project proposal itto · this project proposal is based on the findings and recommendations derived...

INTERNATIONAL TROPICAL TIMBER ORGANIZATION

. TITLE

SERIAL NUMBER

COMMITTEE

SUBMITIEDBY

ORIGINAL

SUMMARY

ITTO

PROJECT PROPOSAL

IMPROVEMENT OF PROCESSING EFFICIENCY OF TROPICAL TIMBER FROM SUSTAINABLE RESOURCES IN INDONESIA

PD 286/04 (I)

FOREST INDUSTRY

GOVERNMENT OF INDONESIA

ENGLISH

Government of Indonesia has put high priority in restructuring wood processing industries in order to improve efficiency and to fit with market capacity and this project has the main objectives to support the government effort.

The present project intends to build-up the country's capacity in wood processing industries that meet intemational standards and requirements. The project will develop the technical requirements for wood production, train the work force and managers, and introduce international standards and norms for wood base industries in Indonesia.

Specially, this project aims at improving industries performance and increased processing efficiency of tropical timber from sustainable resources in Indonesia. The project will analysis of economic evaluation, processing capability, product specifications, promoting new product and quality consistency particularly related to use of under-utilized materials and lesser known species, by providing appropriate processing technologies, which can be beneficial for forest industries in the area of operational, market planning and decision making in integrated forest products industries.

This project proposal is based on the findings and recommendations derived from preproject PPD 57/02 (I).

EXECUTrNG AGENCY

COLLABORATlNG AGENCY

DURATION

APPROXIMATE STARTING DATE

PROPOSED BUDGET AND OTHER FUNDING SOURCES

INDONESIAN SAWMILL AND WOOD WORKING ASSOCIATION (ISWA)

DIRECTORATE GENERAL OF FOREST PRODUCTS DEVELOPMENT, MINISTRY OF FORESTRY

36 MONTHS

UPON APPROVAL

Source

ITTO

ISWA

TOTAL

Contribution in (US$)

809,441

240,500

1,092,291

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TABLE OF CONTENT PART I: CONTEXT ............................................................................................................................. 1

1. Origin ............................................................................................................................................. 1 2. Sectoral Policies ........................................................................................................................... 1 3. Programmes and Operational Activities ................................................................................... 2

PART 11: THE PROJECT ................................................................................................................... 4 1. Project Objectives ........................................................................................................................ 4

1.1. Development Objective ....................................................................................................... 4 1.2. Specific Objectives ............................................................................................................... 4

2. Justification ................................................................................................................................... 4 2.1. Problems to be addressed .................................................................................................... 4 2.2. Intended situation after proj ect completion ...................................................................... 7 2.3. Project Strategy ..................................................................................................................... 7 2.4. Target beneficiaries .............................................................................................................. 7 2.S. Technical & Scientific Aspects .......................................................................................... 8 2.6. Economic Aspects ................................................................................................................ 8 2.7. Environmental Aspects ........................................................................................................ 9 2.8. Social Aspects ....................................................................................................................... 9 2.9. Risks ....................................................................................................................................... 9

3. Outputs ........................................................................................................................................ 12 3.1. Specific Obj ective 1 ........................................................................................................... 12 3.2. Specific Objective 2 ........................................................................................................... 12

4. Activity ........................................................................................................................................ 12 4.1. Activity Obj ective 1 ........................................................................................................... 12 4.2. Activity Objective 2 ........................................................................................................... 13

S. Logical Framework .................................................................................................................... 15 The project's development objective is to increase the contribution of the wood processing industry sector to the national economy through application of appropriate processing technologies .................................................................................................................................. 15

6. Work Plan ................................................................................................................................... 18 7. Budget. ......................................................................................................................................... 21

7.1. Overall Project Budget by Activity- ITTO/ISWA ....................................................... 21 7.2. Consolidated Total and Yearly Project Budget .............................................................. 26 7.3. Project Budget - Executing Agency ................................................................................ 27 7.4. Budget Worksheets ............................................................................................................ 28

PART Ill: OPERATIONAL ARRANGEMENTS ......................................................................... 34 1. Management Structure .............................................................................................................. 34 2. Monitoring Reporting and Evaluation .................................................................................... 35 3. Future Operation and Maintenance ......................................................................................... 35

PART IV: TROPICAL TIMBER FRAMEWORK ........................................................................ 36 1. Compliance with ITTA 1994 Objectives ................................................................................ 36 2. Compliance with ITTO Action Plan ........................................................................................ 36

ANNEX ................................................................................................................................................ 38 ANNEX 1: SPECIFICATIONS OF TRAINING ACTIVITIES .................................................. 39

1. Course on Fundamental of Tooling and Maintenance ......................................................... 39 1.1. Objectives ............................................................................................................................ 39 1.2. Methodology ....................................................................................................................... 39 1.3. Contents ............................................................................................................................... 39

2. Course on Product Quality Management .............................................................................. .40

------ -- ---------

2.1. Objectives ............................................................................................................................ 40 2.2. Methodology ....................................................................................................................... 40 2.3. Contents ............................................................................................................................... 40

3. Course on Industrial Management .......................................................................................... 41 3.1. Objectives ............................................................................................................................ 41 3.2. Methodology ....................................................................................................................... 41 3.3. Contents ............................................................................................................................... 41

4. Workshop on Sustainable Wood Supply ............................................................................... .42 4.1. Objectives ............................................................................................................................ 42 4.2 Methodology ........................................................................................................................ 42 4.3 Contents ................................................................................................................................ 42

ANNEX 2: TERMS OF REFERENCE ........................................................................................... 43 1. The specialist on saw doctoring ............................................................................................... 43 2. The specialist in product quality management for the wood processing industry ........... .44 3. The specialist in industrial management for the wood processing industry ..................... .45

ANNEX 3: PROFILE OF EXECUTING AGENCY. ................................................................... .46 1. Background ................................................................................................................................. 46 2. Infrastructure .............................................................................................................................. 46 3. Current work programmes ........................................................................................................ 46

PART I: CONTEXT

1. Origin

This project is a direct follow-up of the pre-project number PPD 57/02(1) entitled "Improvement o/processing efficiency o/tropical timber/rom sustainable source in Indonesia" It is proposed based on the current situation of the country's raw material deficit and inefficient of wood processing in Indonesia and it is the concrete following up action of recommendations made by the ITTO Technical mission to Indonesia in 2001. Among the accommodations of the ITTO mission are to enhance production efficiency of those mills that are fit for production through retooling, diversification, improve technology, human resource development; to adopt appropriate technologies for utilizing raw material of differing quality and properties and promote downstream value added production for obtaining increased retained value.

The work under PPD 57/02(1) through field visited to 8 selected mills in 5 regions of Indonesia confirmed the weakness that earlier studies had revealed in the wood industries processing sectors. Within the scope of the pre-project, two workshops were held in Jakarta and Surabaya in September and October 2003, respectively. In these workshops, the findings of the pre-project work were extensively discussed by about 40 selected participants from the relevant public and private industry sectors.

The pre-project has identified existing gaps between the individual mill's processing competency with international demand for processed wood products, in terms of product lines or use of diversity sources, quality performances and leading to identification of necessary technical measures to improve the level of wood processing efficiency. Those are essential problem to immediately evaluated cause of efficiency and monitor in order to improve the system production and productivity, efficiency, consistency of final products by eliminating errors and problems early on in the process, significant operating cost and downtime in the process can be reduce with respect to less waste, reject, and customer claim.

2. Sectoral Policies

Indonesia's forestry sector aims at achieving sustainable forest management. The forest management system is originally stipulated in the Basic forestry Act of 1967. In line with the act, government issued regulation No. 21 of 1970 concerning utilization of production forest concessions in sustainable way.

In booming logs production in 1970's and following the ban oflogs export in the late 1970's most of the concessions holds built saw mill industry with enormous capacity and exported most of the production. In early 1980's in response to government appeal to forestry sector for value adding and raising employment, the many concessionaries built down stream industries such as plywood, wood working mills, handicraft and furniture.

In mid 1980's the government abruptly banned the sawn timber export in order to boost downstream industry development. In response to the drive plywood industry grew enormously and by the end of 1990's the number plywood mills followed by working industry.

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To encourage development of wood industry, the government issued Regulation No. 17 of 1986, placing responsibility to licensing the wood industries under the authority of the Ministry of Industry and Trade Indonesia (MITI).

The recent reform situation in Indonesia has helped to improve forestry policy, in which the Ministry of Forestry and local government are given greater role in ensuring the implementation of principles of sustainable forest management.

Indonesia has also confirmed its adherence to international commitment. This includes ITTO Target 2000, the objectives and recommendation of the United Nations Conference on the Environment and Development held in Rio de Janeiro in 1992, the Convention on International trade of endangered species and the world heritage. Since Indonesia is a member of ITTO, it has an obligation to support the ITTO objectives towards sustainable forest management.

Government recently lifted the regulation aimed at enforcing integration between logs producers (i.e. concessionaires) with wood based industry. This is an improvement step to prevent transferred pricing and providing non concession wood based industry with fair competition for raw materiaL

Important development in forestry sector was started since the signing of Letter of Intent (LOI) by Indonesia government in 1998 and the IX CGI meeting in 2000. This has become priority program of the Ministry of Forestry. One of the points was Government Indonesia intent to downsize and restructure wood-based industries in order to balance demand and supply logs and to improve competitiveness of the industries.

