have no direct relationship with buyers
(Nooryasyini et al. 2011b).
It should be noted that the 200 members of APKJ account for less than
2% of all small-scale furniture manufacturers in Jepara (Yovi et al. 2012).
4.2. Strengthening SMEs in Central Java and beyond
Given the new China–ASEAN FTA, Indonesia’s furniture industry
must be prepared for intensifed competition both internationally and
nationally. In China, upstream and downstream furniture industries
are fully integrated; Indonesia’s furniture actors must similarly learn to
collaborate to make the industry strong and competitive.
One of the aims of the formation of the APKJ is for members to become
‘local champions’ or agents of change for other small-scale enterprises
throughout Jepara and its surrounding regions.
As an initial step in that direction, during the fourth year of the project,
CIFOR and the APKJ held a province-wide meeting for the industry,
with attendees including small-scale furniture business operators,
government institutions and other related stakeholders.
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Te meeting provided an opportunity for participants to learn about other
furniture business associations around Central Java and introduce the work
carried out in Jepara as part of the furniture value chain project.Te meeting
culminated with the formation of the Indonesian Small-scale Furniture
Producers Community (Komunitas Pengrajin Kecil Nusantara). Te
community is intended to function as a communication platform for small-
scale furniture manufacturers in Central Java, Yogyakarta and beyond, and
as a source of recommendations for future policy and developments within
Indonesia’s furniture industry (FVC Team 2011c).
4.3. Overcoming gender constraints in the furniture
value chain
An important aspect that is often overlooked is gender relations, even though
it plays a huge role in the economy. Gender should be incorporated into
APKJ participates for the frst time at a national furniture expo in Jakarta.
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value chain analysis because gender relations and the ways that value chains
function may afect each other; many women lack bargaining power and are
employed at low levels in the value chain to cut production costs, and their
employment may contribute to changes in gender relations in the domestic
sphere (Mayoux 2003 in Fauzan et al. 2009).
Te traditional role of women in the domestic sphere is a major determining
factor in their decision to work in the furniture industry, according to
Fauzan et al.’s (2009) study on gender relations in Jepara’s furniture value
chains. Te assumption that women are responsible for domestic work
has often prevented them from seeking out jobs in carving or additional
income opportunities from other employers in other villages. Women
skilled in woodcarving who choose to stay in their own village are faced
with three options: to continue their involvement in the industry as it is but
possibly having fewer orders in the future; to continue their involvement
in the industry at lower levels that do not require their carving skills and
thus are paid less; or shift to other areas with occasional involvement in
manufacturing the furniture if considered proftable (Fauzan et al. 2009).
Furthermore, women’s involvement in the furniture industry difers for each
type of value chain (Fauzan et al. 2009). Using Schmitz’s (2005) governance
models for the furniture value chain, four patterns of gender relations were
identifed. Te market-based value chain (suppliers and buyers remain at a
distance, the product is standardised or easily customised, level of switching
is low) is characterised by the lowest level of gender segregation in its
production process, but women’s involvement is heavily undervalued in
order to keep product prices low. A balanced chain (reciprocal dependence
between buyers and suppliers) tends to have more clearly gender-segregated
production for efciency reasons; for example, female workers might be
replaced by men if the latter can perform additional tasks outside working
hours. A directed value chain (buyers exercise greater control over other frms
in the chain, buyers have doubts about suppliers’ competence) inclines more
strongly towards gender segregation, with the ‘domestication’ of women
in the sanding process because of the lead frm’s preference for minimalist
product designs. Te hierarchical chain (lead frms take direct ownership of
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some operations in the chain) involves the most gender segregation because
of the mechanisation of its production systems,generally assumed to be the
domain of male workers (Fauzan et al. 2009).
Fauzan et al. (2009) conclude that in Jepara ‘it is “socially acceptable” that,
being women with an obligation to take care of the family, female workers
are commonly employed as daily paid workers which would enable them
to simultaneously perform their domestic responsibilities and income
Male and female workers are often assigned diferent roles throughout the Jepara furniture value
chain. Both in large-scale factories as well as small-scale furniture workshops, male workers tend to
be given the responsibility to do more technical work such as sawing, operating heavy machinery
and electronic devices, and assembling. Female workers, on the other hand, to sand, sort and clean
up, or deal with fnancial and managerial issues. However, both male and female workers in Jepara
seem to have the same opportunites to practise wood carving.
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generation’. Furthermore, ‘apart from being located at the weakest point of
the chain where their employment could be easily ended, their concentration
on this seasonal labour force also provides little opportunity to upgrade or
advance in their work’ (Fauzan et al. 2009).
Similar results emerged in Nansereko’s (2010) gender study on Jepara’s
furniture value chain. Tat study found that both male and female workers
are actively involved at every node of the value chain, conducting mainly
primary and support activities, respectively. However, more men than
women are engaged in value addition, with men making more decisions
and in better-paying jobs than women. Tis arises because women are
Box 5. Gender roles in Jepara’s furniture value chain
Excerpt from Nansereko (2010)
Both men and women are involved in all six nodes in the furniture value chain,
namely retailers, fnishing companies and exporters (furniture warehouses),
small-scale furniture workshops, sawmills, wood retailers and forest
plantations. However, women are more highly concentrated in warehouses
than anywhere else along the value chain. In the warehouses, women sand the
furniture pieces, paint them and/or varnish them by hand (rarely using a spray
gun) and then wrap them for shipping.
In furniture workshops, women also carve and source materials, mainly by
telephone. Other work done by women includes bookkeeping and record
keeping, managing cash payments and customer relations, and overseeing the
quality of the fnished products.
By contrast, men work in all six nodes, with their tasks distinct from women’s
work. They design furniture, source furniture materials in person, lift logs or
furniture pieces, saw timber, maintain sawing equipment, do carpentry, carve
and pack heavy articles. Men also sand using a sanding machine, repair cracks
and apply spray fnishes.
Women occasionally also work in some male-dominated activities, namely
marketing, pricing, making furniture catalogues and deciding where to re-
invest profts.
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seen as lacking in furniture-making skills and because some types of work,
such as operating complex machinery, are perceived as too dangerous for
women. Another reason is the cultural division of labour, where men make
money and women tend the home, feed the family and educate the children
(Nansereko 2010).
Te skills gap between male and female workers in Jepara considerably afects
their respective returns to labour. However, men’s and women’s skills can be
upgraded in order to achieve cost and diferentiation advantages, thus driving
down the costs of production and building greater competitive advantage.
However, boosting the involvement of women in the industry will require
changes to the socio-cultural environment (Nansereko 2010).
Refecting upon previous gender studies on Jepara’s furniture value chain,
Purnomo et al. (2010) attempt to understand the position of women and
their preferences in the value chain, as a step towards designing strategies to
generate greater benefts for women.
Female participants listen in on a workshop about wood characteristics.
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Purnomo et al. (2010) note that the APKJ was not aimed at either men or
women, but was set up as a gender-neutral organisation. However, social
norms in Jepara discourage women from going out on their own at night
(when most APKJ meetings are held) and women are often uncomfortable
attending predominantly male meetings (Purnomo et al. 2010).
To address this problem, women in the industry were invited to take part
in focus group discussions to examine how the project could be improved
to suit their needs. It emerged that impacts could be enhanced if actions
were specifcally designed for women. As most of the women noted, fexible
conditions within market-based value chains are preferable to other types
of chains.
As a result, the moving-up scenario, which includes training on marketing
furniture specifcally for women, is a high priority for female workers. Other
scenarios, namely the organising producers associations, collaborating down
and developing green products, are expected to generate benefts for both
women and men, but, as they are not gender-specifc, they do not contribute
to balancing gender relations. Overall, it is recommended that specifc
actions be designed for women (Purnomo et al. 2010).
Purnomo et al. (2011a)examined how the four scenarios introduced in
Chapter 1 could be adapted to beneft women. Teir analysis indicated that
a forum for women only should be established within the SME association.
Women preferred workshops or meetings to be run for no more than half
a day, rather than all day, and they function more efectively in an all-
female group than when they form a minority in a mixed-gender group
(Purnomo et al. 2011a).
As part of the project’s eforts to empower female actors within the
Jepara furniture industry, a workshop was conducted for female sanders.
In collaboration with IWAPI (the Indonesian Female Entrepreneurs
Association) and APKJ, the furniture value chain project provided special
skills training for female workers to enhance their ability to manage their
own business (FVC Team 2011d).
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One of several workshops aiming to improve small-scale furniture
manufacturers’ access to capital targeted female workers in the furniture
industry, particularly those who had worked only as casual labourers. Te
workshop, held in collaboration with IWAPI and APKJ, covered fnancial
management, simple accounting systems and bank loan management (FVC
Team 2012a).
4.4. Gender in the value chain analysis
Results from the furniture value chain project in Jepara were compared and
contrasted with fndings from other gender and value chain studies across
Asia, Africa and South America (Shackleton et al. 2012), with several key
fndings emerging.
First, value chains for forest products provide full- and part-time work for
women in many developing countries. Te jobs are poorly paid but they ofer
fexible working arrangements (Shackleton et al. 2012).
Participants engage in a business management workshop specifcally designed for female workers.
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Second, women have a low profle in these value chains because their inputs
are either informal or are perceived as having little worth. Te invisibility
of women in forest product value chains means that policy makers often
overlook women’s needs. Policy and practice rarely directly support women
and, in some cases, may even criminalise them. Broad policies that promote
women’s development seldom translate into action on the ground. Specifc
policies that support women working in forest product value chains may
substantially improve benefts for women (Shackleton et al. 2012).
Tird, socio-cultural, religious, technical, policy and institutional barriers
often prevent women from working and trading in forest product value
chains. Given the challenges involved, a prerequisite for fnding ways to
overcome these barriers is good understanding of women’s roles in forest
value chains (Shackleton et al. 2012).
