Director of the Forest and Plantation Products Industry of the Ministry of Industry, Merrijantij Punguan Pintaria and staff visited the HIMKI Lounge booth in Hall 3A. The group was received by the General Chairperson of HIMKI, Abdul Sobur and the Secretariat Team
JAKARTA: Currently the national furniture and crafts industry is expanding its 'emerging market' market apart from Europe and the United States. This is due to the decline in demand trends in these two regions due to the economic and geopolitical situation which has resulted in a correction in the value of exports. This encourages efforts to shift the market to areas that were previously not maximized. These market niches include the Middle East, India, China, Africa, Japan, ASEAN and others.
"It is predicted that the Middle East will be able to become a destination country for exporting furniture and handicraft products besides the United States and Europe. In the future, the largest market will actually be more dynamic, no longer just the United States and Europe but also Asia, including the Middle East, Africa and others. The commitment of the Prince of Saudi Arabia, Mohammed bin Salman, who wants to make the Middle East a New Europe certainly requires massive infrastructure development, including property. "Therefore, the furniture industry has a strategic role in meeting the needs to complete this development," said the General Chair of the Indonesian Furniture and Crafts Industry Association (HIMKI), Abdul Sobur, in a written statement in Jakarta, Monday (23/10).
According to him, a number of countries in the Middle East such as Qatar, Bahrain, Oman, the United Arab Emirates and regional countries are actively accelerating infrastructure development which will have an impact on the need for furniture, crafts and home decor in large quantities. This momentum will be a good market opportunity for the Indonesian furniture and crafts industry. The United Arab Emirates will even build a new city seven times the size of Dubai today, and this could be a potential new market.
Kawasan emerging market selanjutnya, ungkap Sobur, adalah India, negara dengan pertumbuhan yang sangat pesat. India akan terus tumbuh selama dekade berikutnya seiring dengan perluasan infrastruktur yang menghubungkan kota-kota besar. Kemudian ada program pemerintah yang mendorong pembangunan kawasan perumahan baru serta pertumbuhan jumlah kawasan perkantoran.
In 2022, the Indian furniture market touched U$ 23.12 billion and is expected to reach U$ 37.72 billion by the end of 2026 with a CAGR growth of 13.37% from 2020-2026. India is the fourth largest furniture consuming country and the 14th largest furniture market in the world. The other thing is that Africa has so far not been maximized and is starting to become part of market penetration.
“Other Asian regions, such as China, have the potential to be penetrated. Although we know that China is the world's leading furniture producer. However, in terms of characteristics, their products are more mass product oriented. "On the other hand, furniture and craft products, including home décor from Indonesia for export, focus more on craftsmanship or exclusive designs," said Sobur.
He added that African markets, such as Egypt, Morocco and other countries, are still potential markets to explore. Meanwhile, the ASEAN market, including the Philippines, is the next emerging market that needs to be looked at seriously. Moreover, with the existence of AFTA or the ASEAN Free Trade Agreement which supports the trade climate in the ASEAN region to become increasingly profitable, due to the reduction in tariffs on trade goods and taxes for countries in Southeast Asia.
RIGHT STEP
Emerging market is a term to describe the economic conditions of countries that are developing and starting to enter the global market as they develop.
It was Antoine W. Van Agtmael from the International Finance Corporation World Bank who introduced this term for the first time. Emerging markets are usually termed Emerging Market Economy (EME), which are developing countries where capita income is low but moving towards the middle class. The number of countries that fall into this category reaches 80% of the total countries in the world.
It was explained that the strategy to target emerging markets was the right strategy, in order to overcome market decline due to the uncertainty of previous traditional markets, namely Europe and the United States. "The market conditions in these two regions are currently being corrected quite significantly," said Sobur.
Targeting these new markets is also very important considering the impact of the Covid 19 pandemic and Russia's invasion of Ukraine which has caused almost all industrial sectors to experience weakening growth. Global growth is expected to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and by 2.7 percent in 2023.
Global inflation is expected to increase from 4.7 percent in 2021 to 8.8 percent in 2022 but decline to 6.5 percent in 2023 and to 4.1 percent in 2024.
While the wounds caused by the pandemic or scarring effect have not yet fully recovered, currently the economic risk is shifting to global economic turmoil caused by an increase in global inflation due to supply disruption due to the pandemic and the Russia-Ukraine war which has a negative impact on demand for furniture and craft products, especially in traditional markets. including the United States, Europe and several other developed countries.
Weakening economic conditions, high inflation and rising unemployment figures at the same time in a certain period indicate that economic stagflation is occurring.
At the same time, the shopping orientation for the needs of the world community has also changed more towards their essential or primary needs by reducing spending on secondary and tertiary products such as household equipment including furniture and crafts. This situation caused a market shock in the furniture and crafts industry which resulted in delays and even cancellations of orders by buyers, especially from America and Europe.
In fact, he said, during the Covid-19 pandemic situation, the national furniture and craft industry sector was still showing quite good growth. In fact, in total, in 2021 exports experienced a significant jump (27.23%), especially from the US. This growth came from increasing demand from the United States which was a positive influence of the fiscal stimulus policy from the US government which encouraged increased household income and supported sustainable spending on all goods, including imported goods.
Meanwhile, the Secretary General of HIMKI, Maskur Zaenuri, assessed that HIMKI and the government have a national furniture and craft export target of US$ 5 billion by 2024. In fact, this is not something that is difficult to achieve considering that Indonesia has quite large potential starting from the availability of raw materials, market opportunities which continues to grow, and is supported by qualified human resources (HR).
Apart from that, currently global market opportunities are still open and continue to grow, driven by rapid development which is projected to create quite large demand for national furniture and craft products.
"However, despite this great potential, to date industry players are still faced with various problems ranging from the difficulty of obtaining raw materials according to their needs, limited marketing promotions, the lack of development of product quality and design, the lack of availability of ready-to-use workers, the use of high technology, and access to capital is still constrained," he said.
It was stated that realizing the export target of US$5 billion in 2024 and making Indonesia successful in becoming the largest producer and exporter country in the region requires support from stakeholders, especially support from the government.
