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Indonesia paint industry feature.

INDONESIA'S paint and coatings industry continues to develop, with growth in sectors being led by increases in exports of furniture, and the introduction of new coatings products and systems.

Overall increased domestic demand for paints and coatings in Indonesia has led some companies to expand. Jotun, which has been making decorative and marine paints, and protective coatings in Indonesia since 1983, recently opened a new factory at Bekasi, just outside Jakarta. The new factory has roughly three times the capacity of its predecessor, reflecting the current and projected increase in demand for paints and coatings.

In April this year, DuPont Refinish, a US-based global company, announced the launch of a low-emission automotive refinishing paint in Indonesia. The paint has already been a success elsewhere in Asia and around the world.

DuPont Indonesia's sales manager, Toni Liawan, said the new product was more environmentally friendly than conventional automotive paint, which could harm the environment due to its volatile organic compound (VOC) content.

Liawan also added that DuPont Indonesia hoped to increase its share of the Indonesian paint market by 10% this year from 35% last year, partly through the expected success of the low-emission automotive refinishing paint. DuPont's paint sales last year in Indonesia increased by 3.75% to 8.3 million litres, worth US$37.9 million, from 8 million litres worth US$36.4 million in 2004.

Success has also come to the industry on the back of the booming furniture export trade. According to business analysts Frost & Sullivan, Indonesian companies manufacturing wood coatings are benefiting from recent boosts in the export of furniture from Indonesia, notably those shipments to the United States. After a temporary slump in the months after the Bali bombings, the demand for Indonesian-made furniture is back on track.

"The export figures have been given a boost by the cheap labour and abundant raw material resources that help domestic manufacturers compete against those from China and other major furniture exporting countries such as Vietnam," said a Frost & Sullivan report in September 2005. "Indonesian furniture manufacturers have to leverage their market experience to thwart competition from such countries in the global market."

Another factor fuelling the Indonesian furniture and related coatings trades is the recent anti-dumping duties imposed by the US Government on Chinese bedroom furniture. Customers are expected to shift their focus to southeast Asian countries where products are relatively inexpensive, but not as cheap as in China.

"Government support through measures such as an increase in logging quota and curbs on illegal logging are expected to boost the furniture market and thereby, the wood coatings market," said a Frost & Sullivan analyst.

Customers in the United States have also been influential in their choice of coatings. Nitro cellulose coatings are favoured for their smoother finish and so this sector of the market in Indonesia is growing, and expected to expand further.

Another key factor is the increasing demand from global markets for more environmentally sound products, notably polyurethane coatings.

Indonesian manufacturers have realised the financial importance of this trend and polyurethane coatings are expected to emerge as the second biggest coatings segment after nitrocellulose in the Indonesian market. They will gradually replace less environmentally sound, acid-cured coatings that emit undesirable formaldehyde during the curing process. Frost & Sullivan expect furniture exports from Indonesia to touch US$2.6bn by 2011.

Developments in the oil and gas industry have also had a positive effect for the Indonesian paint and coatings industry, particularly in the pipeline sector.

On April 11 this year the coating company Bredero Shaw announced it was to provide anti-corrosion, concrete weight coating, internal flow efficiency coating, and anode installation and custom coating for the South Sumatra-West Java Pipeline Project.

The pipes will be coated at Bredero Shaw's new pipe coating facility at Kabil on Batam Island. One pipe will transport natural gas from Pagardewa (South Sumatra) to Cilegon (Banten), and the other will carry natural gas from Pagardewa to Labuhan Maringgai (South Sumatra) and from Muara Bekasi (West Java) to Rawa Maju (West Java).

Due to the increasing demand for Bredero Shaw's pipe coating services, the company recently completed an expansion at its facility in Kuantan in Malaysia and has relocated and expanded its coating facility on Batam Island in Indonesia to a new site with direct deepwater port access in the Kabil Industrial Estate. The plant is the only the coatings facility in Indonesia offering all coating technologies on one site.

Expansion in steel manufacturing in Indonesia have also been beneficial for the paint and coatings industry. Indonesia is the world's fourth most populous country and is experiencing strong growth in the residential and commercial building sectors.

The Australian multinational company BlueScope Steel has plans to construct a second tier of metallic coating and painting lines at its Cilegon operation west of Jakarta. The expanded paint lines should increase the flat steel painting capacity of the manufacturing facility, which should also mean an increased demand for paint and coating products.
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Author:Brace, Matthew
Publication:International News
Geographic Code:9INDO
Date:May 1, 2006
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