Referring to the above policies and considering the international commitment including ITTO, the proposed project is clearly in line with the governments and ITTO's policies.

3. Programmes and Operational Activities

The government of Indonesia has given the priority to the sustainable forest management under the ITTO's objective which is to contribute to the process of sustainable management. There are 5 programmes made in support of sustainable forest management namely:

(1) Combating Illegal Logging, (2) Controlling & suppressing forest fire, (3) Restructuring forest industry sector, (4) Rehabilitation and Conservation ofthe forest resources, and (5) Decentralization in forestry sector.

There were number of programmes and activities undertaken in support of sustainable forest industry in Indonesia especially in related to imbalance of supply and demand including,

On the supply side:

• Plantation development • Introduction of genetically improved fast growing tree species • Reduced impact logging trials • Rehabilitation of degraded forest

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On the demand side:

• Encourage restructuring and investment in using efficient machinery • Research and promote Under-utilized but potentially valuable Lesser Used Species

(LUS) • Research and provide mechanical property test reports of Lesser Known Species

(LKS) • Increase waste utilization by improvement of engineering processes • Product diversification, promoting and marketing.

In the area of the wood industry sector, the following ITTO projects are being implemented:

• PD 74/01 Rev.l (M) Development and Implementation of Guidelines to Control Illegal Logging for Sustainable Forest Management in Indonesia

• PD 80101 Rev.6 (M) Consolidating Sustainable Forest Management Certification System in Indonesia

• PD 85/01 Rev.2 (n Strategies for the Development of Sustainable WoodBased Industries in Indonesia

• PD 110/01 RevA (n Program to Facilitate and Promote Adoption of Reduced Impact Logging (RIL) in Indonesia and the Asia Pacific Region

The proposed proj ect to improve processing efficiency would be complementary to the on-going ITTO projects in illegal logging, certification and reduced impact logging to develop a flourishing forest industry sector in Indonesia while meeting all the criteria for sustainable forest management.

In line with Indonesian government efforts to achieve sustainable forest management, Indonesian wood base industries recorded more than 4000 unit processors included Indonesian Sawmill and Wood Working Association (ISWA) members which consist of 1200 processors with strong export orientation has the major programmes in improvement of competitiveness of wood products through provision of market information. To support those programmes, some activities have been undertaken by ISW A such as exhibitions to provide access for members in promoting wood products and publishing annually member's directory. ISWA's working programmes, among others, are:

In the supply of wood materials: to compile the resources, species usage, prices of round log and sawn timber (local market information), to increase efficiency of wood materials in line with sustainable forest management.

In production and industry: to develop efficiency and productivity in production of woodworking to obtain the maximum added value, to guide the members to maximize utilization of wood.

In marketing: to monitor the market development and trend of product commodity, to promote the products through exhibitions and our embassies abroad.

In addition, some research works have been done to find other species for product diversification for industry. Those programs and activities will support the projects proposes which in line with sustainable wood industry in Indonesia.

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PART 11: THE PROJECT

1. Project Objectives

1.1. Development Objective

The project's development objective is to increase the contribution of the wood processing industry sector to the national economy through application of appropriate processing technologies.

1.2. Specific Objectives

1.2.1. To improve the national skills and capabilities in processing technologies and in product quality management to ensure the efficient and diversified use of tropical timber

1.2.2. To identify product standards, quality/grading requirements and technical regulations in sawn wood products in international markets.

2. Justification

2.1. Problems to be addressed

Most of the processors, despite their export orientation, do not posses the production competency capable of meeting the market demand in terms of product diversification, used of species and quality for a number of reasons including:

A. Low level of processing efficiency

Efficiency level of wood processing in Indonesia is low compared to other countries, such as Malaysia, Japan, and Canada as reflected in low recovery factor. The above matters were influenced by the following conditions:

• Majority mills are still using old machinery, lack of facilities and weak in service and maintenance caused low production capacity.

• Improper use of raw material and specification machinery. • Untrained and low skill of worker at all levels.

The resulted inefficiency in the larger use of wood raw material is not consistent with the efforts to sustaining the forest resources. Other implies to high cost economy and affected low competitiveness to the selling price of the products in world market.

ITTO Technical Mission to Indonesia has also observed the inefficiency of the wood processing sector in Indonesia and strongly recommended to implement appropriate policy and practical measures to resolve the problem. The project will also address this processing inefficiency problem through the gaps analysis i.e. matching the production competency with market requirements for product diversification and quality.

In the past, forest industries in Indonesia had assumed an almost infinite supply of raw materials. However, today, this perception is not as common as it used to be and raw materials shortages are occurring. In response, the industry has looked for raw materials and how wood can be processed more efficiently

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Dennis P. Dkystra has recently argued that a 1 percent increase in the amount of wood recovered from forest harvesting, would reduce the total area of tropical forest disturbed over the 50-year period 2001-2050 by almost 150 million hectors (Tropical Forest Update, 2001). Similarly, there would be substantial impacts in the use of raw materials in wood processing factories, if the current recovery rate of wood processing is to increase 3 or 5 percent.

B. Limited technical information on product standards

Lack of information of product specification from destination countries caused products unmatched with market requirement, demand and supply information of certain product in each consumer countries unavailable implies over supply, decrease the selling price and frequently reject and claim on product quality.

Weakness of marketing position causing most products depend on buyer driven and product orientation limited to semi-finished which need further processed in consumer countries.

There is a trend for end users to using more and more specialized products with particular technical specification, most millers continue to producing their conventional product lines mainly due to technological and human resource limitations.

c. Raw material supply problems

In recent years, supply of natural wood is becoming more and more limited. Most of the millers have to utilize lesser known species and planted wood, in terms of species, quantity and quality, as their raw material input. However, many millers have not installed the technologies suitable for processing both natural and planted wood. Some millers may have installed adequate technologies but do not possess the necessary processing skills.

More importantly, many millers have failed to conduct efficient processing and meet market specifications because of neglect on the information on wood properties.

D. Weak quality management

For many millers, quality orientation is weak, leading to inferior products quality, low selling price, high products rejection, and large waste. So there is a need to promote the critical role of the Total Quality Management (TQM) may play in improving the miller operational efficiency, and competitiveness. Promotion of TQM should bring about commitment to quality.

E. Absence of product quality testing facilities

The Forest Education and Training Centre (CFET) is the training agency of Indonesia Ministry of Forestry (MoF). It is mandated by MoF Decree No.1231Kpts/III2001 to carry out education and training for forestry officials within the MoF and other institutions related to forest management. The Forest Products Research and Development Centre (FPRDC) in Bogor is a research and development institute on wood utilization. These two agencies do not have training programmes for wood processing. The current work of the FPRDC has been concentrated on basic wood sciences.

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In the absence of product quality testing facilities, it is impossible for the millers to pre-test the quality of their products with relative affordable cost prior to exporting. Actually there is a need to asses the feasibility of installing quality testing facilities such as:

• mechanical property of wood, • data format variant species of wood kiln drying system, • carbide tooling for the wood working industry, • fundamentals of tooling and knife grinding, • moisture content measurement, • dehumidifier technology.

An attempt was made to upgrade the equipment installed in its factories for the production of wood based products. However, shortages of capital, technology and skilled manpower, still exist at all levels. The justification of this project lies in upgrading the technology and skills of workers. It is hoped that once this has been achieved, the deficiencies in capital and technology can be resolved through jointventures with carefully selected foreign partners, but it must have a broad base of skilled workers and enlightened managers and supervisors well disciplined to assure sustained quality production.

There may be other obstacles faced by the country in the process of industrialization, but as mentioned above, the project will focus on what is considered to be three critical areas;

• human resource development; • utilization of appropriate modem production technology and methods, and • development of markets for exporting these products

Having improvement of timber processing efficiency and trained people at all levels is fundamental to the development of a viable downstream industry, especially in wood processing, which has an excellent potential for contributing substantially to foreign exchange earnings. Since modem equipment and skilled workers who are trained to use them are not sufficiently available, the technology used in production must be both modem and appropriate.

At this moment the members of Indonesian Sawmill & Woodworking Association (ISW A) are producing sawn timber and downstream processed products with data and information on the existing processing units in terms of production capacity, technological sophistication and raw material supply, product marketing but insufficient and inaccurate.

Furthermore, there were gaps between individual mills competency and international demand for processed wood products in terms of products diversity and quality. Yet, as mentioned earlier, there is a pressing need to intensify value added processing on a more sustained basis.

Both technical and financial assistance will be needed for the successful implementation of the project. Since the Pre-project Number PPD 57/02 Rev. 1 entitled "Improvement of Processing Efficiency of Tropical Timber from Sustainable Sources in Indonesia" had been approved and financed by ITTO.

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This project proposal for the "Improvement of Processing Efficiency of Tropical Timber from Sustainable Sources in Indonesia through application of appropriate processing technologies" as a follow-up to the previous pre-project, cannot be achieved without ITTO's support.

This project will have a locally appointed manager, assisted by counterparts for training and technical information with support staff as needed, and will engage international consultants who will be supported by local counterparts. The outputs will cover basic need for managerial and technical know-how along the concept of quality management and production at the industrial level. There will be continuity of programs as selected trainees will be groomed to become trainers, whilst keeping themselves exposed to current developments and technology. Minor pieces of equipment and teaching aids, needed to ensure the introduction of appropriate modem methods, will also be provided. This project is expected to last 36 months.

