Background and Objective: This research is conducted in order to see which forest products especially wood products have the best value added in wood trading in Indonesia by using sales margin and profit margin formula. Wood products in this research are log, sawn timber, plywood, particle board and furniture that made from mixed tropical hardwood, meranti and luxury classes of timber. Methodology: Price information, marketing agency and production cost of wood products in international and domestic market collected by interview with wood products companies, APHI and BPS are then the information that can be used as data process using actor identification, sales margin analysis, and profit margin analysis. Results: In the mixed tropical hardwood class to be exported mostly processed into plywood with the profit of Rp1,644,500/ m³ log. Meranti is exported in the form of sawn timber with the profit margin of Rp 2,070,250/ m³ log. Furniture is the best-processed product for luxury classes of timber with the profit margin of Rp 9,129,120/ m³ log in the international market, and it has the highest profit margin / m³ log from all of the products made from tropical hardwood in this research. Conclusion: Based on the research, the most appropriate strategy to improve the added value of wood trading in Indonesia is through selling the mixed forest hardwood class in the form of plywood, meranti wood class, in the form of sawn timber and luxury wood class in the form of furniture because they have the highest sales margin and profit margin. The government should consider giving export permit for meranti wood class processed into sawn timber because after observing the analysis, it has the highest market and profit margin than meranti wood class processed into other products.
Keywords: Value added, profit margin, sales margin, wood, wood trading
