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Jakarta, August 7, 2024 – The global furniture market, including home décor, experienced positive growth during the pandemic, as people engaged in home renovations to support activities like working and studying from home. Certain derivative products from furniture, such as palm leaf broomsticks and nipah sticks, also saw increased export value. As one of the leading producers, Indonesia holds significant potential for exporting nipah and palm leaf sticks to high-potential markets globally.
Global demand for Indonesian nipah and palm leaf sticks showed positive growth in 2023. According to data from the Indonesian Central Bureau of Statistics (BPS), processed by the Economist team of the Indonesian Export Financing Agency (LPEI), Indonesia’s export value for these products grew by 11.44% year-on-year (yoy) in 2023, reaching USD 29.32 million, up from USD 26.31 million in 2022. In line with the value increase, export volumes also rose by 15.97% yoy to 70,080 tons from 60,430 tons the previous year.
This export growth was supported by rising demand from two key markets in 2023: exports to India increased by USD 1.16 million, reaching USD 17.04 million, and exports to Pakistan rose by USD 1.84 million, reaching USD 6.17 million.
Nipah and palm leaf sticks come from the midrib that connects the leaf to the palm frond. Palm leaf sticks, derived from oil palm trees, are somewhat stiff, lightweight, flexible at the ends, and light brown in color. Quality standards for these sticks require a dryness level of 50%, with a minimum broomstick length of 90 centimeters. Besides being made into brooms, the sticks can be crafted into various handicrafts such as plates, baskets, vases, and tissue boxes. The most exported derivative product is brooms made from twigs or plant materials, accounting for 98.24% of total exports, equivalent to USD 28.80 million.
Over the last five years, Indonesia’s nipah and palm leaf stick trade balance has consistently posted surpluses, with a surplus of USD 29.14 million in 2023, higher than the USD 26.27 million in 2022. According to the International Trade Centre (ITC), in 2023 Indonesia ranked second in the world as a major exporter of nipah and palm leaf sticks, contributing 12.42% of global exports, after China (20.90%). Other leading exporters include Sri Lanka (11.95%), the Netherlands (5.31%), and Mexico (5.29%).
Recent developments show that the export value for palm leaf and nipah sticks in the January-June 2024 period reached USD 10.18 million, a decline of 27.59% yoy from USD 14.06 million in the same period the previous year. This aligns with a decrease in export volume, which fell by 18.91% yoy to 26,600 tons from 32,800 tons in the same period the year prior.
The sharpest export declines were recorded in India (down 51.85%), Japan (down 17.82%), and China (down 34.93%). Amid this declining trend, Indonesia’s palm leaf and nipah stick exports to several countries continued to grow during the same period, such as to Pakistan (up 11.05%), the Philippines (up 20.03%), and Vietnam (up 194.59%).
“Given the export value realization for the first half of 2024, we anticipate further declines by the end of the year, particularly in markets like India, Japan, and China. The high-interest-rate environment weakens the global property sector, reducing demand for furniture and home decor products, with consumers preferring essential items. However, there are export opportunities in countries with rising demand, such as Pakistan, the Philippines, Vietnam, South Korea, and Iran. As one of the leading producers, Indonesia is expected to seize this opportunity by expanding distribution networks and improving product quality in non-traditional markets,” said LPEI Senior Economist Donda Sarah Hutabarat.
Historically, Indonesia’s nipah and palm leaf stick products have shown good competitiveness (with a Revealed Comparative Advantage/RSCA score of 0.79) compared to China, the Netherlands, and Mexico, but still lag behind Sri Lanka (RSCA 0.99). According to the ITC Export Potential Map, there is still export potential for Indonesian nipah and palm leaf sticks, with high-demand markets including the United States, Malaysia, the Philippines, the United Kingdom, the Netherlands, Taiwan, and France.
One Indonesian exporter of nipah and palm leaf sticks is Rianto Aritonang, owner of CV Kahaka Internasional and a graduate of LPEI’s Coaching Program for New Exporters (CPNE) in 2020. After completing the program, Rianto successfully exported palm leaf sticks, which are derived from waste, to seven countries: Pakistan, India, Nepal, Vietnam, Singapore, and Bangladesh, with an average of 12 to 15 containers per month.
From 2020 to June 2024, CV Kahaka Internasional has exported 8,500 metric tons of palm leaf sticks, equivalent to 622 containers, with a total export value of USD 3.5 million. To meet export demand, Rianto utilized Export Working Capital Credit under LPEI’s SME Special Export Assignment (PKE) program. The government grants LPEI the Special Export Assignment (PKE) to provide financing, guarantees, and/or insurance for export activities that are commercially challenging but necessary to support national export policies.
"One container can hold up to 25 tons of sticks, valued at IDR 130-150 million per container. The sticks are further processed in the destination countries into ready-to-use brooms. We also export ready-made brooms to Singapore, priced at IDR 10-12 thousand per broom, which are resold by distributors for SGD 2 per broom or around IDR 20-25 thousand," Rianto explained.
He shared that he began exporting palm leaf sticks after seeing his friends who worked as areca nut collectors lose their jobs due to the COVID-19 pandemic. Growing up on an oil palm plantation and having worked as an engineer in the shipbuilding industry, Rianto began exploring export business opportunities. His first opportunity came from exporting areca nuts to South Asian countries, but he continued to explore other export possibilities.
“I realized that Sumatra has many oil palm plantations, and palm fronds are always discarded every two weeks during the harvest. I spoke to buyers and convinced them to try palm leaf sticks. In November 2020, we successfully made our first export to India, and they liked it. In terms of strength, palm leaf sticks are not much different, but they are 20% cheaper compared to coconut tree sticks, which are also limited in production. Meanwhile, palm leaf sticks from palm oil waste are always available since the harvest happens every two weeks, ensuring a stable supply of raw materials and being more environmentally friendly," Rianto explained.
Exporting palm leaf sticks from palm oil waste not only helps reduce waste but also improves the welfare of palm oil farmers partnering with CV Kahaka Internasional. To supply raw materials, the company collaborates with over 300 palm oil farmers across 15 locations in Sumatra and Java, including Siantang, Dumai, Lampung, and Pemalang.
“In the past, farmers only collected oil palm fruit, but now they also collect fronds to extract the sticks. Farmers can gather 15-20 kilograms of palm fronds daily, earning an additional income of around IDR 60-80 thousand per day,” he said.
Rianto plans to expand the export market for palm leaf sticks to Europe and Australia, which prioritize eco-friendly products. CV Kahaka Internasional, supported by LPEI and other government institutions, is currently strengthening relationships with European and Australian buyers to penetrate new export markets.
"We have also started exporting ash from palm oil empty fruit bunch waste (tankos) to Taiwan, sending up to two containers per month. Tankos ash contains up to 40% potassium and can be used to enrich the soil," he said.
Aritonang offers tips for business owners looking to start exporting. "Exporting is not easy, but it’s not as hard as imagined. Joining export communities and participating in LPEI’s CPNE program is a good first step to learning. Start by mapping out commodities with export potential and just do it; eventually, you will graduate to become an exporter."
Media Liason
T. Wahyu Prihadi Wibowo
Corporate Secretary – Lembaga Pembiayaan Ekspor Indonesia
Ph. : (021) 39503600
Email : corpsec@indonesiaeximbank.go.id
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