2.2. Intended situation after project completion

Upon completion of the project, the existing gaps between the individual mills processing competency with international demand for processed wood products in terms of diversity and quality are decreased. A momentum of the training program will cultivate a culture for continual improvement and a desire for skill and quality upgrading. Appropriate production systems will be applied and people trained under this project will then be able to teach new recruits on a continuous basis.

2.3. Project Strategy

2.3.1. Reasons for selection

Lacks of technical know how and capital being the major hindrance in the development of the wood industry in Indonesia. This project, if approved, will bring in the much needed technology and exposure for the local people and will enable the local industry to achieve higher revenue from its exports. At the same time, the ability to utilize wood to the optimum will discourage excessive cutting of wood and therefore would cause the least damage to the environment.

2.3.2. Lessons drawn from past evaluation

The Indonesian wood industry is partly craft and part mechanized. This is not helpful to producing products on an efficient scale. The income from the export of value added products is minimal, considering the availability of forest resources. Compared to the performance of the neighboring countries, Indonesia lags far behind indicating the lack of efficiency in wood processing and the lack of a well-trained workforce.

Experience from countries such as Malaysia, Thailand, that have recently shown tremendous progress in the export of wood based products, indicate that the best policy is a combination of an appropriate modem technology and a trained labor force. Timber technology training centers are being set up, for example, in Malaysia for the specific purpose of developing appropriate technology to be manned by skilled workers.

2.4. Target beneficiaries

The direct beneficiaries of the project would be the Indonesian wood processors in general; the ISW A members in particular, wood engineers and wood technologists in

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the industry. Ministry of Forestry, Ministry of Industry and Trade, researchers, and academicians will also indirectly benefit from the project through reports and proceedings it will be produce. Other potential beneficiaries include small and medium-scale tree growers and wood processors, policy makers and investors, NGOs and private sector in Indonesia and other ITTO member countries.

2.5. Technical & Scientific Aspects

In 1995, 330 sawmills operated in Indonesia with a total installed capacity of about 4.3 million cubic meters. Indonesian production of sawn wood between 199311994 and 1999/2000 ranged from 2.2 to 2.1 million cubic meters. A study of the pre-project in Kalimantan indicates recovery rates between 40 to 60 percent by volume of the raw material. On average, 55 percent by volume of sawn wood production was turned into wastes. It is estimated that the residues amount to an average of 55%, consisting of 15% sawdust, 25% slabs, 12% trimmings and 3% shrinkage.

The main constraints in the development of wood processing industry are related to raw material supply, low productivity, low level of profitability. The current utilization is hampered by lack of skills and appropriate technologies. No systematic efforts have been made to promote investment in this sector.

High wastage in processing increase wood cost per-output. Productivity improvements in this area offer the most significant opportunities to improve the industry's profitability. Significant improvements could be gained by improving sawing methods and training without major investment. Labor productivity tends to be low in sawn timber production chain. Workers have rarely received proper training.

This project is designed so that, with the availability of current production technology at ISW A (considered adequate for this purpose), efforts will focus on the improvement of timber processing efficiency and training of workers at all levels and on developing a production system that ensures continuous operation on a sustained level. Continuity of the regular update of market information beyond the project period will be possible because of the fact that the project will have trained the trainers and developed the training material as well as identifying the sources of technology and market information.

Another alternative would be to stress on the application of the latest production technology, but this would hardly do justice to the massive lab or force as modem processing technologies have been developed to cut down lab or requirements and manufacturing is mostly performed using integrated production lines. In the case of ISW A would involve tremendously large investments. Modem processing technologies are also better suited for production in very large series, which at present time would cause problems for their introduction in Indonesia because of the need to create, from scratch, markets for these large volumes. This proposes the introduction of a modem system at an appropriate level of technology with a good use of skilled labor. Such a combination is considered best suited to the present situation in Indonesia.

2.6. Economic Aspects

From the economic point of view this project will enable Indonesia to diversify its export of timber processing to value added finished products, thereby increasing its revenue earnings. It will also promote the establishment of new wood based industries and support industries such as maintenance workshops, transport services, packaging,

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and auxiliary materials. This will result in creating direct employment opportunities. There will be possibilities for the modernized wood industry to cater to the rapidly developing tourism and construction by providing furnishings to the numerous hotels and restaurants and offices that are being set up.

2.7. Environmental Aspects

Environmentally, all care will be taken to ensure a minimum of hazards to workers through the installation on all machines of safety features and the training in safety procedures. In the same vein, reduction of waste will not only increase productivity but also result in a cleaner working place. The increased local processing of timber will contribute to a better economic use of resources and will be seen as a move to counter any trend to escalate logging activities and the export of logs. No major water pollution is envisaged. Air pollution from sawdust and from sprays and polish will be kept to a minimum by installing dust collectors and pressure rooms and other safety measures will also be applied. More importantly, this training project would produce a skilled and motivated workforce who would definitely contribute to higher recovery rates in production. This would certainly have a positive impact on the environment.

2.8. Social Aspects

Because of the project, the resultant benefits of a strong wood based industry will produce, in the long run; enormous multiplier effects in the development of the sector the emergence of support industries will also create further employment, increased wages, and an improved standard of living of workers. Better quality wood products will also be available to the people.

2.9. Risks

The project posed fair risk due to lack of cooperation from key target groups. Another source of risk is related to reliable data especially those pertaining wood species data. To reduce the risks, the main stakeholders such as MoF, other reliable related institutions will be invited to join as a member in Project Steering Committee.

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PROBLEM TREE IMPROVEMENT OF PROCESSING EFFICIENCY OF TROPICAL TIMBER FROM SUSTAINABLE RESOURCES IN INDONESIA THROUGH APPLICATION OF APPROPRIATE PROCESSING TECHNOLOGIES

Timber processing inefficiency in Indonesia

I Lack of com petency to m eet international market dem and

I I I

Product diversity is limited Low products quality

Narrow range of timber species utilization -

Lack of Tooling, maintenance and testing facilitie =---

,--Raw material supply problems

I Poor quality managem enl~

'--Insufficient m arket intelligence & inform ation Weak know-how in wood processing technolog\

-

-

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OBJECTIVE TREE IMPROVEMENT OF PROCESSING EFFICIENCY OF TROPICAL TIMBER FROM SUSTAINABLE RESOURCES IN INDONESIA THROUGH APPLICATION OF APPROPRIATE PROCESSING TECHNOLOGIES

Efficiency of tim ber processing in Indonesia im proved

I Competency to meet international market demand

increased

I I I

Product diversity expanded Products quality improved

- Wider range of tim ber species utilization Tooling, maintenance and testing facilities availabl f7-

- Raw material supply problems solved Quality management enhanced '-------

L-- M arket intelligence & inform ation developed Know-how in wood processing technology im provec I-

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3. Outputs

3.1. Specific Objective 1

Output 1.1 About 200 head saw-doctors and trainers of wood working factories and from technical institutes trained with improved skills in sawing methods and saw-doctoring and other basic wood processing techniques such as molding profilelknife grinding, kiln drying and preservation

Output 1.2 About 100 technicians of wood working factories and from technical institutes trained with improved knowledge of product quality management

Output 1.3 About 100 plant managers and supervisors of wood working factories trained with up-grade skills in industrial management

3.2. Specific Objective 2

Output 2.1 Mechanical property information on Indonesian wood species compiled for wider range of species utilization (common used species, lesser known species and plantation species) in amount 60 speCIes.

Output 2.2 Technical information on product standards, quality/grading requirements and technical regulations in sawn wood products in international markets provided to managers of wood working companies, relevant associations and government agencies

Output 2.3 Tooling, maintenance and testing facilities available to wood working factories.

4. Activity

4.1. Activity Objective 1

Output 1.1 About 200 head saw-doctors and trainers of wood working factories and from technical institutes trained with improved skills in sawing methods and saw-doctoring and other basic wood processing techniques such as molding profile/knife grinding, kiln drying and preservation

Activity 1.1.1 Preparation of courses programs Activity 1.1.2 Identification and contacting of resource persons. Activity 1.1.3 Identification and selection of 200 (two hundred)

Activity 1.2.4

Activity 1.2.5

Activity 1.2.6

Preparation and reproduction of training materials, texts and visual aids, including a video film. Implementation of 4 training courses (7 days each) in Kalimantan, Java and Sumatra. Evaluation oftraining courses

Output 1.3 : About 100 plant managers and supervisors of wood working factories trained with up-grade skills in industrial management

Activity 1.3.1 Preparation of course program Activity 1.3.2 Identification and selection of participants Activity 1.3.3 Identification and contacting of resource persons Activity 1.3.4 Preparation and reproduction of training materials, texts and

visual aids, including a video film. Activity 1.3.5 Implementation of 4 training courses (7 days each) in

Kalimantan, Java and Sumatra. Activity 1.3.6 Evaluation oftraining courses

4.2. Activity Objective 2

Output 2.1 Mechanical property information on Indonesian wood species compiled for wider range of species utilization (common used species, lesser known species and plantation species) in amount 30 specIes.

Activity 2.1.1 Activity 2.1.2

Activity 2.1.3

Activity 2.1.4

Compile the existing studies on wood species. Make a sampling test on the 30 species to laboratory cooperate with R&D of Forestry Department RI. Analyze raw material on sources, raw material demand, supply, price indicators, and distribution system. Dissemination of a wood structure and characteristic handbook

Activity 2.1.5 Organize two workshops on sustainable wood supply, including the potential of lesser-used species with the participation of key stakeholders, including policy planners in the Government and timber associations.

