Indonesia has one of the largest furniture export industries in the world. Wooden furniture dominates the furniture sector, accounting for two-thirds of the total furniture exports. The furniture industry is mainly concentrated in Java (notably Jepara, Semarang, Solo and Surabaya), where furniture accounts for about 40% of Java’s total exports.

Jepara is particularly known for its crafted wooden furniture. Small firms market their products through a network of furniture shops that sells locally. Exports are carried out through sub-contracting arrangements and small enterprises play an active role in export.

The Indonesian furniture industry relies heavily on timber as its raw material with an annual requirement of 4.5 million m3. Although Indonesia is the world’s second largest timber producer, the industry faces shortages of raw materials. The main timber species for wood carving are teak, mahogany and sonokeling (Dalbergia latifolia). Almost half of the total national rattan furniture production is based in Cirebon.

Indonesia faces several challenges in expanding its furniture exports.
* Despite its vast forest resources, illegal timber logging and trade have affected the supply of timber to the furniture sector.
* China, the world’s largest producer and exporter of furniture, is gaining market share in key export markets.
* Thirdly, increasing power and fuel costs have also raised operating costs, eroding Indonesia’s competitiveness. Indonesia has sustained its competitiveness by making progress in both quality and design enhancement.