Press feels the pinch as papers downsize<\/p>\n
The monetary crisis of the past seven months has threatened to
\nkill off all economic sectors, including the press industry. The
\nJakarta Post's team of reporters -- Imanudin, Christiani S.A.
\nTumelap, Ivy Susanti, Aloysius Unditu, Reiner Simanjuntak and PJ
\nLeo --- explores the impacts of the crisis on the press industry
\nand measures taken to cope with the crisis.<\/p>\n
JAKARTA (JP): Soemarto, a newspaper and magazine seller at a
\nbus shelter on Jl. Pramuka, East Jakarta, keeps grumbling to
\nhimself because his sales have dropped by around 40 percent in
\nthe past few months.<\/p>\n
He now only brings home between Rp 20,000 (US$2.22) and Rp
\n25,000 a day compared to his previous daily earnings of Rp 35,000
\nto Rp 45,000.<\/p>\n
However his complaints at the lack of customers are tempered
\nby his understanding of the reasons for the quieter times.<\/p>\n
\"I understand why they stop buying papers at my kiosk,\" he
\ntold The Jakarta Post Friday, \"it's because of the monetary
\ncrisis.\"<\/p>\n
The crisis, which has seen the rupiah's value plunge by almost
\n72 percent against the greenback to around 9,000 from 2,450 in
\nearly July last year, is now becoming a dreadful monster
\nthreatening to kill off all economic sectors and walks of life,
\nincluding the press industry.<\/p>\n
National Press Day, which falls on Feb. 9, was observed in a
\nsimple style as the industry was concerned with soaring price of
\nnewsprint. The different members have one thing in common: the
\npinch of the monetary crisis.<\/p>\n
Publications are working hard to cope with the double blow of
\nthe escalating price of newsprint and declining advertising
\nrevenue, which forces them to subsidize printing costs every day.<\/p>\n
There are 289 print media publications with about 4,500
\nemployees across the country. About 20 dailies, 24 weekly
\nnewspapers and 30 magazines are published in Jakarta and control
\nbetween 60 percent and 80 percent of the national circulation in
\neach category.<\/p>\n
Nobody can predict how long the troubled times will last. Many
\nbelieve the crisis will in fact worsen in the coming months, so
\nbold efficiency measures and drastic cost-cutting action are
\nbecoming compulsory.<\/p>\n
Several publications have been forced to close down, while
\nothers have survived thus far by publishing less frequently,
\nreducing the size and number of pages, increasing the selling
\nprice or laying off some employees.<\/p>\n
Corporate spending on advertising -- the lifeblood and main
\nsource of revenue in the media industry -- has fallen drastically
\nsince the beginning of the crisis in July last year.<\/p>\n
Decline<\/p>\n
According to data from the Indonesian Advertising Association,
\nadvertising spending is expected to decline by around 30 percent
\nthis year from Rp 4.96 trillion in 1997.<\/p>\n
Worse still for the print media is that an increasingly large
\nchunk of firms' advertising budgets has been targeted at
\nelectronic media, especially television, in the last three years.<\/p>\n
Of the Rp 4.96 trillion spent in 1997, for example, television
\naccounted for Rp 2.77 trillion (55.8 percent), newspapers Rp 1.34
\ntrillion (27.1 percent), magazines Rp 325 billion (6.6 percent),
\noutdoor Rp 307 billion (6.4 percent), and radio Rp 206 billion
\n(4.2 percent).<\/p>\n
The revenue of Kompas, the country's most established daily,
\nhas declined by 50 percent. In order to survive, it cut the
\nnumber of pages from 24 to 20 last month, and to 16 last week.
\nFemina weekly, which has suffered a 40 percent drop in its
\nadvertising revenue, is now 130 pages, almost half its previous
\n250.<\/p>\n
Despite all steps taken to cut costs, publishers still have to
\nallocate sizable funds to subsidize printing costs.<\/p>\n
Leo S. Batubara, the secretary-general of the Association of
\nIndonesian Newspaper Publishers (SPS), said that the ex-factory
\nprice for newsprint was Rp 1,530 per kg in July when the rupiah's
\nexchange rate stood at Rp 2,460 to the dollar. By Dec. 16, when
\nthe exchange rate was Rp 6,025 to the dollar, the ex-factory
\nnewsprint price had jumped to Rp 3,545 per kg.<\/p>\n
For a 24-page newspaper with 500,000 copies in circulation
\nlike Kompas, this meant additional expenses of Rp 4.7 billion per
\nmonth. And with the exchange rate rising to around Rp 7,000, the
\nadditional cost climbed to Rp 12 billion.<\/p>\n
Things are even worse as the price of newsprint is still high
\nat US$505 per metric ton, excluding import tax.<\/p>\n
SPS has urged the government to exempt newspaper publishers
\nfrom paying the 10 percent value-added tax to enable them
\nsurvive. The government has yet to respond to this suggestion.<\/p>\n
Paper producer PT Aspex Paper, a joint venture between a South
\nKorean group and timber tycoon Mohamad \"Bob\" Hasan, says it
\ncannot reduce the price.<\/p>\n
\"Around 90 percent of the component is still imported,\" Lee
\nWon Je, managing director of Aspex, was quoted by Kontan as
\nsaying.<\/p>\n
With the uncertain volatility of the rupiah against the
\ndollar, it is almost impossible for Aspex to reduce the price, he
\nsaid.<\/p>\n
Other paper producers, like PT Kertas Letjes or PT Adiprima --
\nowned by the Jawa Pos group -- tend to follow the price set by
\nAspex. Adiprima for example, has to supply the paper demand by
\nits subsidiaries within the Jawa Pos group.<\/p>\n
Around 70 percent of the domestic supply of newsprint is
\nprovided by Aspex with the remaining 30 percent by other small
\nproducers.<\/p>\n
Contrary to Aspex signaling it might reduce prices in the
\ncoming months, it is likely to raise them as it is tantalized by
\nhigher newsprint prices in the regional market.<\/p>\n
And if local publishers cannot afford Aspex's newsprint, the
\ncompany will simply market its products regionally at a higher
\nprice.<\/p>\n
In Australia, for example, newsprint is US$555 per metric ton,
\nwhile Malaysia and India have set the price at $530 per metric
\nton.<\/p>\n
Eight local publications have closed and many others will
\nsuccumb to the same fate if the current situation remains
\nunresolved.<\/p>\n
\"Around 70 percent of the 289 publications in Indonesia will
\nbe closed down if the situation continues,\" Batubara said.<\/p>\n
M. Budyatna, a communications expert and former dean of the
\nSchool of Social and Political Sciences at the University of
\nIndonesia, said only the best companies would survive due to the
\nnatural selection of the market.<\/p>\n
\"To survive, a company must have three strong elements: human
\nresources, finance and technology,\" he said.<\/p>\n
The closure of publications will affect not only the
\npublishers and the workers who will lose their jobs, but also the
\nreaders as their access to information will become increasingly
\nlimited.<\/p>",
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