Output 2.2 Technical information on product standards, quality/grading requirements and technical regulations in sawn wood products in

Output 2.3 : Tooling, maintenance and testing facilities available to wood working factories.

Activity 2.3.1 Identification of tools & testing equipment for training. Activity 2.3.2 Establishment of a small-scale training center in an existing

Activity 2.3.3 Activity 2.3.4 Activity 2.3.5

wood processing factories in Java and procurement of tools and testing equipment for training Installment of tools & testing equipment Training on the use oftools & testing equipments Development of a business plan for the sustainability of facilities established by the project

5. Logical Framework

Development Objective

The project's development objective is to increase the contribution of the wood processing industry sector to the national economy through application of appropriate processing technologies.

Specific objectives

1.

2.

To improve the national skills and capabilities in processing technologies and in product quality management to ensure the efficient and diversified use of tropical timber

To identify product standards, quality/grading requirements and technical regulations in sawn wood products in international markets.

A wide awareness and adoption of efficient processing technologies within wood working factories

Wood working productivity 3% increased

Increase in the contributions of the wood proceeding industry sector to the national economy

Increase in recovery rates for primary processed products by 5%

Productivity in sawmilling and processing improved in quality and recovery rate of sawn wood

Appropriate technological information on wood species, products standards and qualities prepared and disseminated to target groups

Products qualities met with international standards (minimize quality claim)

Raw materials sources, including the use of lesser-used species, diversified

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Indonesia's Economics Statistics on Foreign Trade Annual report by Department of Forestry Annual report by Department Trade & Industry Annual statistics by Forest Industry Revitalization Body (BRIK) Statistic report compiled by Indonesia Wood World Net - ISWA.

National statistics on wood utilization and industrial production

National mill and industry level data

Annual Report of Wood Products

Evaluation reports

Technical reports on products standards, qualities and regulations

Reports from associations/companies

Technical reports on utilization of Indonesian wood, including LUS

The political will of the Government will be translated into relevant policy measures and action plan aimed at ensuring the integrated development of the forest industry sector.

Continuous supply and demand on wood products

Willingness of wood processing industries to participated in the training courses and adopt new technologies

The identification of qualified international and national consultants and sub-contractors to undertake the proposed activities

Gradual acceptance of LUS in domestic and exports markets

Output

Outputs 1.1

About 200 head saw-doctors and trainers of wood working factories and from technical institutes trained with improved skills in sawing methods and saw-doctoring and other basic wood processing techniques such as molding profile/knife grinding, kiln drying and preservation

Outputs 1.2

About 100 technicians of wood working factories and from technical institutes trained with improved knowledge of product quality management

Outputs 1.3 About 100 plant managers and supervisors of wood working factories trained with up-grade skills in industrial management

Four training courses on saw-doctoring and I Report of training events basic wood processing technologies held in Kalimantan, Java and Sumatra I List of participants

200 peoples trained with texts, visual aids, I Evaluation VDO, prepared in Indonesian Language

Three training courses on product quality I Report of training events management and improvement held in Kalimantan, Java and Sumatra I List of participants


Three training courses on industrial I Report of training events management held in Kalimantan, Java and Sumatra I List of participants


16

Adequate premises and demonstration facilities for four courses provided on schedule

Qualified national resource persons recruited on schedule

Sufficient confirmation on the attendance of participants at courses

Adequate premises and demonstration facilities for three courses provided on schedule



Adequate premises and demonstration facilities for three courses provided on schedule



Outputs 2.1

Mechanical property information on Indonesian wood species compiled for wider range of species utilization (common used species, lesser known species and plantation species) in amount 60 species.

Outputs 2.2

Technical information on product standards, quality/grading requirements and technical regulations in sawn wood products in international markets provided to managers of wood working companies, relevant associations and government agencies

Outputs 2.3

Tooling, maintenance and testing facilities available to wood working factories

Quality technical information for the efficient I Technical reports on the efficient use of use of Indonesian wood, including LUS and Indonesian wood plantation species, compiled and disseminated

A quality testing facility with training function operational

New equipment in wood testing installed in the laboratory/training workshop of ISWA

Long-term sustainability of the testing facility identified

International/national consultant reports

Study tour reports

Business plans

Quality and updated technical information I International/national consultant reports on products standards, technical regulations collected and disseminated

A website of ISWA operational Website of ISWAlregular bulletin

Regular bulletin developed,

17

Cooperation with wood utilization Rand 0 institutes

Adequate premises and demonstration facilities provided on schedule

Selection of appropriate equipment conducted

Cooperation with machinery producers and/or suppliers, and other related institutions.


Full cooperation and good synergy of partners for collection of technical information and data and exchange information

6. Work Plan

Output! Activities + Y1 Y2 Y3

Q1 Q4

OUTPUT 1.1 About 200 head saw-doctors and trainers of wood working factories and from technical institutes trained with improved skills in sawing methods and saw-doctoring and other basic wood processing techniques such as molding profile/knife grinding, kiln drying and preservation

1.1.1 Preparation of courses

1.1.2 ms

Identification and contacting of resource nt:>r'<:;nr,<:;

1.1.3 Identification and selection of 200 (two hundred)

1.1.4 Preparation and reproduction of training materials, texts and visual aids, including a video film.

1.1.5 Implementation of 4 training courses (7 days each) in Kalimantan, Java and Sumatra

1.1.6 Evaluation of training courses

OUTPUT 1.2 About 100 technicians of wood working factories and from technical institutes trained with improved knowledge of product quality management

1.2.1 Preparation of course

1.2.2

1.2.3 and selection of




OUTPUT 1.3

About 100 plant managers and supervisors of wood working factories trained with up-grade skills in industrial ement 1.3.1

1.3.2 Identification and contacting of resource persons

18

Output! Activities +

1.3.3 Identification and selection of ants




OUTPUT 2.1

Y1 Y2 Y3

Mechanical property information on Indonesian wood species compiled for wider range of species utilization (common used species, lesser known species and plantation species) in amount 30 ies. 2.1.1 Compile the

on wood .. r"'"'~''' 2.1.2 Make a sampling test on the

30 species to laboratory cooperate with R&D of Forestry Department and/or local/overseas

2.1.3

m 2.1.4 Dissemination of a wood

structure and characteristic handbook

2.1.5 Organize two workshops on sustainable wood supply, including the potential of lesser-used species with the participation of key stakeholders, including policy planners in the Government and timber associations

OUTPUT 2.2 Technical information on product standards, quality/grading requirements and technical regulations in sawn wood products in international markets provided to managers of wood '"',., ... 11';1",.. corn relevant associations and overnment cies

Development of an ISWA website to widely disseminate project results to interested es

2.2.2 Comparative study tours to Malaysia, China and Japan to collect information on timber industry training and research system, product

19

Output! Activities +

standards, quality/grading requirements and technical

ns 2.2.3 Identification and contacting

of resource persons Development & distribution of a ular bulletin

OUTPUT 2.3

Y1 Y2

Q1

Toolin maintenance and facilities available to wood workin factories. 2.3.1 Identification of tools &

testing equipment for traini

2.3.2 Establishment of a smallscale training center in an existing wood processing factories in Java and procurement of tools and testin ment for trainin

2.3.3 of tools & testing

2.3.4 Training on the use of tools & testing equipments

2.3.5 Development of a business plan for the sustainability of facilities established by the project

20

Y3

Q4

7. Budget

7.1. Overall Project Budget by Activity - ITTO/ISW A

Table/Activity + 10. 20. 30. 40. 50. 60. 80. ITTO ISWA Total Non-Activity Based Expenses Project Sub- Duty Capital Cons. Misc. ITTO

Personal Contract Travel Items Items Review Output 1.1. A 1.1.1. Preparation of courses 900 900 900

programs A.1.1.2. Identification and contacting of 900 900 900

resource persons A.1.1.3. Identification and selection of 900 900 900

200 (two hundred) participants A.1.1.4. Preparation and reproduction 2.500 12.920 15.420 15.420

of training materials, texts and visual aids, including a video film A.1.1.5. Implementation of 4 training 39.700 51.960 61.660 30.000 91.660

courses (7 days each) in Kalimantan, Java and Sumatra A.1.1.6. Evaluation of training courses 900 900 900

Total Output 1.1. (a) 45.800 12.920 51.960 80.680 30.000 110.680

Output 1.2. A.1.2.1. Preparation of course 900 900 900

program I

A.1.2.2. Identification and selection of 900 900 900

participants A.1.2.3. Identification and contacting of 900 900 900

resource persons A.1.2.4 Preparation and reproduction 10.900 7.000 17.900 17.900

of training materials, texts and visual ~

aids, including a video film

21

Table/Activity + 10. 20. 30. 40. 50. 60. 80. IITO ISWA Total Non-Activity Based Expenses Project Sub- Duty Capital Cons. Misc. IITO

Personal Contract Travel Items Items Review

A.1.2.S. Implementation of 4 training 24.100 21.960 46.060 46.060

courses (7 days each) in Kalimantan, Java and Sumatra. A.1.2.6. Evaluation of traininQ courses 900 900 900

Total Output 1.2. (b) 38.600 7.000 21.960 67.560 67.560

Output 1.3. A.1.3.1 Preparation of course 900 900 900

program A.1.3.2 Identification and selection of 900 900 900

participants A.1.3.3. Identification and contacting of 900 900 900

resource persons A.1.3.4 Preparation and reproduction 1.700 7.000 8.700 8.700

of training materials, texts and visual aids, including a video film A.1.3.S. Implementation of 4 training 5.300 20.100 25.400 25.400

courses (7 days each) in Kalimantan, Java and Sumatra. A.1.3.6. Evaluation of training courses 900 900 900

Total Output 1.3. (c) 10.600 7.000 20.100 37.700 37.700

Output 2.1. A.2.1.1. Compile the existing studies 3.300 3.300 3.300

on wood species A.2.1.2. Make a sampling test on the 21.000 300 900 10.200 12.000 22.200

30 species to laboratory cooperate with R&D of Forestry Department RI.

