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2. Restructuring of pulp & paper to improve performance. (Industry).

Demand for pulp and paper in the country has continued to increase, but according to the Association of Pulp and Paper Producer (APKI), sales of pulp and paper on the domestic market dropped 127% last year. AKKI blamed dumping by a number of countries including South Korea, India, Malaysia and Finland for the weak demand for local products.

Dumping is growing in the country, affecting price stability lately. Local producers are confronted with unhealthy competition facing foreign product sold at dumping prices, APKI said.

APKI urge the Indonesian Anti Dumping Committee (KADI) to slap a 30%-50% surcharge on the foreign products to create price stability on the domestic market and a fair competition. Initial indications of dumping found by KADI included a surge in imports from the four countries including uncoated uncoated writing and printing paper in the tariff category of HS 4802.52.200 and the price levels which are below the prevailing price on the domestic market.

In a bid to improve the performance of paper industry in the country, the government is seeking to restructure the industry by continuing to take inventory of pulp and paper companies to have data about installed capacity and real production of each company. In addition the step is to control the use of log raw material from non industrial timber estate (HTI).

APKI said the raw material is sufficiently available in the country but the autonomy system has caused confusion in the implementation of regulations.

Despite the alleged dumping, the country's production of pulp and paper has tended to continue to increase. Both installed capacity and real production have increased. APKI said the country's installed capacity for pulp now totaled 6.6 million tons, up from 5.6 million tons in 2001. Meanwhile, production rose from 4.7 million tons in 2001 to 5.4 million tons in 2003.

Similarly, the country's installed capacity for paper rose to 10.3 million tons from 9.9 million tons in 2001 and the production increased from 7 million tons to 8.2 million tons in the same period.

Production of kraft paper the largest

AIPKI said the production of kraft liner paper this year is predicted to rise 13.6% to 2.5 million tons from 2.2 million tons in 2002. Kraft line paper and fluiting or box paper contributed the largest part to the country's paper production, which grew by 9.8% annually. The increase in production is boosted by growing demand.

Box paper is used widely as packaging for manufactured goods and demand for which depends much on the development of the manufacturing sector especially food and beverage industry and other industries producing export commodities.

Box paper competes in the market with board paper which is also used widely as packaging for goods, but boards are used mainly as book and magazines covers.

Exports of box paper are small, therefore, its exports could still be increased. Exports could not yet be increased because of the large consumption on the domestic market while expansion of production capacity is not easy. Last year demand for box paper rose 9.4%. Around 90% of the country's production of box paper is disposed of on the domestic market.

Though production is expected to grow only by 13.6% this year or lower than last year's 15.8%, sales of box paper is predicted to continue to increase as the price of paper in the country follows the trend of international prices

Meanwhile, demand for kraft liner paper on the domestic market has continued to increase in the past three years. Consumption of this type of paper totaled 2.1 million tons in 2002 or an increase of 10.5% from 1.8 million the year before. Consumption this year is expected to grow by 9.5% to 2.3 million tons this year.
Table--1
Projected production or pulp and paper

(million tons)

Year Capacity Production

Pulp:
2001 5.6 4.7
2002 6.3 5.0
2003 *) 6.6 5.4
Paper:
2001 9,9 7
2002 10 7,6
2003 *) 10,3 8,2

Source: APKI

*) estimate

Table--2
Production of kraft liner paper

 Year Production Growth
 (million tons) (%)

 2000 1.9 --
 2001 1.9 0
 2002 2.2 15.8
 2003 *) 2.5 13.6
Average growth 9.8

Source: APKI

*) estimate

Table--3
Exports and imports of kraft liner paper & fluting

(Tons)

Year Import Exports Consumption

2000 49,245 246,760 1,745,855
2001 44,870 122,445 1,896,685
2002 42,660 181,975 2,094,030
2003 * 40,530 191,200 2,303,450

Source: APKI
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Comment:2. Restructuring of pulp & paper to improve performance. (Industry).
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Jul 29, 2003
Words:768
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