Chip Block Pallet: Wood Industry Innovation in Indonesia

by | Nov 16, 2022 | Study Insight | 0 comments

What innovation that can help wood waste reduction? How is Indonesia’s government seeing this opportunity on Chip Block Pallet as a product with good demand?

Based on data from The Business Research Company, there has been a growth in the global wood products market from USD 631.11 billion in 2021 to USD 690.04 billion in 2022, or 9.3%. It is estimated that in 2025 the market will continue to grow to USD 850.38 billion with a CAGR of 6%, and in 2026 the market will continue to grow to USD 866.21 billion with a CAGR of 5.8%. The wood product market is made up of several derivatives of wood products such as plywood, furniture, veneer, wooden containers, pallets, wooden floors, wooden frames, and accessories.

Some examples that fall into wood processing include the manufacture of products from forest raw materials such as paper and pulp, oil, and building materials. Apart from the handicraft and furniture industries, a large demand for wood materials is the packaging and logistics industries. According to, the 2020 pandemic increased the demand for wood materials for packaging and logistics needs.

This is due to the implementation of social restrictions by the government, thus increasing online shopping which makes logistics businesses require more wood and adjustments in their business processes. But on the other hand, the high demand for wood can also have an impact on the environment and increase wood waste from the production process.

What is the potential of the wood industry in Indonesia? What kind of innovation that Indonesia do to fulfil the demand while tackling the waste issue in the same time?

Indonesian Government Encourages Revival of Wood Industry and China’s Investment Interest

The government hopes that wood products can become the exclusive of non-oil and gas exports again also one of the country’s foreign exchange sources, as happened in the 1970s to 1998 era. In particular, the Indonesian government sees wood as a renewable natural resource, and it can also boost the people’s economy. The value of Indonesia’s wood exports in 1993 successfully hit USD 4.6 billion. According to the Merdeka Republic, this condition is even more potential because it is supported by Chinese investment in the Indonesian wood industry which was marked by the signing of an agreement on May 27, 2022, regarding cooperation in the development of international industrial zones between the Shandong Timber and Wood Products Association with the Special Economic Zone Sei Mangkei. stated that the wood industry has better stability compared to other industries due to the availability of sufficient raw materials and can be renewed in the long term. In addition, as stated on the website page of the Indonesian Coordinating Ministry for Economic Affairs, the potential for the wood industry in Indonesia shows good prospects, especially with the support and special attention from the government regarding the optimization of the wood industry, especially plywood.

Based on data from Detik Finance, 200 entrepreneurs are members of the Shandong Wood and Wood Product Entrepreneurs Association and are also targeting the Batang area in Central Java as an investment target. If the investment in Central Java is considered successful, the investment will be expanded to four other islands namely Sumatra, Kalimantan, Sulawesi also Papua.

Chip Block Pallet, Wood Pallet Innovation Becomes New Potential to Replace China’s Imports

The wood industry also produces its wood waste in the form of various pieces of wood and sawdust. Citing the page of the Indonesian National Research and Innovation Agency (BRIN), the economic value of wood industrial waste in the market is only around USD 0.013/ sack. It is very necessary to provide added value from the waste.

The Indonesian government through BRIN works by processing wood waste into Chip Block Pallets (CBP). This innovation is also a solution to overcome the problem of lignocellulosic biomass waste which is abundant in Indonesia but is not managed optimally. Due to the added value, it is estimated that the chip block pallet (CBP) price will reach USD 150 – 250 per m3.

This innovation can also open new jobs, reduce the dependence of related industries in Indonesia on CBP products from China, and no less importantly is to solve the waste problem. According to, some of the advantages of CBP include superior load strength, high nail resistance, high durability, free formaldehyde emission, and simple installation.

CBP is an example of a research-based product as an environmentally friendly product that is ready to be commercialized. Added in The Phrase, to make sure the success of CBP, it is needed the collaboration of all stakeholders not just driven by the central government, but also together with local governments and related wood industry. According the data published by the World Bank, the highest value of wood products import are coming from pallets, box pallets, and load board products. These are three countries which are recorded in the World Integrated Trade Solution in 2018.

1. Germany

Recorded by the World Bank, the total import of wood pallets in Germany reached a value of USD 541,015,950 in 2018, making Germany the highest country in importing pallet wood products in that year. Based on data from FLEGT Independent Market Monitor, Germany’s imports of wood and wood products from tropical countries increased to USD 1.21 billion in 2021, which was previously USD 875 million in 2020 and USD 1.06 billion in 2019.

One of the most important countries as a supplier to Germany in 2021 in Brazil. However, excluding pulp products, Indonesia is the largest exporter of tropical wood products to Germany. Last year it was discovered that the number of German imports from Indonesia increased significantly from USD 167 million to USD 217 million in one year.

2. France

France is the second largest wood pallet importer country after Germany. According to data from the World Bank where it was recorded that total imports of French wood products reached USD 223,656,820 in 2018. Several other types of wood products imported by France include paper and cardboard with a value of USD 1,78 million in September 2022 and wooden barrels of USD 41.2 million in 2020.

Imports of French paper and cardboard in 2022 have also increased from the previous month which amounted to USD 1,54 million in August 2022. Meanwhile, wooden barrels were imported by France from the United States as the largest country supplying wooden barrels to France for USD 12 million, the second for Ukraine for USD 7.44 million, Spain the third for USD 5.85 million, and Austria the amount USD 3.14 million.

3. Netherlands

The Netherlands is the third largest importing country for a wood pallets with a total import value of USD 192,554,000 in 2018, according to World Bank data.  As stated on the website of the Observatory of Economic Complexity (OEC), the total imports of wood products by the Netherlands reached USD 4.39 billion in 2020, making the Netherlands the seventh largest importer of wood products in the world.

Furthermore, it is said that wood products are the seventeenth highest imported commodity by the Netherlands. The top three countries of origin for imported wood products ordered by the Netherlands included Germany with a value of USD 750 million, Belgium with a value of USD 519 million, and China with a value of USD 462 million.

There is an article related to the wood industry about the furniture industry that you could explore more here.  

Enter The Indonesian Wood Market with BRIGHT Indonesia

Because of the huge impact of the wood industry in Indonesia, of course, it takes a lot of in-depth research about the wood market in Indonesia. So, to enter the Indonesian market, you need the right local partner to assist you.

BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.

BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:

  1. Provide assistance for you in expanding and developing your business by identification of potential partners.
  2. Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arrange business meetings, and act as a liaison.
  3. Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
  4. Link client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.

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