22

Table/Activity + 10. 20. 30. 40. 50. 60. 80. ITIO ISWA Total Non-Activity Based Expenses Project Sub- Duty Capital Cons. Misc. ITIO


A.2.1.3. Analyze raw material on 15.300 15.300 15.300 I

sources, raw material demand, supply, I

price indicators, and distribution system. A.2.1.4 Dissemination of a wood 8.000 8.000 8.000

structure and characteristic handbook A.2.1.5 Organize two workshops on 11.400 6.000 12.000 29.400 29.400

sustainable wood supply, including the potential of lesser-used species with the participation of key stakeholders, including policy planners in the Government and timber associations. Total Output 2.1. (d) 18.600 29.000 11.700 6.900 12.000 66.200 12.000 78.200

Output 2.2. A.2.2.1. Development of an ISWA 18.000 12.000 31.600 64.800 86.400 40.000 126.400

website to widely disseminate project results to interested parties i

A.2.2.2. Comparative study tours to 31.500 10.000 21.500 31.500 I

Malaysia, China and Japan to collect I

information on timber industry training and research system, product standards, quality/grading requirements and technical regulations A.2.2.3. Development & distribution of 23.400 36.000 44.400 15.000 59.400 !

a regular bulletin Total Output 2.2. (e) 41.400 48.000 31.500 31.600 64.800 140.800 76.500 217.300

Output 2.3. A.2.3.1. Identification of tools & testing 9.300 9.300 9.300

equipment for training.

23



A.2.3.2. Establishment of a small-scale 173.200 45.000 138.200 80.000 218.200

training center in an existing wood processing factories in Java and procurement of tools and testing equipment for training A.2.3.3. Installment of tools & testing 9.000 2.000 11.000 11.000

equipment A.2.3.4. Training on the use of tools & 40.700 23.700 17.000 40.700 !

testing equipments A.2.3.5. Development of a business 900 900 900

plan for the sustainability of facilities established by the project Total Output 2.3. (f) 19.200 2.000 173.200 85.700 183.100 97.000 280.100

Non Activity Based Expense N.1. Domestic air travel for PO for 4.860 4.860 4.860

overall monitoring & implementation of activity N.2. Days of DSA for PO for 9.600 9.600 9.600 I

overall monitoring & implementation of activity N.3. Procurement of Project 36.720 15.000 36.720

Secretariat office (68 m2 @ $15/mo) x 12 N.4. Office supplies & stationary 7.200 7.200 7.200

N.5. Insurance for machine 4.800 4.800 4.800

N.6. Sundry: Communication 18.000 18.000 18.000

Expenses N.? Auditing 6.000 6.000 6.000

N.8. Contingencies 24.000 14.000 10.000 24.000

24



N.9. ITTO Monitoring & Evaluation 135.408 130.158

N.10. ITTO Program Support Costs 54.163 52.063

Total Non-Activity B. Expenses(g) 36.720 14.460 7.200 52.800 189.571 268.401 25.000 300.751

Grand Total 174.200 142.640 151.680 204.800 99.800 129.600 189.571 809.441 240.500 1.092.291

25

7.2. Consolidated Total and Yearly Project Budget

Budget Component Total Year 1 Year 2 Year 3

10 Project Personal 11. National Experts 23.200 10.400 3.200 9.600 13. Other Labor 61.200 31.400 15.200 14.600 15. International Experts 30.000 20.000 5.000 5.000 16. International Consultants 45.000 20.000 10.000 10.000 17. Project Secretary 19.800 10.800 3.600 5.400

19. Component Total 139.200 92.600 37.000 44.600

20 Sub-Contracts 21. Sub-Contracts 142.640 82.160 32.240 28.240

29. Component Total 142.640 82.160 32.240 28.240

30 Duty Travel 31. Daily Subsistence Allowance 103.920 36.840 41.040 26.040 32. International Travel 31.500 10.500 10.500 10.500 33. Local Transport Costs 300 300 34. Domestic Air Travel 15.960 6.270 6.270 3.420

39. Component Total 151.680 53.910 57.810 39.940

40 Capital Items 42. Land 78.000 78.000 44. Capital Equipment 126.800 105.800 10.500 10.500

49. Component Total 204.800 183.800 10.500 10.500

50 Consumable Items 51. Raw Materials 41.600 41.600 54. Office Supplies and Stationery 13.200 5.400 5.400 2.400 55. Electricity 45.000 45.000

59. Component Total 99.800 92.000 5.400 2.400

60 Miscellaneous 61. Sundry 87.600 29.200 29.200 29.200 62. Auditing 6.000 2.000 2.000 2.000 63. Contingencies 36.000 14.000 14.000 14.000

69. Component Total 129.600 45.200 45.200 45.200

80 Project Personal 81. Monitoring and Review Costs 135.408 45.136 45.136 45.136 83. Programme Support Costs 54.163 18.000 18.000 18.163

89. Component Total 189.571 63.136 63.136 63.299

Grand Total 1.092.291 612.806 251.286 228.199

26

7.3. Project Budget - Executing Agency

7.3.1. ISWA

Budget Component

10 Project Personal 20 Sub-Contracts 30 Duty Travel 40 Capital Items 50 Consumable Items 60 Miscellaneous 80 Project Personal

Total

27

Total

42.000 51.500 80.000 17.000 50.000

240.500

7.4. Budget Worksheets

Inputs Unit Quarter Budget Total

I Activities Units and Quality No. Costs Year Component Amount

OUTPUT 1.1 About 200 head saw·doctors and trainers of wood working factories and from technical institutes trained with improved skills in sawing methods and saw·doctoring and other basic wood processing techniques such as molding profile/knife grinding, kiln drying and preservation 1.1.1 Preparation of courses programs Project Secretary 1 900 Q1Y1 17 900 1.1.2 Identification and contacting of resource

persons Project Secretary 1 900 Q1Y1 17 900 1.1.3 Identification and selection of 200 (two

hundred) participants Project Secretary 1 900 Q2Y1·Q4Y2 17 900 1.1.4 Preparation and reproduction of training Project Secretary 1 900 Q1Y1·Q2Y1 17 900

materials, texts and visual aids, including Weeks of local expert in Saw Doctoring 1 800 Q1Y1·Q2Y1 11 800 a video film. Weeks of local expert in Wood Processing Technic 1 800 Q1Y1·Q2Y1 11 800

Collection of Training aids and materials 28 240 Q1Y1·Q2Y1 21 6,720

Translate into Indonesian Language 1 3,000 Q1Y1·Q2Y1 21 3,000

Making of a video/visual training material (4 topics) 1 3,200 Q1Y1·Q2Y1 21 3,200 1.1.5 Implementation of 4 training courses (7 Project Secretary 1 900 Q3Y1·Q1Y3 17 900

days each) in Kalimantan, Java and International consultant 3 10,000 Q3Y1·Q1Y3 16 30,000 Sumatra Days of DSA for participants (200x7) 1400 30 Q3Y1·Q1Y3 31 42,000

Days of DSA for local expert (2x4x7) 56 120 Q3Y1·Q1Y3 31 6,720

Weeks of local expert in Saw Doctoring(1x4) 4 800 Q3Y1·Q1Y3 11 3,200 Weeks of local expert in Wood Processing Technic(1x4) 4 800 Q3Y1·Q1Y3 11 3,200

Weeks of local assistant (2x4) 8 300 Q3Y1·Q1Y3 13 2,400

Return air ticket 12 270 Q3Y1·Q1Y3 34 3,240 1.1.6 Evaluation of training courses Project Secretary 1 900 Q2Y3 17 900

Sub·Total for output 2.1 110,680

28

Inputs Unit Quarter Budget Total Activities Units and Quality No. Costs Year Component Amount

OUTPUT 1.2

About 100 technicians of wood working factories and from technical institutes trained with improved knowledge of product quality management 1.2.1 Preparation of course program Project Secretary 1 900 Q1Y1 17 900 1.2.2 Identification and contacting of resource

persons Project Secretary 1 900 Q1Y1 17 900

1.2.3 Identification and selection of participants Project Secretary 1 900 Q1Y1-Q4Y2 17 900

1.2.4 Preparation and reproduction of training Project Secretary 1 900 Q1Y1-Q2Y1 17 900 materials, texts and visual aids, including International expert in Product Quality a video film. Management 1 10,000 Q1Y1-Q2Y1 15 10,000

Collection of Training aids and materials 1 2,000 Q1Y1-Q2Y1 21 2,000

Translate into Indonesian Language 1 3,000 Q1Y1-Q2Y1 21 3,000

Making of a video/visual training material 1 2,000 Q1Y1-Q2Y1 21 2,000 1.2.5 Implementation of 4 training courses (7 Project Secretary 1 900 Q2Y1-Q1Y3 17 900

days each) in Kalimantan, Java and International expert in Product Quality Sumatra Management 2 10,000 Q2Y1-Q1Y3 15 20,000