As was shown to be the case in Jepara, encouraging and strengthening
collective action among women may improve their opportunities in value
chains for forest products. Women-only groups are more encouraging
for women than mixed-gender groups. Furthermore, groups for women
working in forest product value chains can build on existing women’s
self-help or social groups. However, women-only groups require additional
training in literacy and skills, as well as in technologies suited to women
(Shackleton et al. 2012).
Finally, the diversity in value chains means that there is no single way
forward. Nevertheless, better understanding of the position of women in
value chains and their preferences is a step towards devising strategies to
empower specifc groups of women, in specifc value chains in specifc
contexts (Shackleton et al. 2012).
5.1. Major problems encountered by furniture makers
Major obstacles encountered by small-scale furniture manufacturers in
Jepara include obtaining raw materials, ensuring product quality, marketing
products and sustaining business capital. Tese four problems are very much
interconnected and need to be addressed simultaneously.
Fluctuations in timber prices make it difcult for small-scale manufacturers
to purchase good-quality timber, which afects product quality. Many
producers opt for cheaper, low-quality timber from younger trees, which
compromises the sustainability of timber sources (FVC Team 2011e).
Furthermore, most small-scale manufacturers market their products not
to end consumers but mainly to middlemen, wholesalers, big furniture
companies or exporters. With no set standards for product quality, small-
scale manufacturers have a weak bargaining position and are forced to accept
whatever price buyers ofer them. As a consequence, their sales income often
does not cover their production costs, which places pressure on them to sell
as many products as possible at any price (FVC Team 2011e).
Another problem is that buyers often do not make their payments on time,
causing manufacturers to delay work. To circumvent this cash fow problem,
5. The ‘green furniture’ scenario:
Building and enhancing access
to green markets for small-scale
furniture manufacturers
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many manufacturers sell their deposit cheques at 6–7% lower than their
initial value. High-interest loans from banks ofer another avenue by which
small-scale manufacturers attempt to obtain quick cash (FVC Team 2011e).
Tese interconnected problems create a vicious cycle that leads small-scale
manufacturers deeper into poverty, along with declining timber resources
and environmental degradation, reduced market competitiveness and a poor
image for the Jepara industry.
5.2. Timber certifcation
In recent decades, the idea of sustainable forest management through timber
certifcation has been promoted internationally. Furniture made from timber
certifed as coming from sustainable sources is qualifed ‘green furniture’,
and can be sold to environmentally conscious consumers at a premium price.
Te aims of schemes to encourage certifcation of furniture are to conserve
forest resources, ensure sustainability in the furniture-making industry and
improve the welfare of furniture manufacturers. A strategy that encourages
certifcation could stimulate demand for furniture from sustainable sources
and thus could help those in the Jepara furniture industry resolve some of
their problems (Purnomo et al. 2011b).
However, the initial uptake of certifcation schemes throughout the furniture
industry has been slow, even though many accredited institutions are ready
to conduct certifcation schemes in Indonesia, such as the Tropical Forest
Trust (TFT), Indonesian Ecolabel Institute (LEI) and the Forest Stewardship
Council (FSC) (Purnomo et al. 2011b).
Several factors may account for the apparent lack of interest in certifcation
schemes. First, although price for certifed furniture has increased annually
by between 6% and 30%, consumers’ willingness to pay has been moving
in the opposite direction, thus reducing the uptake of timber and furniture
certifcation schemes (Purnomo et al. 2011b). Generally, Indonesian
domestic consumers are less willing to pay for certifed furniture, whereas
international consumers from the United Kingdom and Norway have
relatively high willingness to pay, at 16% and 7.5%, respectively. Tis
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indicates that certifed furniture products should be targeted to a specifc
international niche market. From the supply side, large manufacturers
are better set up for certifcation than small-scale manufacturers
(Purnomo et al. 2011b).
In a survey of actors along the furniture value chain concerning their
perceptions of certifcation, approximately 25% of small-scale manufacturers
said they would support the certifcation scheme if timber prices were lower.
Furthermore, most log traders had little or no knowledge about timber
certifcation; 10% objected to a scheme that would further complicate
timber transactions, and 18% supported the scheme on the basis that
it would enable them to fetch higher timber prices and bigger profts
(Yovi et al. 2009).
Given these fndings and the potential value of certifcation schemes for
the industry, the project developed a strategy designed to boost capacity in
timber certifcation.
Certifed ‘green’ furniture feature in a Jepara showroom.
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Box 6. Indonesia’s timber legality assurance system
Excerpt from Yovi (2011)
Indonesia’s Timber Legality Assurance System (SVLK) is the only certifcation
scheme in which participation by industrial forest concessions, production
forest concessions and community plantation forests is made mandatory by
the government.
The system was created to ensure the legality of timber and timber products.
It guarantees that each licence holder and owner of a private forest who has
undergone VLK certifcation and met all verifcation requirements complies
with all existing government regulations related to the legality of timber and
forest products.
Introduced in 2010 as part of a move to curb illegal logging in the country, the
SVLK aims to grant Indonesian furniture manufacturers greater access to the
global market because it provides a guarantee to buyers that the timber and
timber products come from legal and environmentally sound sources.
Furthermore, the SVLK is expected not only to beneft society and the
government through its support of sustainable forest management, but also to
beneft companies by requiring them to develop better management systems.
Direct results of better management are higher measurable inputs, processes,
costs and outputs/outcomes, as well as qualifed staf competencies, all of
which will ultimately improve the company’s performance.
Following Indonesia’s commitment in 2011 to engage in legal timber trade
with the European Union under a Voluntary Partnership Agreement, the SVLK
will support Indonesia in having its timber and timber products deemed legal
upon entry into EU markets.
However, although the Indonesian government recently allocated more than
US$300 000 from the state budget to subsidise SVLK certifcation for small-
scale manufacturers, the process can still cost tens of millions of rupiah, which
manufacturers cannot aford. Small-scale manufacturers are thus encouraged
to form cooperatives and apply for group certifcation.
Poor promotion of the SVLK means that private forest owners and small-
scale furniture manufacturers often do not understand it. Lack of clarity
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5.3. Project activities for moving forward
Te ‘green furniture’ scenario forms part of the overall solutions suggested
by the project to address problems in the Jepara furniture industry. Te
introduction of certifcation schemes is expected to boost furniture makers’
proft margins by enabling them to produce premium-priced certifed green
furniture catering to a specialised niche market.
To help Jepara’s small-scale furniture makers enter the premium market,
CIFOR and PPEI (Centre for Indonesian Export Development) jointly
held a workshop for them on the‘ chain of custody for export purposes’.
Te workshop introduced participants to the basic systems and standards
involved in the timber chain-of-custody certifcation scheme and showed
of certifcation mechanisms and objectives, concerns over the high cost
of certifcation and the risk of reducing competitiveness through higher
production costs are three main reasons for actors’ lack of interest in the
scheme.
Given the variation in understanding of SVLK certifcation, helping those in the
industry before the system comes into operation is a priority. Problems persist
in the process of knowledge transformation in the SVLK. The small numbers
of competent facilitators are not comparable to the extent of existing forests,
which creates problems for plans to implement the SVLK, which is scheduled
for early 2013.
As facilitation may take a relatively long time – one to three years depending
on the level of readiness of community forest management – the availability
of continued funding is crucial. Strengthening SVLK-related competencies
will require continuous and close assistance by both government and non-
governmental organisations.
Comprehensive strategies that connect upstream industries (private forests)
with downstream industries (small-scale furniture manufacturers) are
important for the sustainability of Jepara’s furniture industry. In addition,
actors should take advantage of the certifcation subsidies for small-scale
industrial licences that were introduced by the Jepara district government.
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them how the scheme can be implemented throughout the timber and
furniture market chain, explained the requirements for documenting the
whole certifcation process, and taught them how to conduct internal
auditing. Many members of the APKJ attended this workshop.
A few months following the chain-of-custody workshop, Nooryasyini et
al. (2011c) conducted a survey to assess local APKJ champions’ progress in
pursuing the green furniture scenario. In terms of business management,
28% of the attendees said they already had a system for documenting their
raw material use and production-related purchases, and only 20% record
their fnancial fows regularly (Nooryasyini et al. 2011c). As compliance
with certifcation schemes requires consistent application of basic managerial
practices, these fndings indicate that small-scale manufacturers have a long
way to go before they will be ready to take part.
In addition, 64% ofthe small-scale manufacturers surveyed do not fully
understand the whole process of timber certifcation, stating that they
gain very basic information about certifcation from the workshop. Most
producers also described the scheme as difcult to implement, mainly
because of their lack of familiarity with the process, which they perceive
as complicated and expensive. As a result, none of the producers who
participated in the workshop has yet taken any steps towards certifcation
(Nooryasyini et al. 2011c).
Nevertheless, most producers are now at least aware of certifcation and its
potential to improve their business conditions. As certifcation has only just
been introduced to the wider small-scale furniture-making community, it is
understandable that most manufacturers are still unsure about the technical
and fnancial requirements. Ongoing support and assistance from the local
government and other actors should be provided to continue to encourage
small-scale manufacturers to adopt certifcation (Nooryasyini et al. 2011c).
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Furthermore, regional policy also should aim to boost marketing of certifed
furniture and further encourage certifcation (Purnomo et al. 2011b). For
example, the Roadmap for the Jepara Furniture Industry is part of the
project work aimed at mobilising stakeholders to support the green furniture
scenario. For more details, see Chapter 6.
6.1. Projections based on current conditions
We carried out a10-year projection (2013–2023) for Jepara’s furniture
industry to forecast future outcomes in the case of a business-as-
usual scenario.
Industrial demand for timber in Jepara was recently calculated to be
864 771 m
3
, with 24% annual growth (Achdiawan and Puntodewo 2011).
At this rate, Perhutani, which supplies 85% of the Jepara region’s timber,
will be able to fulfl only 1% of demand by 2030. To avert future shortages,
fast-growing timber species have been planted throughout the region.
