Posted by: nsrupidara | November 10, 2008

Another quotation of our research (with Sri Sulandjari, and Henry Sandee)

From: Anne Caroline Posthuma, 2003, TAKING A SEAT IN THE GLOBAL MARKETPLACE: OPPORTUNITIES FOR “HIGH ROAD” UPGRADING IN THE INDONESIAN WOOD FURNITURE SECTOR? (Paper presented at the Conference on Clusters, Industrial Districts and Firms: the Challenge of Globalization. Conference in honour of Professor Sebastiano Brusco Modena, Italy. September 12-13, 2003)

International Labour Organization – Geneva – Switzerland posthuma@ilo.org December, 12th 2003

By the 16th century, Jepara was already a thriving commercial centre. Yet, the town slipped from its former glory into obscurity in the 17th century, after the Dutch burnt the town and moved the administrative centre to Semarang. After a long dormant period, the local industry was resuscitated in the 1970s through a revival of domestic demand and renewed appreciation for traditional-style furniture. With this growth, Jepara has re-emerged as the hub of a burgeoning industry, encompassing approx. 3,000 firms, including 100 large and medium enterprises scattered across 80 villages (Sandee, et al., n.d.: 15). Employment was estimated at 44,000 workers by the late nineties, but this total employment could easily double, if one considers those employed on a piece-work basis (Schiller and Martin-Schiller, 1997:21). Following a modest initial attempt at exporting in 1986, the value of exports had reportedly reached US$169 million in 1998 (ibid)4. The 32 furniture clusters in Central Java were responsible for 21.6% of the Province’s total exports in 2001 (down
from 27% in 2000), as compared with 13.2% for garments and 13% for textiles. At the national level, the furniture industry represents 1.87% of total manufacturing outputs and adds around 2.7% to the total value of Indonesian exports (CEMSED, 2003:3 &4).

A recent survey of the clusters in Central Java Province reveals the high density of relations between firms  within the same cluster, as well as the intense buying relations across clusters in this Province (CEMSED,  2002)7. This process has also involved more flexible production and labour practices (ibid).

A general conclusion of this analysis is that Jepara is in a process of transition, moving toward the greater participation of Indonesian businesses in both production and marketing. This is a painstaking process, involving success but also mistakes, as enterprises are engaged in a costly learning process of how to participate in the international furniture trade. In this process, some labour is shed, and increased cost competition raises negative consequences for labour standards and working conditions (Sandee, Sulandjari and Rupidara, 2002).

Finally, wood furniture is an important industry for Indonesia and a core industry in Central Java Province, accounting for substantial job creation, income generation, production and export earnings. Furniture production contributes between 1 and 1.87% to total Indonesian manufacturing outputs, and around 2.7% to the total value of Indonesian exports, which is higher that the share of most other sectors. In Central Java
Province, wood furniture is the largest contributor to provincial exports, accounting for 27.16% of total exports in 2000 and although this dropped to 21.57% in 2001, this was still the highest share of total exports (versus garments with 13.28% and textiles with 12.80%) (CEMSED, 2002, page 3-4).

CEMSED (Sulandjari, S. and N. Rupidara), “Value Chain Analysis of Furniture Clusters in Central Java”, report on a survey prepared for the ILO, Salatiga, 2002.

Sandee, H., Sulandjari, S., and Neil Rupidara, “Business networks and value chains in furniture
production : An analysis of demand-supply relationships of teak furniture from Central Java,
Indonesia”, first draft of a report to the ILO, Amsterdam, December 2002.

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