Days of DSA for participants (100x5) 500 30 Q2Y1-Q1Y3 31 5,000

Days of DSA for expert (2x5x4) 40 120 Q2Y1-Q1Y3 31 4,800 Weeks of local expert in Product Quality Management (1x4) 4 800 Q2Y1-Q1Y3 11 3,200

Return air ticket 8 270 Q2Y1-Q1Y3 34 2,160 1.2.6 Evaluation of training courses Project Secretary 1 900 Q3Y3 17 900

Sub-Total for output 2.2 67,560

OUTPUT 1.3

About 100 plant managers and supervisors of wood working factories trained with up-grade skills in industrial management 1.3.1 Preparation of course program Project Secretary 1 900 Q1Y1 17 900

29


1.3.2 Identification and contacting of resource Project Secretary 1 persons

900 Q1Y1 17 900

1.3.3 Identification and selection of participants Project Secretary 1 900 Q1Y1-Q3Y2 17 900

1.3.4 Preparation and reproduction of training Project Secretary 1 900 Q1Y1-Q2Y1 17 900 materials, texts and visual aids, including

Weeks of local expert in Industrial Management 1 800 a video film. Q1Y1-Q2Y1 11 800

Collection of Training aids and materials 1 2,000 Q1Y1-Q2Y1 21 2,000

Translate into Indonesian Language 1 3.000 Q1Y1-Q2Y1 21 3,000

Making of a video/visual training material (4 topics) 1 2,000 Q1Y1-Q2Y1 21 2,000 1.3.5 Implementation of 4 training courses (7 Project Secretary 1 900 Q2Y1-Q4Y2 17 900

days each) in Kalimantan, Java and Days of DSA for participants (100x5) 500 30 Q2Y1-Q4Y2 31 15,000 Sumatra Days of DSA for local expert (1x5x4) 20 120 Q2Y1-Q4Y2 31 2.400

Weeks of local expert in Saw Doctoring(1x4) 4 800 Q2Y1-Q4Y2 11 3,200

Weeks of local assistant (1 x4) 4 300 Q2Y1-Q4Y2 13 1,200

Return air ticket 10 270 Q2Y1-Q4Y2 34 2}OO 1.3.6 Evaluation of training courses Project Secretary 1 900 Q1Y3 17 00


OUTPUT 2.1 Mechanical property information on Indonesian wood species compiled for wider range of species utilization (common used species, lesser known species and plantation species) in amount 60 species.

2.1.1 Project Secretary 1 900 Q1Y1-Q2Y1 17 900 Compile the existing study on wood species Weeks of national experts on wood species 4 600 Q1Y1-Q2Y1 11 2.400

2.1.2 Make a sampling test on the 30 species Sub-contract laboratory test 30 700 Q2Y1-Q4Y1 21 21,000 to laboratory cooperate with R&D of Local purchase of material & sample @ 0.1 m3 30 30 Q2Y1-Q4Y1 51 900 Forestry Department and/or

Cost of freight transfer material to laboratory 30 10 Q2Y1-Q4Y1 33 300 local/overseas laboratory/science institution

30


2.1.3 Project Secretary 1 900 Q3Y1-Q4Y1 17 900 Analyze raw material on sources, raw

Weeks of national experts on wood species 24 600 Q3Y1-Q4Y1 13 14,400 material demand, supply, price indicators, and distribution system

2.1.4 Dissemination of a wood structure and Sub-contract Handbook printing 1000 8 Q1Y2-Q2Y2 21 8,000 characteristic handbook

2.1.5 Organize two workshops on sustainable Workshop I (Jakarta) invite 80 participant 1 9,000 Q3Y1-Q4Y2 63 9,000 wood supply, including the potential of

Days of DSA for resource persons 14 300 Q3Y1-Q4Y2 31 4,200 lesser-used species with the participation of key stakeholders, including policy Workshop 11 (Balikpapan) invite 30 participant 1 3,000 Q3Y1-Q4Y2 63 3,000 planners in the Government and timber

Days of DSA for resource persons 14 300 Q3Y1-Q4Y2 31 4,200 associations Return air ticket to Balikpapan and

accommodations (6 persons) 1 3,000 Q3Y1-Q4Y2 34 3,000

Workshop topics preparation 1 6,000 Q3Y1-Q4Y2 54 6,000


OUTPUT 2.2 Technical information on product standards, quality/grading requirements and technical regulations in sawn wood products in international markets provided to managers of wood working companies, relevant associations and government agencies

2.2.1 Development of an ISWA website to Development of Web Application 1 12,000 Q1Y1-Q4Y3 21 2,000 widely disseminate project results to

Build servers (hardware) 2 2,000 Q1Y1-Q4Y3 44 24,000 interested parties Operating system and other software 2 3,800 Q1Y1-Q4Y3 44 7,600

Sundry: Months of internet connection to ISP 36 1,800 Q1Y1-Q4Y3 61 64,800

Months of Staff for operation and maintenance 60 300 Q1Y1-Q4Y3 13 18,000 2.2.2 Comparative study tours to Malaysia,

China and Japan to collect information Return Y Class ticket & Accommodation (3x3) 9 3,500 Q3Y1-Q3Y3 32 1,500

on timber industry training and research system, product standards, quality/grading requirements and technical regulations

31


2.2.3 500 bulletin every 2 months @ $4 18 2,000 Q1Y1-Q4Y3 21 36,000 Identification and contacting of resource

Months of Editor 36 400 Q1Y1-Q4Y3 13 14,400 persons Development & distribution of a regular bulletin Months of Staff 36 250 Q1Y1-Q4Y3 13 9,000


OUTPUT 2.3

Tooling, maintenance and testing facilities available to wood working factories. 2.3.1 Identification of tools & testing equipment Weeks of national experts on saw doctoring 1 800 Q1Y1 11 800

for training. Weeks of national experts on profile grinding 1 800 Q2Y1 11 800

International consultant 0.5 10,000 Q2Y1 16 5,000

Project Secretary 1 900 Q2Y1 17 900

Project Technical staff 2 900 Q2Y1 13 1,800 2.3.2 Establishment of a small-scale training Procurement Facility for training centre 1 78,000 Q2Y1 42 78,000

center in an existing wood processing Band Saw (Saw Doctor) Grinding Kit-Set 1 18,000 Q2Y1 44 factories in Java and procurement of 18,000

tools and testing equipment for training Profile Grinding Machine with Attachment 1 32,000 Q2Y1 44 32,000

Planner Straight Grinding Machine 1 2,000 Q2Y1 44 12,000

Universal Grinding Machine for Circular Saw 3 9,600 Q2Y1 44 28,800

Measurement (scale match) Kit-Set 5 420 Q2Y1 44 2,100

Moisture Content Measurement Kit-Set 5 460 Q2Y1 44 2,300

Months of electricity cost 30 1,500 Q2Y1 55 45,000 2.3.3 Installment of tools & testing equipment Installing by machinery supplier technician for test-

run all-in 4 500 Q2Y1 21 2,000

Weeks of national expert on saw doctoring 1 2,000 Q2Y1 11 2,000

Weeks of national expert on profile grinding 1 2,000 Q2Y1 11 2,000

International Consultant 0.5 10,000 Q2Y1 16 5,000

32


2.3.4 Training on the use of tools & testing Training materials of band-saw blade ( Qtt tool) 5 600 Q2Y1 51 3,000 equipments

Training materials of blank-knife for profile 100 130 Q2Y1 51 13,000

Training materials of plan blade 20 130 Q2Y1 51 2,600

Car bite tape 500 40 Q2Y1 51 20,000

Welding blander 3 700 Q2Y1 51 2,100 2.3.5 Development of a business plan for the

sustainability of facilities established by Project Secretary 1 900 Q4Y1-Q4Y3 17 900

the project


TOTAL OUTPUT 791,540 Non-activity based expenses Domestic air travel for PO for overall monitoring &

implementation of activity 18 270 34 4,860 Days of DSA for PO for overall monitoring & implementation of activity 80 120 31 9,600 Procurement of Project Secretariat office (68 m2 @ $15/mo) x 12 3 12,240 21 36,720

Office supplies & stationary 3 2,400 54 7,200

Insurance for machine 3 1,600 61 4,800

Sundry: Communication Expenses 3 6,000 61 18,000

Auditing 3 2,000 62 6,000

Contingencies 3 8,000 63 24,000

ITTO Monitoring & Evaluation 1 130,158 81 135,408

ITTO Program Support Costs 1 52,063 83 54,163

GRAND TOTAL 1,092,391

33

PART Ill: OPERATIONAL ARRANGEMENTS

1. Management Structure

I

I

I

I

The project will be carried out under the coordination of ISWA and Ministry of Forestry (MOF). ISWA will be acting as the Project executing Agency under the overall supervision of the Director General of Forest products Development, Ministry of Forestry. Other agencies such as Ministry of Industry, Private and state Enterprise will also be involved under the supervision of the Project Steering Committee (PSC). At this Committee, representatives from selected local governments, environmental NGOs such as WWF-Indonesia will be invited as observers to ensure multistakeholders consultation.