Even with these plantations, however, the total potential volume of teak
throughout Jepara will not be able to meet the soaring industrial demand.
Forecasts indicate that, by 2030, Jepara district will be able to meet only
2% of total timber demand. Tese fgures indicate a worrying trend for the
sustainability of Jepara’s teak furniture industry (CIFOR et al. 2012).
Total export value is forecast to reach US$3.77 per kilogram furniture
weight in 2022, compared with US$2.16 per kilogram in 2003. Increases
in export value will need to be matched by an increase in furniture quality,
and continuous innovation to stimulate export demand may be required.
If quality standards can be maintained, growth in the annual export value
6. The future of Jepara’s
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may reach at least 1.37% (CIFOR et al. 2012), which is still well below the
national growth target for annual furniture exports of 8–10% and the Jepara
target of 7%.
Capital demand also is projected to increase in the next 10 years. According
to Prestvik (2008), if 68% of furniture businesses apply for loans at a total
annual infation rate of 10%, IDR 356 billion will need to be made available
from formal fnancial institutions, with IDR 87 billion of that allocated for
small businesses. Local cooperatives will also need to provide IDR 34 billion
for members’ loans, with informal loans between family and friends to reach
approximately IDR 4 billion (CIFOR et al. 2012). Given this huge potential
demand for capital, fnancial institutions and the government must prepare
carefully to fnd ways to give small businesses access to the capital they
greatly need.
Sustainable supplies of good quality timber is needed to ensure the future survival of Jepara’s
furniture industry.
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6.2. Project achievements
Monitoring and evaluation of the project’s impacts on people’s livelihoods is
an integral part of action research. An impact assessment survey (Achdiawan
2012) was conducted in February and March 2012, during the fourth year of
the furniture value chain project. Te assessment used the same questionnaire
and method as in Prestvik (2008), with additional questions on the impacts
of CIFOR’s research project.
Survey respondents included a subset of the sample in Prestvik (2008), as
well as representative members and champions of the Jepara Small-Scale
Furniture Producers Association (APKJ). Questionnaires aimed to elicit
respondents’ views of the changes experienced by manufacturers and APKJ
members and champions relative to households in Jepara not engaged in
making furniture. APKJ ‘champions’ are core members or those who perform
key roles in the association (Achdiawan 2012).
Te survey found that approximately 10% of furniture workshops visited
in 2008 had closed by 2012, because of a lack of capital and orders from
buyers. Most had shifted into activities such as trading and agriculture. Te
median gross revenue of those who continued in the furniture trade was
IDR 222 million (USD 24 000) in 2012, compared with IDR 210 million
(22 500 USD) per active workshop in 2008 (Achdiawan 2012). Furniture
manufacturers’ incomes were consistently higher compared with non-
producers and ex-producers (Achdiawan and Puntodewo 2011).
A shift in the market saw manufacturers serving more domestic consumers
in 2012: 75% of workshops that served the export market in 2008 have
since moved into the domestic market. Tis shift may be related to the
recent global crisis, which caused international markets to shrink slightly
(Achdiawan 2012).
Furthermore, respondents no longer cited marketing as their main problem,
thanks to the CIFOR project. Rather, for 80% of APKJ champions, the
availability of equipment for furniture processing (i.e. dry kilns) has now
become their main problem. Furniture makers who are not APKJ members
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Box 7. Roadmap for Jepara’s furniture industry 2012–2022
Excerpt from CIFOR et al. (2012)
Jepara’s furniture export market is growing at the slow rate of 1.39% per year.
By contrast, the central government has set a targetof 8–10% growth for
national furniture exports, and the Jepara district government has a target of
7% for regional growth in 2022.
To enhance the local furniture industry, the Jepara district government, in
collaboration with stakeholders, developed a comprehensive roadmap for
use in guiding the implementation of industry-related action plans between
2012 and 2022. The plans cover several sectors of the industry, including raw
material supplies, access to capital, marketing, human resources, institutions
and physical and non-physical infrastructure. The following paragraphs
highlight the details of each plan:
1. Raw materials: extensive introduction of fast-growing tree species,
extensive implementation of the SVLK (Timber Legality Assurance
System), diversifcation of the use of tree species, intensive collaboration
between upstream and downstream industries in ensuring the provision
of timber either from within or outside the Jepara region, development of
a comprehensive database on raw material needs throughout the region,
intensive research on alternative timber sources, efcient management of
industrial waste and establishment of a centralised timber market within
the region.
2. Access to capital: improve access to capital for small-scale furniture
manufacturers, establish grants for certain production tools and machinery
and for access to marketing channels and raw material sources, develop
regulations that support access to capital, collaborate with non-
governmental organisations or the private sector to open up opportunities
for corporate social responsibility programmes that target small-scale
industries, and increase the implementation of small-scale credit schemes
(Kredit Usaha Rakyat).
3. Marketing: establish a distinct brand for Jepara’s furniture products,
eliminate market barriers, diversify market niches, establish an
institution that can monitor domestic market transactions, and use
information technology and trade shows for local and international
marketing channels.
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4. Human resources: provide training for small-scale furniture manufacturers
in business management, wood processing, marketing, information
technology, fnance, entrepreneurship, product design, communications,
administration documentation, taxation, production, occupational health
and safety, and exports–imports.
5. Infrastructure development: establish quality roads, timber terminals,
warehouses, international seaports, airports, energy sources, international
trade show centres, information centres, accommodation, industrial
centres, industrial tourism centres and industrial museums.
6. Institutional strengthening: encourage close collaboration with education
and research institutions, professional associations and government
bodies; and develop regulations that support Jepara’s export market.
continue to experience problems with market access, equipment, wood
quality and wood supply (Achdiawan 2012).
Te survey also revealed aspects of project initiatives requiring improvement.
Clear rules and consensus must be established to maintain cohesion among
APKJ members, especially to ensure equal access to resources (Achdiawan
2012). Similarly, Nooryasyini et al. (2011c) found that 42.9% of APKJ
members were not fully satisfed with the association, mainly because its
programmes had failed to reach all small-scale manufacturers.
Furthermore, several innovations introduced through the APKJ, such as
the collective marketing web portal, had not been immediately adopted by
all members. Tus, external interventions may be needed to accelerate the
adoption (Achdiawan 2012).
In summary, after four years, the FVC project had several achievements,
notably the formation of the Jepara furniture roadmap and improved
capacity of small-scale furniture manufacturers. However, although the
project generated benefts for APKJ members and champions, these did not
extend to furniture manufacturers in the wider Jepara area. As the project
enters its fnal year, it must expand its reach to the wider community, by
encouraging members of the association to spread their success to non-
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members. APKJ members and champions could act as agents of change, as
they now have the capacity to share their business innovations and improve
conditions throughout the industry (Achdiawan 2012).
6.3. Roadmap for the furniture industry
Ongoing research indicates that stakeholders in the Jepara furniture value
chain are not well connected and rarely collaborate. Seeing potential to
improve the efciency of the furniture industry, the project proposed that
the Jepara local government develop a comprehensive roadmap to support
collaboration in the industry. Te aim of this approach is to empower less
connected and more vulnerable stakeholders and to minimise conficts
between parties (Irawati and Purnomo 2012).
Strategic workshops to support furniture makers in dealing with the
increasingly competitive market were also conducted as part of the project. In
the frst of these, furniture makers from Jepara and government ofcials from
Central Java were invited to discuss existing policies that afect the furniture
industry and the livelihoods of those within it. Te workshop created an
opportunity for stakeholders to engage in intense dialogue and to give
feedback to improve policy (FVC Team 2010c).
In several subsequent workshops throughout 2011 and 2012, the idea
of developing a comprehensive roadmap specifcally for Jepara’s wooden
furniture industry was examined further. A bottom-up approach was adopted
to develop strategic guidelines for future developments within the industry
between 2013 and 2023. Participants included government ofces, industry
associations, small-scale manufacturer representatives, higher education
bodies and other related stakeholders. An initial draft of the roadmap, which
incorporated existing functions of government bodies as well as aspirations
of other stakeholders, was released in early 2011 and ultimately made into a
Jepara district regulation in 2012 (FVC Team 2011f, 2011g, 2012b).
Te Jepara Furniture Industry Roadmap 2013–2023 is a positive output
resulting from a long process of refecting, planning, acting and monitoring
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throughout the lifetime of the project. Te roadmap has strong potential to
strengthen small-scale furniture makers’ bargaining position, connect them
to wider market networks, improve trust in and support from government
bodies and contribute to the sustainability of the furniture industry. It
also has the potential to redress the power imbalance among actors in the
furniture value chain, and improve both livelihoods and furniture value
chain governance with the onset ofthe ASEAN–China Free Trade Agreement
(Purnomo and Irawati 2012).
6.4. Developing industry regulations for occupational
safety and health
A similar process to that used for the roadmap is underwayto develop a legal
framework covering occupational safety and health (OSH) practices for
A factory worker uses a face mask during a potentially hazardous fnishing technique. Proper
occupational safety and health practices are mostly conducted by big furniture companies. Small-
scale furniture makers are yet to comply to such standards.
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workers in the furniture industry. Work practices along Jepara’s furniture
value chain were found to barely comply with basic OSH standards, such as
the use of personal protective equipment (Yovi and Sidiq 2012). Although
many people in the industry acknowledge the need for health and safety
at work, few possess sufcient understanding of the importance of OSH
protection or of the rights and obligations of company management and
government institutions.
Most small-scale furniture businesses in Jepara do not provide their
employees with safety equipment such as goggles, helmets, gloves or
protective jackets because of limited funds and unfamiliarity with their use
(Nooryasyini et al. 2011c). Furthermore, work insurance is non-existent,
with most businesses considering that existing wages are sufcient for
workers’ livelihood needs (Nooryasyini et al. 2011c).
