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Paper at dumping price floods the domestic market. (Trade).

Imported products of paper have flooded the domestic market sold at dumping prices. The domestic products, therefore are facing unhealthy competition. The tight competition forced a producer of coated paper to stop operation in 2001 The company could not face the competition from powerful producers abroad that sold paper products at dumping prices.

Local producers like PT. Indah Kiat Pulp & Paper, PT. Pabrik Kertas Tjiwi Kimia, PT. Pindo Deli Pulp & Paper have sent a petition to the Indonesian Anti Dumping Committee (Kadi) calling for investigation into alleged dumping involved four countries--South Korea,, India, Malaysia and Finland.

The legal basis of investigation by KADI of goods suspected being sold at dumping prices in the country is government regulation, PP No. 34/1996, on Anti Dumping Import Duty Bea (BMAD) and a decision of the Industry and Trade Minister No. 427/2000 on KADI. In starting the investigation, KADI gave a deadline 37 days after it served a public notice to the suppliers allegedly to have committed dumping to deny the allegation.

Based on the rule of the WTO (World Trade Organization), countries accused of dumping could send in rejection or denial to the petitio0ning country by sending written data against the allegation. In line with the WTO rule, if the process of investigation could not be completed in a year, it could be extended by another six months.

The duty of KADI is to look for the causal links between the alleged dumping price and the injury caused to the domestic industry. If the injury was found to be the result of dumping price, KADI could decide to impose BMAD, otherwise the case is closed.

The Indonesian pulp and paper association (APKI) has urged KADI to impose BMAD sanction of 30%-50% on the four countries.

The surcharge will make their selling prices for their commodity in the country are equal to the selling prices in their domestic market. Indications of dumping found by KADI at the start of its investigations include a surge in imports of paper products from the four countries, a decline in domestic production and sales by local producers and low prices of imported products.

The four countries are accused of committing dumping in the market of uncoated writing paper and priming paper in tariff categories of HS 4802.52.200. The companies accused of committing the dumping include Shin Mooring and Shin Ho of South Korea, Sashi Shashi of India, Sabah Forest of Malaysia and Stora Enso and UPM Kymme of Findland.

The prices of uncoated writing and printing paper in the four countries are between US$ 700 to US$ 800 per ton. In Indonesia, the exporters sold their products at much lower prices of US$ 500 per ton. The prices of local products are between US$ 750 and US$ 800 per ton. The big difference is a strong indication of dumping.

According to APKI, the country needs around 35,000 to 45,000 tons of writing and printing paper a year. The domestic industry has an installed capacity of 9 tons a year, and production averages 7.5 million-8 million tons a year-a capacity utilization of 83%.

Market share down 17%

The domestic producers claimed to have suffered injury as a result of the alleged dumping, saying their sales have dropped and their share of the domestic market shrank by 17%.

According to APKI, imports from the 4 countries suspected of committing dumping totaled 35,000 tons of paper from the tariff category of HS4802 52.200 in the year from August 2001 to July 2002. The volume surged from only 20,000 tons a year before. The surge in imports was detected only in October after local producers complained about difficulty in disposing of their products as a result of competition from imported products.

Initial investigation showed that Finland put up the lowest price The eastern European country produces around 13 million tons of paper a year with domestic requirement of only 1.8 million tons. The rest are exported including to Indonesia. That country relies on exports to dispose of most of its paper production. Amid the tight competition in the world market, that country has to work extra hard and apparently has been tempted to resort to dumping to win a market share.

In 1997, Indonesia's imports of paper totaled 301,000 tons, but the export volume shrank in the following years to 167,000 tons as a result of the financial crisis. The declining trend continued until 2001 with imports averaging 130,000-140,000 tons a year valued at US$ 200,000 to US$ 216,000 a year.
Paper requirement and supply in Indonesia

Installed capacity Volume (annum)

Production 9 million tons
Writing and printing paper requirement 7.5 million-8 million tons
 35,000-45,000 tons

Source: APKI

Imports of paper, 1997-2001

Year Volume Value
 (tons) (US$`000)

1997 301,578 357,200
1998 167,901 252,865
1999 143,800 216,568
2000 134,400 205,450
2001 130,500 200,560

Source: Central Board of Statistics
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Comment:Paper at dumping price floods the domestic market. (Trade).
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Mar 25, 2003
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