Project Organization Chart

ITTO I .. .I

ISWAlMOF I I ~I

• Project Steering Committee 0 MoF 0 Association 0 Enterprise 0 Other related

institutions

~r + Auditor I ... 1 Project Leader j I ~ I

ConsultanUExpert I

I I Wood Processing I Market information

J Training

J

The project manager will be from ISW A. The project coordinator should be a senior manager at forest industry, which has responsible for the planning of the project activities and project management.

The Executing Agency will closely work with research and development institutes on wood utilization such the Forest Products Research and Development Centre (FPRDC) in Bogor.

34

2. Monitoring Reporting and Evaluation

1. Progress reports;

A project progress report will be prepared and submitted to ITTO, the progress report will be available at 6 monthly intervals after project star-up. This report will be prepared under the responsibility ofproject coordinator.

2. Project Completion Report;

A project completion report will be prepared and submitted to ITTO as soon as the project completed and not more than 3 months after.

3. Project Technical Report;

Project technical reports for studies, workshop and training reports will be provided within 3 months of the project completion.

4. Monitoring, Review and Steering committee visit

The project will be subject to monitoring by representatives of ITTO at least once every 12 months. The monitoring mission will visit Executing Agency and relevant field sites.

5. Evaluation

A final evaluation will be conducted based on Project Outputs

3. Future Operation and Maintenance

The initiation and subsequent implementation of the activities of the project will be contingent upon the timely provision by the Executing Agency of the adequate premises, facilities and services required for the effective operation of the project. The equipment, components and materials acquired by the proj ect will be the responsibility of the Executing Agency which, at the completion of the project, will decide on its disposal in accordance with ITTO procedures.

The thrust of the project will be directed to build up the training and development capability at ISW A and to carry out priority activities in the output areas. At the end of the project period, all the planned activities will have been carried out, and the attempted sustainable impact on the local capacities of both the private and public sectors would have been achieved. The project activities are expected to be followed by other national-level programmes for wood processing industry development which would be financed and executed separately.

However, given the importance of the issues involved in the development of the wood processing sector and the identified extensive needs for assistance, it is possible that the execution of tentative national follow-up programs may require additional technical assistance at international level. In such a case a separate proj ect could be formulated in due course to enhance development impacts. This possibility could be considered during an ex-post evaluation of the project so that necessary preparatory action could be timely taken.

35

PART IV: TROPICAL TIMBER FRAMEWORK

1. Compliance with ITTA 1994 Objectives

The project is of direct relevance to the following objectives stipulated in Article 1 of the ITTA, 1994.

d. To enhance the capacity of members to implement a strategy for achieving exports of tropical timber and timber products from sustainable managed sources by the year 2000;

f. To promote and support research and development with a view to improving forest management and efficiency of wood utilization as well as increasing the capacity to conserve and enhance other forest values in timber producing tropical forests;

1. To promote increase and further processing oftropical timber from sustainable sources in producing member countries;

J. To improve marketing and distribution oftropical timber exports from sustainable managed sources;

m. To promote the access to, and transfer of, technologies and technical cooperation;

2. Compliance with ITTO Action Plan

This project meets the priority actions identified under ITTO Yokohama Action Plan 2002-2006 of the Forest Industry

Goal 1

1. Assist in the promotion and transfer of new and/or improved techniques and technologies

2. Encourage and assist Members, as appropriate, to promote investment in timber processing industry by taking steps to:

• Recognize the importance of a sound balance between sustainable timber production and the processing capacity of the connected industry;

• Organize workshops/seminars on the use of new and/or improved techniques, technology and the development, testing and adoption of guidelines;

Goal 2

1. Assist with human resource development and institutional strengthening through specialist workshops and seminars and the provision of fellowships.

Under Goal 1 & 2, Project activities organize and conduct short training, course for production planning for owner, technicians and production managers in wood processing in Indonesia to introduce appropriate wood processing technologies. Also organize a series of workshops on sustainable wood supply to improve knowledge and better understanding the future development of the wood processing industry.

36

Goal 3

1. Facilitate and encourage development of demonstrations, which address increased efficiency in the widest sense.

2. Assist in the promotion, transfer and adoption of new and/or improved techniques and technologies through publications and other media, workshops, seminars and fellowships.

3. Encourage and assist Members, as appropriate to: Develop, test and adopt regional and national guidelines that assist in the efficient conversion of raw material and help minimize waste and losses at all stages.

Under this goal, project activities provide key issues such as the possibility of increasing the yield obtained in sawing the logs and improve the quality of the sawn timber producing using the existing equipment through better saw doctoring and improved machine maintenance and overhaul procedures.

37

ANNEX

38

ANNEX 1: SPECIFICATIONS OF TRAINING ACTIVITIES

1. Course on Fundamental of Tooling and Maintenance

1.1. Objectives

To improve Band-saw blade saw doctoring and profile knife grinding practices, the diagnostic of faults and correct maintenance of operate the machines in the mills to processes tropical hardwood.

To prepare training material, a video and visual aids on this topic for use in the industry as well as in educational establishments in the country.

1.2. Methodology

Classroom training (lectures) in the mornings and demonstrations in the afternoons. Before the start of the course, the consultant will prepare a 30 minute video (in Indonesian Language) to complement the lecture notes and serve as reference material on correct practices to participants from the industry. The one week course will be held in Kalimantan, Java and Sumatra where the production of sawn timber or molding are important. Participants from industry will be handed the course material, in Indonesian Language, and a copy of the video, while those· from teaching institutions will also be handed a complete set of visual aids, in Indonesian Language, used during the course.

1.3. Contents

Fundamental of Tooling and Maintenance.

The following topics will be covered:

Lectures: • Theory of sawing, types of teeth used for sawing tropical hardwood and their

technical characteristics (definitions of angles and their values, types of settings for the teeth, hardening of teeth etc.)

• Types of saw-blade, saw doctoring and profile knife grinder equipment suitable for processing tropical hardwood

• Technical factors in the sawing machines that affect the precision of sawing and the life of the blades

• Use and abuse of tooling, carbide grade selection tool materials, re-sharpening, grading wheels and the influence of machine condition on a success of the wood working process

• Setting up the molder step by step procedures, provide graphics and drawing help to explain the critical details

• Theory of basic set-up molder spindle, profile change over, stock preparation, machine components, safety requirements, remedies for surface defects

• Types of timber preservation technologies • Types of timber drying technologies • Troubleshooting the dry kiln and its controller, ways to analyze what is happening

in the dry kiln, shows a series of dry kiln control chart and explains how to "red" the charts to understand what is happening in the kiln, and overall kiln maintenance

• Quality influences in kiln drying, common sense presentation which will help reduce drying degrade of timber, by understanding character of timber, how to

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avoid degrade and modify drying schedules, lumber stacking, sampling procedures and the techniques of equalizing and conditioning

Demonstrations: • Poor quality of sawn surfaces and increased power consumption when sawing with

blunt saws or with teeth having inappropriate profiles or poor setting, • Demonstration of welding of band saws and testing of welds done by the

participants. • Demonstration of tensioning (using rollers and hammers), and assessment of the

quality of the tensioning done by the participants. • Demonstration of the various types of setting of the teeth

2. Course on Product Quality Management

2.1. Objectives

To improve knowledge about the critical role of the Total Quality Management (TQM) in improving the miller operational efficiency, and competitiveness

To prepare training material, a video and visual aids in Indonesian Language on this topic for use in the industry as well as in educational establishments in the country.

2.2. Methodology

Classroom training (lectures) in the mornings and demonstrations in the afternoons.

The five-day course will be held in Kalimantan, Java and Sumatra. The first day of the week will be used to prepare the samples that will be used in the demonstrations.

Before the start of the courses, the consultant will, in his first week in Indonesia, visit some factories to familiarize himself with local conditions and practices and prepare a 30 minute video (in Indonesian Language) to complement the lecture notes and serve as reference material on correct practices to participants from the industry.

The lectures will be in Indonesian Language and/or English with interpretation in Indonesian Language. Course material will be in participants from industry will be handed the course material and a copy of the video, while those from teaching institutions will also be handed a complete set of visual aids used during the course.

2.3. Contents


Lectures: • Description of products standards, quality/grading and technical regulations • Description of quality management system used in wood processing • Description of the various types of equipment used to improve quality management • Correct quality control system preparation prior to production processing • Testing the quality of the finished products.

Demonstrations: • Demonstration of various application methods for quality management system.

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• Demonstration of the various types of equipment, including their correct maintenance and/or showing of videos.

• Demonstration of the correct quality control system preparation procedures, including the appropriate equipment.

• Demonstration of inferior products quality, low selling price, high products rejection, and large waste.

3. Course on Industrial Management

3.1. Objectives

To improve skills in planning expansion or restructuring of existing industries, resulting in higher productivity and lower investment costs as well as improve production planning and control of existing industries.

To prepare training material and visual aids in Indonesian Language on this topic for use in the industry as well as in educational establishments in the country.

3.2. Methodology

Classroom training, with lectures and in the case of production planning and control, group work (40-50 %), with considerable audience participation. When the invitations will be sent out, a short description of the existing facilities, production equipment, range of products and production capacities, as well as the production planning methods of each candidate's firm will be requested. These will be analyzed by the lecturers, who will then be in better position to select appropriate examples. A typical layout, with standard woodworking machines, will be used for the group work in production planning and control, a couple of products selected (e.g. a table and a chair, to be mass produced) and the participants will be asked to calculate the raw material requirements plan production and estimate the delivery date.