Te government had provided OSH guidelines and supervision for less than
1% of the units in the industry; this was confned to furniture production
stage and failed to reach workers and managers in log yards (Yovi and
Sidiq 2012). Te failure among management to implement OSH systems
for workers in small workshops has compounded the high risk of work-
related accidents and health efects. Incidents have been reported frequently,
including fnger loss from use of machines, hernia, hearing loss or reduction,
lung illness, and possibly also kidney dysfunction (Yovi and Sidiq 2012).
During a focus group discussion in early 2012, stakeholders agreed to
a proposal to conduct an OSH pilot project in a small-scale furniture
production centre in Jepara. An ad hoc team was established to involve
stakeholders in each stage of the planning, implementation, development
and supervision of OSH protection. Further eforts are underway to increase
the role of local government in OSH guidance and supervision through
involvement of related local sets of working units. Ultimately, there is a
critical need for regulation at the district level to create a local budget for
implementing OSH protection in Jepara (Yovi and Sidiq 2012).
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6.5. Impacts beyond the project
Te project also generated several impacts beyond its initial target of small-
scale furniture manufacturers and the Jepara region. Te project team has
shared information on the use of value chain methods with project partners,
university students and the international scientifc community throughout
the duration of the project. As a result, the value chain approach has been
adopted within several studies conducted by project partners,particularly
FORDA’s REDD and REDD+ studies in Kalimantan, Jambi and South
Sumatra; ACIAR’s palm and pig commodity chains project in East Nusa
Tenggara and non-timber forest product market chain study in Burkina
Faso; and CIFOR’s impact assessment on the rattan value chain in
Kalimantan and Java.
Te value chain approach has been taught to hundreds of undergraduate and
postgraduate students at IPB in Bogor, West Java, and Jepara’s STTDNU.
Furthermore, students from across Indonesia, as well as from Norway, the
Jepara Head of District, Hendro Martoyo shows his support for the development of the Jepara
Furniture Roadmap.
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Netherlands, New Zealand and the United Kingdom, did internships with
the project. APKJ also attracted many people to Jepara, including students
from Gadjah Mada University (UGM) in Yogyakarta, to learn from the
organisation’s experiences.
Several papers published during the project lifespan have been quoted
in other scientifc articles, including ‘Value chain approach of furniture:
action research to improve power balance and enhance livelihoods of small
and medium enterprises’ (Purnomo et al. 2009), ‘Value chain governance
and gender in the furniture industry’ (Purnomo et al. 2010), ‘Roles of
information technologies for SME furniture business’ and ‘How does the
marketing portal work for SME furniture producers?’ (Suyamto and Irawati
2011). A presentation on green furniture during a national conference on
green business also raised the interest of many scholars and businesses in
the project’s publications; the presentation was later published in IPB’s
national journal.
Te project work also supported the skills development of research
partners, university students, actors in the local furniture industry and
local government agencies. Research partners and university students from
Indonesia and overseas received all necessary support to implement the value
chain analysis in their own studies. Students from local universities STDNU
and STIENU were also trained in conducting surveys using a variety of
research tools such as GPS tracking, interviews and questionnaires.
Local furniture industry actors who were asked to document their personal
stories as part of the project were given guidance in writing. After their stories
had been published, many of the writers expressed their appreciation for the
project and for being given the skills to share their personal narratives on
Jepara’s furniture industry.
Te project also supported the Jepara Government Planning Agency
in strategic planning for the furniture industry and provided it with an
introduction to health and safety at work.
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79
Community impacts from the project emerged in terms of economic, social
and environmental changes. Some readers of the furniture photo book later
contacted furniture buyers. Local students whose involvement in project
surveys raised their awareness of furniture makers’ living conditions were
inspired to organise a flm festival with the aim of supporting Jepara’s
furniture industry and carving culture. APKJ also established internships for
local college students interested in issues afecting the furniture industry.
CIFOR’s short flm entitled ‘Survival of Javanese furniture’ increased
public awareness of the struggles of small-scale furniture manufacturers and
improved understanding of the diferences between cheap mass-produced
furniture and more expensive high-quality furniture. Furthermore, the
flm increased stakeholder understanding of various issues afecting the
furniture business.
Te Jepara Furniture Tourism Map also enhanced the district’s commercial
advantages by improving access between producers and consumers in both
domestic and international markets.
On a more long-term scale, if the furniture industry is more sustainably
managed, demand for wood resources may increase even further, possibly
encouraging people to grow trees and improve environmental conditions.
6.6. Hopes and dreams
Te furniture industry is highly dynamic, largely because of its sensitivity to
copyright infringements, new entrants, substitute products and consumer
preferences. Industry players must react to global business competition
not only by being aware of the industry’s structure, but also by analysing
their own resources and combining strategies for premium competence
and competitiveness. Tis section describes the ideal state for the furniture
industry in 2023, looking at timber supplies, access to capital, marketing,
human resources, infrastructure and institutional governance.
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6.7. Timber supply
Te Jepara furniture industry embodies distinctive cultural values in the form
of solid wood carving. Several copyrighted carving designs have strengthened
Jepara’s identity in the international furniture market. Tus, without
neglecting current furniture trends, which favour minimalist designs, ideally,
in 2023, distinctive carving designs will continue to be developed.
With a target of 7% annual growth, the Jepara furniture industry is estimated
to generate more than USD 250 million by 2023. Tis will be accompanied
by an increase in demand for raw materials, in terms of both quality
and quantity.
Timber quality must be prioritised, because Jepara’s high-quality carving
designs require the use of mature teak wood. Perum Perhutani is expected
to continue to supply the high-quality timber needed. Modern minimalist
furniture designs that do not require high-quality teak wood could use
alternative wood species or medium-quality teak wood.
Although Jepara’s community forests can meet only 5% of the industry’s
timber demand at the moment, they should be producing larger quantities by
2023. Terefore, if community forests in Jepara receive the support they need
to cultivate teak and alternative wood species, timber scarcity will hopefully
be less of a problem in 10 years. By integrating government programmes at
local and national levels, timber farming could become a lucrative economic
activity that contributes to improved livelihoods for community farmers.
Ease of access in obtaining raw materials also will hopefully be greater by
2023. Tis change encompasses simpler administrative processes for timber
purchasing, improved accessibility of timber grown by community farmers
outside Jepara, and the establishment of a timber terminal for Jepara’s
furniture industry. With strong commitment from stakeholders, the timber
terminal will be able to operate over the long term, and thus provide various
types of timber at afordable prices while benefting community farmers. In
addition, by 2023, timber producers associations in Jepara will ideally have
built strong networks with timber producers from outside the Jepara region.
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81
Given the importance of consumer trust for the industry, industry players
must support the Timber Legality Assurance System (SVLK), which the
national government is developing to respond to international requirements.
Group certifcation schemes, collaborations between small-scale and large-
scale enterprises, and the establishment of cooperatives are other options for
helping industry players obtain certifcation. Te Indonesian government
is planning for the SVLK to be accepted by the international market so
that it replaces existing certifcation schemes. A target is to have 10% of
those in Indonesia’s furniture industry using raw materials certifed under
the SVLK by 2023. Te SVLK uses a ‘one step only’ model, certifying the
main management unit but not conducting chain-of-custody certifcation.
Terefore, it would be highly desirable to ensure a solid supply of certifed
timber by 2023. Encouraging collaboration between certifed timber
suppliers and those in the furniture industry would be a useful strategy for
ensuring the production of certifed furniture.
Using design as a means of strengthening the industry is a major challenge
given the complex dynamics of furniture trends. Collaboration between
furniture enterprises and designers from design schools in Jepara will ideally
help meet this challenge. Designs could also respond to international
consumer trends by integrating diferent materials into the furniture. Te use
of technology to improve productivity and timber efciency will hopefully be
integrated into furniture operations in Jepara by 2023.
Ideally, the government would support these goals by regularly providing
accurate data on current and projected developments in the furniture
industry, to make it easier to predict dynamics in timber demand and supply.
6.8. Access to capital
Giving small-scale furniture enterprises greater access to capital by 2023 is a
central target. Local government and related associations have a major role
in securing such access. It is projected that in the next 10 years, demand
for capital to fund furniture manufacturing operations will reach IDR 500
million a year, and funding will be accessible through banks, money lenders,
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friends and cooperatives. Ideally, various capital funding schemes will have
been established by 2023, including soft loans, corporate social responsibility
grants and cooperatives. To date, small-scale furniture enterprises have
had government-supported schemes such as Kredit Usaha Rakyat (KUR),
Program Nasional Pemberdayaan Masyarakat (PNPM) and Koperasi Serba
Usaha (KSU).
Achieving this will require frm commitment from the local government,
which will need to be closely monitored. Terefore, future policies will rely
on active inputs from furniture enterprises and from the central government.
Further capital could be generated from sectors outside the furniture
industry, such as tourism. Te development in 2011 of the Jepara Furniture
Shopping and Tourism Map should support this aim.
6.9. Marketing
Given Indonesia’s size (the national population exceeds 260 million), the
market for Jepara’s furniture will hopefully be well developed by 2023.
Ideally, an institution that can maintain data on domestic transactions
will have been established, making it easier for all to understand the
dynamics of the industry. Te same institution could also generate data on
international market dynamics, including consumer trends, making those
data accessible for all industry players, so that they can respond appropriately
to consumer trends.
Te local government will also, hopefully, be carefully supervising furniture
export transactions by 2023, in order to ensure consistent product quality, to
build market trust and to protect furniture makers. Te full operation of the
SVLK will ideally have contributed to design enhancement, quality control,
consumer service improvements, stronger negotiation skills and greater
competitiveness in the international market.
Furniture from Jepara needs to be promoted through active participation in
national and international trade exhibitions. Internet marketing portals that
are designed to meet consumer demands will hopefully have been built by
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83
2023. Strategies such as this will not only extend business networks among
furniture producers and consumers but may also shorten the distribution
channel and reduce costs. If these goals are achieved, the industry’s target of
7% annual growth by 2023 would be more feasible.
