Newsletter No. 491
News-Analysis
January 22, 2007

 

The following newsletter has been contributed by Sandra R. Leavitt (Shingetsu Member No. 55) of Georgetown University.

JAPAN EXPLORES BUILDING BIO-ETHANOL FACTORIES IN INDONESIA

Japan’s Kanematsu Corporation is interested in developing bio-energy based on cassava in Indonesia.

Company representatives have been exploring eight areas, most on Sumatra, with Indonesia’s Industry Minister Fahmi Idris with the plan to build a bio-ethanol factory that can produce 100,000 liters per day after an initial investment of US$25 million. Kanematsu Corp. is also exploring the possibility of building a bio-diesel factory and electric generator with a base commodity of palm oil in Riau, Indonesia.

Indonesia’s Coordinating Minister for the Economy Boediono said that his country is strongly committed to the development of bio-fuel, even as fossil-fuel oil prices come down in the short term.

JAPANESE DEMAND FOR TIMBER INCREASES AS SUPPLY FROM INDONESIA AND MALAYSIA FALLS

The price of timber from Malaysia and Indonesia surged recently due to decreased supply and increasing demand. Several factors are affecting supply. First, production areas of Malaysia and Indonesia have been severely hit by thunderstorms and flooding. Last week, Malaysian officials in the southern states had to evacuate over 90,000 people from their homes, as the region experienced its heaviest rainfall in a century. States most affected include Johor, Malacca, Negri Sembilan and Pahang.

Second, Indonesia has proposed a six to twelve month moratorium on logging in areas seriously affected by flooding in December.

Third, Indonesia finally appears to be getting serious about law enforcement to prevent illegally harvested timber from reaching major ports. According to Tempo, military personnel have been seen stopping and inspecting logging trucks and seizing illegal shipments.

While supply weakens, demand has surged. First, Japanese imports have been growing since March, listing an increase of 33% September 2006 alone. Second, demand from China and India continues to grow. Third, the Persian Gulf is experiencing a construction boom that draws on timber from Malaysia and Indonesia.