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The development of forest-based sawmilling and ply milling industries (1980s-1990s) and pulp and paper industries (mid 1990s) plays an important role in forest resource management. Wood supply from plantation forests will have to provide an increasingly larger share of the supply in the near future, particularly of pulp logs. Technology and marketing problems are emerging in processing logs from those plantations. The development of industrial forest plantations is focused on meeting the need of pulp and paper industries’ raw material, and therefore tree species are dominated by fast growing species such as Acacia spp. and Eucalyptus spp. Government policy established more forest-based industries to promote forest based and timber processing industries in the country. Indonesia’s forest-based industry comprises a mix of non-panel forest-based industry of 81 pulp and paper mills (12 integrated pulp and paper mills; 66 paper mills; 3 pulp mills), and panel-based industry of 4,400 sawmills, 120 plywood mills, 39 block board mills, 13 chip mills, 2 Medium Density Fibre mills. The rapidly expanded Indonesian forest-based industries were not well supported by the long-term sustainable supply of raw materials. The forest-base has been supplied by an abundance of quality raw material with relatively low production costs. There were minor efforts to increase efficiency and competitiveness. There is an imbalance between log supply and demand. The technological aspects of the forest-based industry are also neglected. Observations are that most of industries were built in the 1980s and the technology is now inefficient and thus competitiveness in the global market is low. Machinery is out of date and can process higher grades and larger log sizes, but not wood wastage and smaller diameter logs. The sustainability of Indonesian pulp and non-pulp plantation forests and processing industries should be clearly planned and implemented. This paper provides a national review of Indonesian plantation forests, their processing industries’ restructuring and potential markets.

Sustainable production of wood and non-wood forest products: Proceedings of IUFRO Division 5 Research Groups 5.11 and 5.12, Rotorua, New Zealand, March 11–15, 2003.