6.10. Human resources
A comprehensive inventory of existing human resources will ideally be
available by 2023. Te use of professional certifcation schemes will guarantee
staf competence, especially artisans and carvers, which in the long run may
improve furniture quality.
To boost staf competence, stakeholders will hopefully provide training
on business management, production techniques (timber preservation and
Diferent actors along the furniture value chain are approached ad encouraged to share their
personal stories and involvement within the industry. Home interviews and writing workshops are
conducted to improve their capacity in writing these stories.
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drying), marketing, information technology, fnance, entrepreneurship,
design, fnishing technology, communication, administration, taxation and
administrative processes for exports and imports. Ideally, for efciency,
a body will have been created to centralise the training programmes and
support the use of professional certifcation schemes.
6.11. Infrastructure
Hopefully, by 2023, major improvements will have been made to
infrastructure, including public roads, timber terminals, warehouses, energy
sources, international trade exhibition facilities, information centres, hotels,
tourist apartments and restaurants, industrial centres, industrial tourism
villages and a furniture industry museum. Plans to develop Jepara’s main
transport facilities, including an export-oriented airport and seaport, should
continue in the near future.
Te establishment of a timber terminal or auction centre is also high on the
agenda as a means of ensuring that furniture makers can obtain competitively
priced raw materials. Te existence of such terminals may also reduce the
unnecessary role of brokers and middlemen.
6.12. Institutional governance
By 2023, synergised collaborations among institutional groups within and
outside Jepara ideally will have been forged. Related research and educational
institutions include SMKs, CIFOR, FORDA, BPPT, Dewan Riset Daerah
(DRD), STDNU, STIENU and APEPSI. Professional associations also
play a crucial role in improving the Jepara furniture industry. Tese include
ASMINDO, APKJ, HPKJ, IWAPI, ASEPHI, HIMPI, HIPMI, KADIN,
DEKRANASDA, APINDO, ORGANDA, HIPPI and PHRI.
Central and local government will need to be actively involved in managing
the performance of the industry. Governments could help resolve conficts
between stakeholders through policies that support the industry and
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85
encourage the close involvement of related institutions. Both levels of
government should be responsible for policy implementation and evaluation,
to ensure policies contribute to a fruitful business climate.
Another hope is that, by 2023, Jepara will have achieved long-term market
competitiveness, to be made possible through the identifcation of relevant
resources, selection of resources needed to meet future market demand,
measurement of intangible resources (particularly knowledge), introduction
of programmes that enhance emerging competence and capabilities, rapid
response to external challenges, and constant development, extension,
protection, conservation and renewal of resources.
If these actions are taken, it is hoped that by 2023 the Jepara furniture
industry will have achieved higher economic growth, with better employment
opportunities and a better-designed eco-centric development scheme.
6.13. How to get there
To realise the vision and mission for Jepara’s furniture industry, several plans
have been developed to deal with raw material supplies, access to capital,
human resources, institutional governance, and physical and non-physical
infrastructure.
Indonesia’s national economy is growing at a rate of 7% per annum, and
Jepara is growing at 5%. Te furniture industry is growing nationally at a
rate of 8–10% per annum.
Jepara has set a target growth rate of 7% per annum for the furniture
industry. In reality, however, the current growth rate is 1.39% per
annum. Achieving the targeted goal will require efective support of
furniture manufacturing and product sales. In sustaining the industry’s
competitiveness and uniqueness, the Jepara district government must
prioritise the development of its furniture industry above other wood-
based industries.
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6.14. Action plan
6.14.1. Timber supply
Timber in demand by the Jepara furniture industry falls into three groups:
mahogany, teak and mixed wood. It is expected that Perhutani will be
unable to meet growing demand in the future. Initiatives such as support
for community forests, silvicultural training by Perhutani and the Ministry
of Forestry, and wood marketing are needed to deal with the shortage.
Reforestation and plantation of green belts are also needed to ensure an
ongoing supply of raw materials. Central and local governments must also
support eforts to obtain chain-of-custody certifcation for community forest
timber. Te following actions are recommended to ensure that furniture
makers in Jepara continue to have an adequate supply of raw materials.
Cultivation of fast-growing timber species
Fast-growing timber species have the physical, mechanical and chemical
characteristics ideal for use in furniture making. Several fast-growing timber
species have been developed under various commercial products and plans.
One timber species promoted by the government is Jati Unggul Nusantara
(JUN), which is planned for cultivation outside forest reserves or private
forests. As a premium species, JUN requires intensive management and
supervision from Perhutani and the Ministry of Forestry throughout each of
its growth stages. Te government should provide land in community areas
and use cultivation techniques to facilitate better access to premium seedlings
at an afordable price.
JUN can be felled at the age of 10 years. Although its physical, chemical and
mechanical characteristics are similar to those of conventional teak species,
it is categorised as a second-class type of timber that is vulnerable to termite
attacks when it is young. Te older the timber, the more likely it will survive
termite attacks and other pests and diseases.
If 250 ha of land or 100 000 seedlings are planted each year, approximately
30 000 m
3
of timber will be available by 2026, or even up to 120 000 m
3
by 2030. Tis projection is based on an area less than that of conventional
plantations in community forests in 2007, which covered 715 ha of
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87
land. If 715 ha of JUN species were planted each year, approximately
85 000– 429 000 m
3
of timber would be available by 2030.
Implementation of the SVLK (Timber Legality Assurance System)
To guarantee that timber is sourced from verifed management units, the
national government introduced the SVLK under Ministry of Forestry
Decree No. P38/Menhut-II/2009. Te aims of the scheme are to control
timber management and increase timber prices.
In its National Forestry Plan 2012–2030, the Ministry of Forestry set a
target of nationwide timber certifcation and verifcation. Additional targets
include obtaining SVLK certifcation for at least 50% of forestry units
between 2010 and 2014. If all furniture enterprises, from timber suppliers to
furniture manufacturers, obtain SVLK certifcation, sale prices may improve.
All furniture enterprises should therefore be fully certifed as a step towards
achieving the target growth rate.
Existing studies indicate that Jepara’s furniture export growth will reach
only 1.39% by 2020, far below the national growth rate of 8–10%. Setting
a target of full certifcation for at least 5–10% of furniture enterprises should
enable export prices for furniture to rise.
Diversifcation of products and raw materials
Diversifcation of products and the raw materials used is an important factor
in eforts to boost production. Furniture manufacturers are challenged to
continuously innovate and create new furniture products. Another reason to
use a variety of raw materials,whether timber or synthetic substances, is to
be sure that there is a sufcient and afordable supply of materials for small-
scale manufacturers.
Stakeholder engagement in the supply of raw materials
Ensuring a supply of raw materials requires stakeholders to work together
extensively. One option is to build agreements with timber-producing
regions. Logs from timber-producing regions can be processed exclusively
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into furniture in Jepara, further boosting the industry’s performance in the
domestic market.
Availability of data on the timber supply–demand gap
Tere is known to be a huge gap between the demand for timber and the
available supply. However, quantitative data are difcult to obtain because
of issues such as inaccuracies in data on the timber supply and demand
and diferences in the types and sizes of timber. To make such data readily
available, timber management and timber distribution systems must be well
planned and implemented, closely controlled and regularly evaluated.
To obtain accurate data on raw material consumption, existing data on
timber entering Jepara district can be utilised. Documents on Transportation
of Timber and Logs (Surat Angkutan Kayu Olahan atau Kayu Bulat) need to
refect existing conditions to ensure the availability of accurate data on the
types and volume of timber needed for the entire Jepara furniture industry.
Using other wood species as raw materials
Diferent timber species have diferent physical, chemical and mechanical
characteristics, and these are factors when categorising timber according to its
type and use. Certain timber species are used only for woodwork, frewood
or construction, for example. However, timber scarcity may force people to
ignore the traditional uses of certain wood species, because the higher price of
good-quality timber increases production costs, whereas use of other types of
wood for making furniture, such as merbau from Papua, mango and jackfruit
may reduce the supply–demand gap.
Collaboration with tree farmers in cultivating species to supply timber
Tree farmers in community forests should be encouraged to engage in
plantation and intensive cultivation in order to supply timber, which will be
allocated to Jepara furniture manufacturers. Farmers will be given incentives
to manage sustainable timber plantations and training in silvicultural
practices to ensure timber quality.
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89
Industry players must lobby the government to ensure they receive the
necessary policy support at the macro and micro levels. Subsidies for
machinery and equipment, technical training and other supporting functions
are needed to ensure continuous innovation and quality management
throughout the industry.
Efcient management of industrial waste
Technological solutions can be used to minimise the amount of industrial
waste generated during furniture production. As only a small proportion of
the industry use their industrial waste, all those in the industry need to be
instructed in optimum use of raw materials.
Collaboration with tree farmers from outside Jepara
Out of the total supply of raw materials, 11.47% is sourced from regions
outside Java, 31.20% is supplied by Perhutani and 55.00% comes from
community forests across Java (Hadiyati 2011). Timber from within Jepara
district accounts for only 0.46% of the total demand, because the district
ofers little good-quality timber (Hadiyati 2011). Excluding timber sourced
from Perhutani, this means that two thirds of the timber supply comes
from outside Jepara. Given this heavy dependence on outside regions,
it is important to build relationships with tree farmers in Maluku and
Southeast Sulawesi.
Establishment of timber terminals
For better monitoring of timber transactions, a designated meeting place
for timber buyers and sellers is needed. Te formation of a timber terminal
may lead to better timber management and encourage more transparency in
timber pricing.
6.14.2. Access to capital
Te following recommendations aim to ensure that capital is readily available
to those in the Jepara furniture industry in 10 years.
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Provide accessible capital for small- and medium-scale furniture
manufacturers
With increasing prices of raw materials and other items required for
manufacturing furniture, production costs will continue to soar, placing
pressure on small- and medium-scale furniture manufacturers. Giving
these SMEs support in accessing capital should be a priority in the near
future.