The five day course will be held in Kalimantan, Java and Sumatra. The fifth day of the week will be used for evaluation and additional discussions The lectures will be in Indonesian Language and/or English with interpretation in Indonesian Language. Course material will be in Indonesian Language.

Participants from industry will be handed the course material, while those from teaching institutions will also be handed a complete set of visual aids, in Indonesian Language, used during the course as well as copies of the group work's theme.

3.3. Contents


Plant Layout: • Importance of a good layout • Methodology

Equipment selection: • Importance of selecting appropriate equipment • Identification of exact requirements • Identification of potential suppliers • Evaluation of offers

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Production planning and control: • Importance of production planning and control • Methodology for production planning • Group work

4. Workshop on Sustainable Wood Supply

4.1. Objectives

To improve knowledge and better understanding by participants of forest resource base, the potential of about 60 lesser-used species including their wood properties, distribution channels and quality standards, in order to enable them to increase and diversify their share of the export market.

4.2 Methodology

Classroom lectures and panel discussions with visual aids and hand-out materials, as appropriate. The one-day seminar will be held in Jakarta and Balikpapan. The workshop will be used for individual consultations with participants.

4.3 Contents

The workshop will focus on the supply of raw materials sustainable managed sources in Indonesia and will cover the following main topics:

• Overview of the world wood products market and global supply trends • Current status of the wood processing industry • Wood supply situation in Indonesia and basic factors • Selecting a target market: carrying out export market research (Individual markets): • Introduction of wood properties characteristics of about 60 lesser-used species • Distribution patterns • Quality specifications and standards • Market promotion activities • Designing an strategy for sustainable supply of raw materials

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ANNEX 2: TERMS OF REFERENCE

1. The specialist on saw doctoring

Position

Duration of assignment

Starting date

Qualifications

Location

Languages

Duties

Specialist in saw doctoring

Two weeks of work at home and four weeks for conducting the courses

In the project's first and second year

Wood technologist, forester or engineer with formal training in saw doctoring. Experience in organizing and conducting training courses highly desirable.

Four weeks work at the specialist's home, and one week each in Kalimantan, Java and Sumatra

Indonesia Language

Under the overall supervision of the Project Leader and in close cooperation with the other members of the project's team, the incumbent will be expected to perform the following specific tasks:

1. Review the possible venues of the course and select the most appropriate. 2. Finalize the exact programme of the four day course, that will cover: (i) lectures on saws

and saw doctoring equipment, precision of saws, theory of sawing, types of teeth, types of grinding wheels (ii) demonstrations on saw sharpening machines, alignment of saws, welds and welding, tensioning and setting of teeth. It is envisaged to have lectures in the mornings and demonstrations in the afternoons, and to conduct the course in Indonesian Language.

3. Draft the texts of the lectures and prepare the visual aids, and submit them for printing at least two weeks before the start of the course.

4. Prepare a 30 minute video based on the texts of the lectures, to complement these texts. 5. Conduct four courses, including demonstrations, at Kalimantan, Java and Sumatra. 6. In collaboration with the Project Leader and industry representatives, evaluate the courses

and review the documentation prepared. If necessary, modify the texts of the lectures to better suit local conditions and practices (for eventual future use in the Indonesian educational system).

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2. The specialist in product quality management for the wood processing industry

Position: industry.

Duration

Starting date

Qualifications

Location

Languages would be an asset.

Duties

Specialist in production planning and quality control for the wood processing

Six weeks of work; two at home and four weeks in Indonesia

In the project's second year

Engineer specialized in the wood processing industry, with long experience at decision-making level in the operation of small-medium wood processing factories and experience in developing and training wood processing technologies.

Two weeks work at the specialist's home, and three weeks in Indonesia

English/Indonesian Language, basic knowledge of Indonesian Language

Under the overall supervision of the Project Leader and in close cooperation with the other members of the project's team, the incumbent will be expected to perform the following specific tasks: 1. Finalize the exact programme for a five-day course on production planning

and control management. 2. Draft the texts of lectures and prepare the visual aids and other adequate

training material and submit them to the project in Jakarta at least four weeks before the start of the course.

3. Upon his arrival in Indonesia and in collaboration with the other specialist (covering plant layout and equipment selection) make the final arrangements for the course.

4. Conduct the course, which will be held in Kalimantan, Java and Sumatra. 5. In the days he will not be lecturing, provide ad hoc assistance to selected

factories in the region. 6. In collaboration with the Project Leader, industry representatives and

other specialists, evaluate the courses and review the documentation prepared. If necessary, modify the texts of lectures to better suit local conditions and practices (for eventual future use in the Indonesian technical education system).

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3. The specialist in industrial management for the wood processing industry

Position Specialist in plant layout and equipment selection for the wood processing industry

Duration of assignment

Starting date

Six weeks of work, two, at home and four weeks in Indonesia.

In the project's second year

Qualifications Engineer or wood technologist, with considerable experience in the planning and expansion of wood manufacturing plants. Specifically he should have experience in the preparation of plant layouts, identification of equipment needs, drafting of technical specifications, identification of suppliers and evaluation of bids. Experience in conducting courses and lecturing on these topics highly desirable.

Languages Englishllndonesian Language, basic knowledge of Indonesian Language would be an asset

Duties Under the overall supervision of the Project Leader and in close cooperation with the other members of the project's team, the incumbent will be expected to perform the following specific tasks:

1. Finalize the exact programme for the course on plant layout and equipment selection and industrial management for wood processing industry.

2. Draft the texts of the lectures and prepare the visual aids and other training material and submit them to the project in Jakarta at least four weeks before the start of the course for translation into Indonesian Language and printing.

3. Upon his arrival in Indonesia he will, in collaboration with the other specialist (covering production planning and control) make the final arrangements for the course.

4. Conduct the course, which will be held in Kalimantan, Java and Sumatra. 5. In the days he will not be lecturing, he will provide ad hoc assistance to selected

factories in the region. 6. In collaboration with the Project Leader, industry representatives and the other

specialist, evaluate the courses and review the documentation prepared. If necessary, modify the texts of the lectures to better suit local conditions and practices (for eventual future use in the Indonesian technical education system).

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ANNEX 3: PROFILE OF EXECUTING AGENCY

This pre-project will be implemented by the Indonesian Sawmill and Woodworking Association (ISWA) in cooperation with Directorate of Forest Products Processing and Marketing, Ministry of Forestry, Indonesia.

1. Background

ISA was established in 1972 and has been renamed ISWA by The National Congress held in Surabaya, Indonesia on October 31, 2002; the initial purpose was to promote the development of wood industrialization, centered on the production of sawn-timber and downstream processed products, and to assist the marketing of the processed wood products in domestic and international markets. In 1998, ISA comprised 1,465 saw-millers of various scale and was organized through seventeen Regional Coordinators stationed in each province of Indonesia where plants were located. Most of products exported between 1972 and 1988 were in the form of sawn-wood.

Imposition of high export tax of sawn-wood since 1988 has forced ISA members to develop further wood processing facilities. Indeed, downstream processing has grown rapidly since then and today, most of the products exported was in the form of semifinished and finished products consisting of : door & window components and engineered timber doors, solid & laminated finger joint flooring, parquet flooring, skirting and various wood profiles, ship-deck & ship flooring, solid & finger .joint laminating for furniture & housing parts, scantling three layers laminating, dowel, turning, balustrade, and any kind of wood sticks.

ISW A members today are around 500 processors, with strong export orientation. During the last decade, members of ISA have been exporting around 1.2 million m3 of processed products per annum valued at US$ 700 million. ISA members consume around 3.0 million m3 (log equivalent) of wood as raw material. Most of the raw material is obtained from domestic free market in the form of rough sawn timber.

2. Infrastructure

ISWA Headquarters is at Manggala Wanabakti, Indonesia Forestry Center Building, occupying around 400 m2 of floor. ISW A operates an information system called ISW A Wood Data Center (Pusat Data Perkayuan ISW A, widely known as PDPI). The system utilizes contemporary computer technologies and operates under the domain: www.iwwn.com. The system contains up to date information on markets of wood products and processing technologies though with some limitations, and members are free to access the system. At present the President of ISW A is Mrs. Hj. Soewarni and the Secretary General is Mr. Jimmy Purwonegoro. In total the Headquarters employs 15 staff; many of them are forestry university graduates.

3. Current work programmes

ISWA's working programmes, among others, are

In the supply of wood materials: to compile the resources, species usage, prices of round log and sawn timber (local market information), to increase efficiency of wood materials in line with sustainable forest management.

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In production and industry: to develop efficiency and productivity in production of woodworking to obtain the maximum added value, to guide the members to maximize utilization of wood.

In marketing: to monitor the market development and trend of product commodity, to promote the products through exhibitions and our embassies abroad.

In addition, some research works have been done to find lesser-used species (LUS) for product diversification for industry. Primary information on about 60 LUS has been identified. Those programs and activities will support the project proposes which in line with sustainable wood industry in Indonesia.

ISWA has implemented ITTO pre-project PPD 57/02 (1) "Improvement of Processing Efficiency of Tropical Timber from Sustainable Sources in Indonesia", which was approved and financed at 33rd session of the ITTC in Y okohama, in November 2002. Its experience in implementing PPD 57/02 will substantially facilitate the required work for the current proj ect.

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project proposal itto · this project proposal is based on the findings and recommendations derived...

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