Provide accessible soft loans
Capital is required not only for furniture manufacturing, but also for
storage, timber collection and marketing. State fnancial institutions or
the private sector should extend more soft loans to meet the industry’s
need for capital.
Provide grants to small- and medium-scale furniture manufacturers
Grants in the form of production tools and accessories, marketing
assistance and access to free raw materials are useful for reducing the need
for capital among manufacturers and artisans.
Develop regulations that support the availability of capital
Te national target growth rate for industry of 8–10% in the next
10 years, as outlined in the National Furniture Roadmap, requires
giving SMEs full support in terms of access to capital and marketing.
Government intervention at local and national levels is needed to ensure
that capital is widely available.
Encourage companies from outside the furniture industry to ofer
support through corporate social responsibility programmes
Engagement with corporate social responsibility programmes from state-
owned enterprises and the private sector (national and international) that
are not directly related to the furniture industry could provide a solution
to the industry’s problems regarding the supply of timber and tools,
development of technology, access to capital and product marketing.
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91
Ofer credit schemes for small- and medium-scale furniture manufacturers
Kredit Usaha Rakyat (KUR) was launched in 2007 as a credit scheme
targeting SMEs and cooperatives, ofering capital and fnancial investments
underwritten by the government.
Te aims of the state programme are to (1) fast-forward the development
of the real sector and empower SMEs, (2) improve SMEs’ access to capital
and (3) alleviate poverty and enhance employment opportunities. Te
government guarantees up to 70% of KUR’s fnancial risks, with the other
30% guaranteed by six fnancial institutions, namely Mandiri, BRI, BNI,
Bukopin, BTN and BSM.
SMEs and cooperatives can access KUR under the following terms and
conditions: (1) loans of up to IDR 5 million are charged an annual interest
rate of 24% and (2) loans of IDR 5 million–500 million are charged an
annual interest rate of 16%.
Additional programmes are required to complement KUR, such as: (1) the
establishment of cooperatives to enable capital loans and savings among
members; (2) better access to government programmes such as Lembaga
Penyaluran Dana Bergulir (LPDB) and Program Kementrian Bina
Lingkungan (PKBL) and (3) collaboration with fnancial institutions in
supervision of fnancial management.
Provide direct assistance through the local government
Te local government should allocate funds from the state budget for
assisting SMEs with cash funding, facilities, production-related infrastructure
and marketing.
6.14.3. Marketing
Create a Jepara furniture brand
To build market competitiveness, initiatives for branding the industry are
required. Branding can be achieved through careful development of the
Jepara Furniture Carving geographical indicators. Te geographical indicator
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will function as a common copyright protector for furniture workshops in
Jepara and may boost competitiveness if product quality is maintained.
Increase the number of export destinations
Te Jepara furniture industry exported products to 102 destinations in 2009,
a great increase compared with fve years earlier. An even greater increase in
the number export destinations should be encouraged over the next 10 years.
Diversify market and furniture products
A small proportion of Jepara furniture manufacturers sell their products
exclusively to certain markets and buyers. To strengthen their bargaining
position and boost their prices, these businesses need to expand their
market. To do this, they need useful information on market conditions and
alternative sales avenues.
Establish a body dedicated to monitoring domestic sales
Documentation of domestic sales of furniture is inadequate and
unsystematic. A government body or independent institution needs to
be tasked with monitoring, documenting and reporting domestic sales of
furniture, particularly for premium products. Te information on patterns in
these transactions will be of use in predicting market trends and developing
product designs for the domestic market.
Use information technology and trade shows for local and international
marketing
It is essential for businesses to efectively use information technology to
extend their reach to the global market, monitor trends and create product
designs. A comprehensive database on export destinations, importers and
product specifcations is also required. Information on local and international
sales, buyers and sellers should be made available online. Tese steps are very
important for comparing export and import values for other countries and
for boosting competitiveness.
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6.14.4. Human resources
Te Jepara furniture industry can be most efectively developed through its
human resources. A comprehensive map of those employed in the industry
is needed. Workers should receive training to ensure they are qualifed and
certifed, and the use of technology should be encouraged among furniture
producers. Technological difusions may form geographical distributions
of specifc furniture products, in accordance with existing potential
human resources.
Well-planned, regular training is need to develop staf capacity. Training
should cover the following topics:
1. Management: Training is needed to improve the managerial skills of
SMEs without ignoring existing local knowledge. Training should cover
appropriate and cost-efective business planning, capital funding, human
resource management, supervision and evaluation of production, and
product marketing.
2. Production (wood conservation and drying): High-quality furniture
begins with efective treatment of raw materials; SMEs should therefore
receive training in wood conservation and kiln drying.
3. Marketing: As marketing, promotion and packaging are key
determinants of the success of product sales, training in marketing is
important for ensuring the sustainability of Jepara’s furniture industry.
4. Information technology: SMEs should be trained in the use of
information technology, which can be used to improve product
development, production processes and marketing.
5. Finance: Financial management throughout all stages of production and
marketing is important for maintaining a healthy business cash fow.
6. Entrepreneurship: SMEs should receive training in innovations,
promotions, business development and access to capital so they are
better equipped to deal in the global furniture market.
7. Design and fnishing: Furniture produced in Jepara is usually sent
to other regions for further development and fnishing. If they are
trained in furniture design and technical fnishing processes, furniture
workshops will be able to add value by developing ready-to-use products
and directly access end consumers.
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8. Communication: Training in communications may lead to improved
social relations between furniture manufacturers, tree farmers
and consumers.
9. Documentation and administration: If SMEs can properly document
their product designs, market distribution channels and raw material
needs, their businesses will be better equipped to survive.
10. Taxation: SMEs should receive training to ensure they understand their
tax obligations and can calculate and include taxes as part of their total
production costs.
11. Production: Training is needed to enhance SMEs’ use of production
technology so that their products satisfy market requirements.
12. Occupational health and safety: OHS training is important to ensure
productivity. Government regulation is also needed.
13. Administration on exports and imports: Training on administrative
aspects of timber supply and fnished products will help SMEs
understand the formal process of exporting and importing.
6.14.5. Infrastructure
Appropriate public infrastructure is very important for supporting furniture
manufacturing and product marketing. Particular attention is needed in the
following areas:
1. Roads: Public roads connect timber suppliers with furniture
manufacturers, and manufacturers with markets and consumers. High
road connectivity ensures the ease of doing business.
2. Inter-island seaports: An inter-island seaport needs to be developed in
Jepara to improve product shipping.
3. Energy security: Furniture production requires a lot of energy,
including electricity and fuel, making energy security important for the
sustainability of the furniture industry. Terefore, the Jepara district
government should work closely with the Tanjung Jati Natural Gas
Power Station to ensure a sustainable supply of energy.
4. International trade show facilities: To facilitate widespread marketing, an
international-standard trade show facility should be constructed within
the Jepara region.
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5. Information centre: A specially designed information centre that
provides information on diferent types and designs of furniture needs
to be established to assist consumers in choosing furniture and provide
manufacturers with better information on consumer trends.
6. Hotels and tourism infrastructure: Accommodation for consumers
visiting from outside the Jepara region is necessary. Te development of
such infrastructure may also help boost tourism to Jepara more generally.
Tourism services and hotels must display a distinctive Jepara character.
7. Industrial centres: Industrial centres, that is, clusters of certain types of
product manufacturers, will both enable consumers to fnd products and
assist manufacturers in better positioning themselves in the market.
8. Industrial tourism villages: To motivate consumers, industrial tourism
villages should be developed with exhibitions on the diferent types of
products and how they are made.
9. Furniture museum: A dedicated museum that holds exhibitions on
various aspects of the furniture industry will stimulate consumers to seek
further information and possibly order furniture.
6.15. Institutional strengthening
Strengthening ties among institutions related to the furniture industry may
result in improved outcomes in Jepara. Te following institutions play an
important role in future developments of the industry:
1. Education and research institutions: SMK, CIFOR, FORDA
Education and research institutions play an important role in developing
innovative product designs, identifying opportunities and fnding
solutions to industry-related problems, as well as providing policy
recommendations.
2. Professional associations and NGOs: ASMINDO, APKJ, HPKJ, IWAPI,
ASEPHI, HIMPI, HIPMI, KADIN, DPKJ, DEKRANASDA, APINDO,
ORGANDA, PHRI, HIPPI, LAKPESDAM NU, FEDEP, FLP, FRK-IFJ
Inter-institutional collaboration needs to be fostered to ensure continuity
of industrial production in terms of marketing, production and
timber supplies.
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3. Education and technological development institutions: BPPT, DRD,
STTDNU, STIENU, SMKN 2 and ABPEPSI
Cutting-edge technology and industrial innovations will always be
available if education and technological development institutions
continue to update their research and communicate their fndings to
those in the industry.
4. Government institutions: Ministry of Industry, Ministry of Trade,
Ministry of Forestry, Bappeda, BKPMD, Local Economic Bureau, SMEs
and tourism industry, DPRD and DEKOPIN
Intensive collaboration between local and central government bodies and
fnancial institutions are expected to encourage industrial growth at the local
and global scales.
Regulations and policies designed to support Jepara’s furniture production
and exports must help SMEs gain better access to raw materials, tools and
technologies, as well as improve their technical and managerial skills. In
addition, market information, marketing opportunities and access to capital
must be readily available to ensure sustainability of the industry.
6.16. The role of stakeholders in implementing the action
plan
Without strong commitment from all stakeholders in the industry, achieving
the ideal conditions for 2023 may not be feasible. Te main roles of
institutions in Jepara in carrying out the Roadmap are set out in Table 3.
As the table shows, securing timber supplies requires available land,
scheduled plantings and cultivation, as well as good forest management.
Meeting timber demand involves not only sourcing the timber, but also
collaborating with local institutions and other timber-producing regions.
Timber certifcation schemes must be encouraged as a step towards fetching
higher prices for furniture. Te Ministry of Forestry and Perhutani also
need to collaborate in implementing the SVLK, with full support from
government policies. Both institutions are also responsible for technical
Melati, Herry Purnomo and Bayuni Shantiko
97
Table 3. The role of stakeholders in implementing the Jepara Roadmap
2013–2023
Rawmaterials
Action plan
Access to
capital
Marketing
Human
resources
Infrastructure
Institutional
strengthening
I
N
S
T
I
T
U
T
I
O
N
S
DISHUT BUN V
DPRD V
DISKOP. UKMPP V V V
Bappeda V
DISPERINDAG V V V
Perhutani V
FRK V
JFDC V
APKJ V
HPKJ V
ASMINDO V
STIENU V
STTDNU V
SMKN 2 V
Financial
institutions/banks
V
DISOSNAKERTRANS V
GAPOKTAN V
DISHUBKOMINFO V V
PU-ESDM V
DINAS CIPTA KARYA
and TATA RUANG
V
DISPARBUD V
DISDIKPORA
SETDA
98
Making research work for small-scale furniture makers
supervision of planting, tree maintenance, cultivation and capacity building
of tree farmers. Ways to encourage the diversifcation of raw materials
through the use of alternative timber species and the minimisation of
industrial waste also need to be considered.
Financial institutions should also become involved in facilitating soft loans,
grants and credit schemes in order to strengthen furniture producers’ and tree
farmers’ access to capital. Te Ministry for Small and Medium Enterprises is
expected to supervise this.
Together with the Ministry of Industry, Ministry of Trade, APKJ and
ASMINDO, the Ministry for Small and Medium Enterprises will be
responsible for supporting marketing by providing market information,
managing furniture clusters and providing insights into consumer trends,
with the aim of better guiding SMEs in developing production plans. Market
diversifcation, monitoring of domestic transactions and use of information
technologies are also steps that will help SMEs cope with market conditions.
Training programmes for up-skilling workers are the responsibility of
educational institutions such as STIENU, STDNU and JFDC. Bappeda
too plays an important role as the main planning authority for future
infrastructure developments in Jepara.
All of the suggested plans can be implemented if the institutional setting
is appropriate. Although all stakeholders are responsible for institutional
governance, the DPRD is expected to facilitate relations between institutions
to ensure that the entire action plan is implemented appropriately. Finally,
local regulations and policies should fully support the action plan by clearly
defning responsibilities.
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Appendix:
Jepara tourist map
and shopping guide
The Jepara Furniture Value Chain Project is funded by the
Australian Centre for International Agricultural Research
(ACIAR) and implemented by the Center for International
Forestry Research (CIFOR) in collaboration with the Forum
Rembuk Kluster (FRK), the Government of Jepara District,
Forestry Research and Development Agency (Balitbanghut),
The Ministry of Forestry and the Faculty of Forestry, Bogor
Agricultural University (IPB).
www.cifor.org/furniture
Data sources
• CIFOR 2010 Jepara road network map at a scale of 1:50 000
and a census report of small-scale furniture producers
• BAPPEDA 2008 Thematic map of the district of Jepara, used
for administrative boundary data and road network
• BAKOSURTANAL Digital topographic base map of Indonesia
(RBI) with the basic scale of 1:50 000, sheet numbers 1409-
313, -314, -331, -332 and -334, used for the road network
and settlement data
• Tourism and Culture Unit, District of Jepara. Map of Jepara’s
tourism interest points.
The boundaries shown on this map are not an
ofcial reference.
Photographs by Taufq Istiqlal, Murdani Usman and Diana Vela
Betawi chair
Marlboro chair
Fish chair
www.javamebel.com is a marketplace connecting buyers
and sellers, using the Internet to increase outreach at low
cost. This joint marketing portal has been developed to help
small and medium enterprises in Jepara thrive. Members
of the Jepara Small Craft Association (APKJ) market their
products through the site, directly connecting with
potential buyers.
javamebel.com
Lounger
Atie Puntodewo, Melati, Ramadhani Achdiawan,
Rika Harini Irawati and Herry Purnomo
Dressing table
Crab chair
Mirror frame
Jepara Furniture
Tourist map and shopping guide
The carving city of Jepara
The region of Jepara has been renowned since the reign of Queen
Kalinyamat (1549–1579). At that time, Jepara was the main commercial
port on the island of Java and a naval base. Queen Kalinyamat was
instrumental in the development of a sculpture tradition, which is
still an economic mainstay of Jepara. Jepara-style carving has unique
characteristics because it marries features of the carving styles of the
Majapahit Kingdom with a contemporary style of Chinese origin.
Queen Kalinyamat made Jepara into both a prosperous and a powerful,
famous region. To commemorate her reign, the anniversary of Jepara
is celebrated on the day she was crowned as ruler of Jepara, the 12th
day of Rabiul Awal 956H or 10 April 1549. Her coronation was marked
with the four-word slogan, ‘Trus karya tataning bumi,’ which can be
interpreted as ‘Keep working hard to build the region.’
Reviving the Jepara furniture
industry
Although Jepara is located outside the main economic and tourism
corridor of Java, it has its own special advantage, which makes it a
unique and valuable destination for tourists and other guests. For a long
time, Jepara has been recognised for its master carvers and carpenters,
and this Central Javanese city has come to be known as ‘The Carving
City of Jepara’.
Unfortunately the Jepara furniture industry has been in decline since the
2000s; similar industries have developed in other places and teak wood
sources are depleted. The local government has therefore decided to try
to revive the glory of the furniture industry and of Jepara carving.
Although the Jepara furniture industry has been known for hundreds
of years, tourists or buyers who come to Jepara have trouble fnding
furniture of the type and quality they desire. This is because there is no
reliable guide for fnding the many furniture workshops and stores.
This map benefts tourists, buyers and furniture artisans alike. Tourists
can easily fnd the type of product they are looking for, with the price
and quality of their choice. Carpenters and carvers scattered across
Jepara have the opportunity to interact directly with buyers.
Apart from the wood furniture industry, Jepara has various other
manufacturing industries that support the local economy, some of
which have been included in this guide.
This is the gateway to the
district of Jepara, either
from Demak or Kudus.
The industry in this region
is dominated by ofcial
industrial centres set up by
the local government.
Mayong
Mayong is the centre for
clay roof tiles. The sales
area is located on the right
of the main road from
Jepara to Kudus .
Products ofered here
include roof tiles such as
Mantili, Supersoka,
plastered roof ridges and
shingle. Through
marketing, products have
reached many areas in
Indonesia and Malaysia.
Gemiring Lor
These shops, on the
eastern edge of the map,
are close to the Kudus
District . Products
ofered here include
gebyog, carved wooden
walls and doors, and jamb
carvings for traditional
Javanese wooden houses.
Kriyan
This area is specifed by the
local government as a
centre for white steel
(monel) manufacture.
Usually sold as jewellry or
How to use this map
For the sake of efciency, woodworkers who make
similar products usually cluster in one location.
This practice has made it easy to identify groups by
the products they sell. The clusters described here
include both ofcial industrial centres set up by
the government and informal groups of producers.
The clusters are named according to the main
product they ofer. For ease of use, several clusters
are grouped by location and shown on detailed
maps. The main map covers the entire region. On
this map, each cluster boundary is depicted with
a diferent colour. For orientation purposes the
map is set in a three by three kilometres grid with
the rows labelled A, B, C, etc and the columns 1,
2, 3, etc starting from the bottom left corner. The
detailed maps are not all drawn to the same scale,
but each is equipped with the corresponding
labels and grid.
Krasak–Gemiring area
home decorations, Indonesians who have
made the hajj wear white steel bracelets
produced in this area as a status symbol .
Telukwetan
The village of Telukwetan is the centre of the
rattan industry, where you can buy many
types of furniture made from rattan or a
combination of rattan and wood .
Nearby, in the village of Pelemkerep, Mayong
District, on the right of Mayong District ofce,
is the monument that marks the birthplace
of R. A. Kartini, the Indonesian women’s
emancipation heroine (B6).
Several groups of artisans work in this region.
Mulyoharjo
From the Ratu Shima main road heading towards
Mulyoharjo, turn left on Belakang Gunung Street
. This area has been set up as a centre of wood
sculpture by the district government. The statues
are made from various types of wood including
rain tree wood, cofee wood, teak root, wood
waste and fossilized or recycled wood.
Bandengan
Bandengan is north of Mulyoharjo. Go north on
the Ratu Shima main road and turn left at the sign
for Bandengan . The unique products ofered
here include furniture shaped like boats, as well as
chairs and bookcases. These export quality
products, made from old teak salvaged from
boats, are produced for the European and North
African markets.
Kedungcino
The northernmost furniture shops in this area are
at Kedungcino. From the Ratu Shima main road
turn left on the Wonorojo–Bandengan road that
goes to Kedungcino . The speciality in this
location is garden furniture including the grape
chair, a chair carved with a grape ornament on the
back of the seat, and the betawi chair, of Batavian
traditional design. Made from local teak, the
products are targeted at the domestic market and
sold in an unfnished state.
Kedungcino–Mulyoharjo area
This area includes the districts of
Mlonggo, Bangsri and Pakisaji.
Several furniture production
centres are located here.
Karanggondang
From the main road that
connects Jepara to Pati, turn left
at Mlonggo. Follow the road
towards Karanggondang .
Products sold here include
folding chairs and lounge chairs.
Sekuro
The main product produced
here is the extendable table ,
which is made from local teak
and targeted at the
domestic market.
Slagi
Slagi, located south of Sekuro, is
the centre for the slatted,
outdoor Marlboro bench, a
chair with a high backrest,
horizontal stripes and a curved
armrest on each side .
Products are made for export to
the United States, Germany,
Brunei Darussalam and Africa.
Bondo–Sekuro area
This area covers the subdistricts of Tahunan
and Batealit. Several groups of carpenters
and carvers work here.
Ngabul
Ngabul is well known for antique, wooden
furniture with ancient designs and carving,
and products made from older, recycled
wood . Both indoor and outdoor
Ngabul–Mindahan area
products are produced to meet export
standards. Products are targeted at the
domestic market, as well as for export to
destinations such as Malaysia, France and
Australia.
Ngasem
Daybeds and baby cots can be found in
the Ngasem area . Other products
include sofas, dressers, kitchen sets, gebyog
and gazebos.
Mindahan
To the east in Batealit, Mindahan is the
sales centre for nightstands and divans .
Made from local teak and targeted at the
domestic market, these products are on
sale as unfnished products.
Bawu
Located in the northern area of the map
, Bawu is the place to fnd wooden
easels made from teak and mahogany for
both local and export markets.
Pekalongan
Pekalongan, to the west of Bawu , is
where you can fnd coat racks made of
mahogany and intended for the domestic
market. Outside this area, products from
Pekalongan can be found in Jepara,
Yogyakarta and Surakarta (Solo).
The Bulakbaru–Dongos area includes the
subdistricts of Tahunan, Pecangaan and Kedung.
Troso
The district government has designated Troso as
the centre of the weaving industry, located on the
main road from Demak to Jepara. Turn left on to
the road leading to Bulakbaru . Products ofered
here include tablecloths, pillowcases, curtains,
gloves, long cloths and mats.
Dongos
Northwest of Troso is Dongos, which covers quite a
large area . Here you can fnd a special piece of
furniture known as the eagle and stair chair.
Products are made from mahogany and targeted
at both domestic and export markets.
Bugel
Bugel is located to the west of Dongos . This
area is famous for the crab chair (kursi yuyu), a chair
designed in the shape of a crab. It has four curved
legs without a backrest and its armrest has seven
stripes. The products here are made from local teak
and intended for domestic and export markets.
Menganti
Menganti is located northwest of Bugel. From the
Bulakbaru road, turn right at the Bugel–Mantingan
junction. Products include the Roman style chair
and the balero chair, a dining chair with a high
backrest and fve stripes . Besides these two
items, other products found here are the salina
chairs, which consist of four dining chairs and one
Bulakbaru–Dongos area
Kawak–Plajan area
The Kawak–Plajan area includes the subdistricts
of Pakisaji, Mlonggo and Bangsri.
Kawak
This area can be reached via the main road from
Mlonggo to Bangsri; turn right at the road that
goes to Guyangan. After about 1.5 km, turn right
again . The fagship item in this area is the
rekal, a stand for the Qur’an or any other book.
Plajan
From Kawak, go southeast to Guyangan. The
selling location is quite extensive, following the
Guyangan to Plajan road . Plajan is the place
to buy stackable ofce chairs and the peanut
bench, an outdoor chair shaped like a peanut.
round dining table, the basket chair and
various tables.
Kerso
Kerso is north of Menganti . In this area you can
fnd betawi and salina chairs, the balero chair,
various dining chairs, and the box seat, a chair with
box motifs.
Jondang
Jondang is located south of the Bulakbaru road.
From Menganti, go south, past the crossroads at
Kedung, and you will arrive at Jondang .
Specialities from this area include pot chairs, made
for fower pots, and Roman style chairs. Carved
from local teakwood, these products are
manufactured specifcally for the domestic market.
Bulakbaru
Located on the western edge of the map ,
Bulakbaru is famous for one product, the
nightstand or bedside table. Terawangan
transparent carvings are also found here, along
with sideboards and cabinets.
Mantingan–Sukosono area
The Mantingan–Sukosono area is located close to downtown
Jepara, about 3 km from the centre on the main street from Jepara
to Demak.
Tendok
Along Tendoksari Street there are many types of frames for paintings
and mirrors . The products are usually for export to the East Asian
market, especially to China and Korea. A pigura is a wooden picture
frame.
Langon
Not far from Tendok, on Sidodadi Street, there is a ketapang centre
. Tables and beds made in ketapang style have distinctive legs
that curve inwards and are usually made from teak, mahogany or
durian. These products are exported to destinations such as Korea,
Japan and France.
Still around Langon but further south at the crossroads of Sidodadi
and Sultan Hadlirin streets, you will fnd a centre for cofn
manufacture . Items are made from teak or mahogany and sold
on the domestic market.
Sukosono
From Langon, follow the road that connects Dongos to Sukodono
and you will arrive at the centre for furniture made in shapes
inspired by plants and animals . The best known products from
this area are chairs with carvings of crabs, dragons, fsh and roses.
These products are intended for sale on domestic and export
markets.
Rau
Rau, at the southwestern corner of the map, is the centre for corner
seats . Products are made from teak and mahogany and
intended for the domestic market.
Mantingan
Mantingan, in the northwest of the map, is the centre for sideboards,
bookcases and display cabinets . Products are exported,
especially to Belgium. Miniature furniture for children and dolls can
also be found here.
Sukodono
In the vicinity of Sukodono, there is a centre for salina seats ,
Tegalsambi–Sukosono area
The Tegalsambi–Sukosono area covers the subdistricts
of Sukosono, Tahunan and Jepara. There are fewer
workshops and showrooms in this area but there is
still variety.
Demaan
Demaan, in the north of the map , is well known for its corner seats.
This item is made from a combination of teak and rosewood, which
results in a gradation of two colours of wood. Products are targeted at
the domestic market.
Krapyak
Going south along Kalinyamat Road and turning right at Randusampit
Street, you arrive at the centre for chair production, in particular the
minimalist Hong Kong chair, a chair with Chinese style ornamentation
. Products are produced for the domestic market and sold as
unfnished furniture.
Tegalsambi
Further down the road going south to Mantingan Kalinyamat, turn right
towards Tegalsambi, and there are centres for dresser manufacture .
Frames for mirrors and various types of table can also be found here.
Mangunan
In this area the bale-bale, a wooden daybed, is manufactured . Other
products, which are sold on the domestic market, include cabinets and
laundry baskets.
Demangan
Demangan is the centre for sideboards, nightstands, lawn chairs and
krapyak, which are wooden blinds for indoor use . Products are
exported to destinations such as Taiwan, Singapore and Germany.
Semat
As in Demaan, furniture produced in this area combines teak and
rosewood, and includes dining chairs, guest chairs, patio chairs, display
cases, wardrobes and desks . The historical point of interest in this
area is the statue of R. A. Kartini, located at the intersection of KS Tubun,
HOS Cokroaminoto, Kartini and Pemuda streets.
This area is located near Jepara city centre, and
extends into the subdistricts of Jepara, Pakisaji,
Tahunan and Batealit.
Senenan
On the main Jepara–Pati road, slightly north of
Senenan and on the left is a centre for wooden
relief carving . Immediately east of Senenan is a
production centre for Roman and Monaco style
furniture .
Kecapi
Kecapi is the centre for carved partitions and room
dividers. The showrooms are along Citrosono Street
up to Sosrokartono crossroads on the northwest
side .
Bulungan
This is the centre for cabinet manufacture. The
showrooms extend along Sosrokartono street; turn
left to go north on the road heading to Bulungan
. You can fnd any kind of cabinetry here, from
wardrobes and bookcases to shelving units, chests
of drawers and sideboards.
Bawu
Bawu is located southeast of Kecapi, on the
Kuwasen–Kecapi area
crossroads of two streets, Kecapi–Bawu and Rukmini . This area is the
centre for the king’s chair, named as such because it replicates the kind of
chair used in palaces in England.
which have a wide variety of shapes and ornaments,
including carved roses. Salina seats are generally
produced for the domestic market.
Randusari Bendo
In the north, especially around Jayadi Rojo Street, you
will fnd a centre for sofas. The area is known as
Randusari . Bedroom sets and door frames are also
made and sold here.
You can visit some historical sites in this
neighbourhood, including the Mantingan mosque
complex. This ancient mosque was built during the
reign of the Sultanate of Demak, in the Saka year
1481 or 1559 AD, by Emperor Hadlirin, the husband
of Queen Kalinyamat and brother-in-law of Sultan
Trenggono, the last ruler of the Sultanate of Demak.
This was the second mosque built in Indonesia, and
became the centre of Islamic proselytising on the
north coast of Java. In this complex you can also fnd
the graves of Sultan Hadlirin and Waliulah Bah Abdul
Jalil, also known as Sheikh Siti Jenar.
Teak forest in Jepara
Ofoading logs
Carrying the log
Using a chainsaw to shape the wood
Assembling a chair
Sanding the furniture
FRK - IFJ
javamebel.com
The Jepara region in Central Java is one of Indonesia’s largest furniture-making centres,
providinga livelihood for thousands of small-scale furniture manufacturers and their
families. Like other stakeholders along the Indonesian furniture industry value chain,
these producers are afected and challenged by a range of dynamic changes.
To strengthen Jepara furniture makers’ potential to enter the global market, a multi-
stakeholder project, ‘Mahogany and teak furniture: action research to improve value
chain efciency and enhance livelihoods’, was conducted with the support of the
Australian Centre for International Agricultural Research (ACIAR).
This book outlines the research process and the outcomes that were achieved
throughout the fve-year project. The project laid some crucial foundations for small-scale
furniture makers to build on, including the formation of the Association of Jepara Small-
scale Furniture Producers (APKJ) and the development of a furniture industry roadmap
for 2013–2023.
cifor.org/furniture
cifor.org blog.cifor.org
Center for International Forestry Research
CIFOR advances human well-being, environmental conservation and equity by
conducting research to help shape policies and practices that afect forests in
developing countries. CIFOR is a member of the CGIAR Consortium. Our headquarters
are in Bogor, Indonesia, with ofces in Asia, Africa and South America.
This research was carried out by CIFOR as part of the CGIAR
Research Program on Forests, Trees and Agroforestry (CRP-FTA). This
collaborative program aims to enhance the management and use of
forests, agroforestry and tree genetic resources across the landscape
from forests to farms. CIFOR leads CRP-FTA in partnership with
Bioversity International, CIRAD, the International Center for Tropical
Agriculture and the World Agroforestry Centre.
doc_762764503.pdf