The newsprint crisis<\/p>\n
The price of newsprint in this country will increase again
\nnext month by around 36 percent, following a series of increases
\nover the past year, ranging from around 4 percent to the 29
\npercent raise imposed just two months ago. Thus the newsprint
\nprices have increased by more than 97 percent -- or almost
\ndoubled -- within the last year.<\/p>\n
Undoubtedly this is a new record in the statistical history of
\nIndonesian economic performance during the last few decades. And
\nnot surprisingly, newspaper publishers across the country are
\nvery much worried. Some are considering the viability of passing
\nalong the increases -- at least a big chunk of them -- to their
\nreaders. Others are exploring the possibility of reducing the
\nnumber of pages they are publishing. Still others are thinking of
\ncombining both options. The hard fact is, whichever option you
\nchose, you are bound to lose a certain number of your readers,
\nwith no guarantee of avoiding bankruptcy.<\/p>\n
Moreover, this recent politically-engineered price fixing of
\nnewsprint will expire after three months. Just how much higher
\nthe price of newsprint will be set for October and beyond is
\nanybody's guess.<\/p>\n
And there is yet another major factor, which for some reason
\nhas not been a part of most public debates and discourses about
\nthese price increases. That is the newsprint situation worldwide.<\/p>\n
Newspapermen around the world have been worrying about the
\nnewsprint crisis since last year. In the United States, for
\nexample, where newsprint prices have increased by more than 60
\npercent for the last 18 months, newspaper conferences and
\nseminars are being held to find ways to overcome the resulting
\ncrisis. Similar efforts are being made in Europe and the Asia-
\nPacific region.<\/p>\n
During the first half of last year, world prices of newsprint
\nwere still within a range of US$440 to US$450 per metric ton, or
\naround Rp 950 per kilo as compared to the local price of Rp 1,170
\nduring that period. During the third quarter of 1994, the prices
\nincreased to a range of US$560 to US$580 per metric ton, or
\naround Rp 1,235 per kilo as compared to the locally set price of
\nRp 1,270 per kilo. They increased further to around US$700 per
\nmetric ton (around Rp 1,535 per kilo) during the last quarter of
\nlast year, while local Indonesian prices remained at the previous
\nlevel.<\/p>\n
By the way, that was about the time Indonesian newsprint
\nmanufacturers started exporting their products at the expense of
\nlocal publishers, disregarding the fact that the local publishers
\nhad been subsidizing them unwillingly for many years.<\/p>\n
Early this year world prices of newsprint continued to
\nincrease, to around US$900 per metric ton by last March, or
\naround Rp 1,988 per kilo as compared to the local price of Rp
\n1,320 per kilo. Nowadays global prices have reached the level of
\naround US$1,100 per metric ton, or around Rp 2,444 per kilo as
\ncompared to the current locally set price of Rp 1,700 per kilo.
\nAnd recent statistics from the newsprint front show that the
\nworld demand for newsprint is expected to rise 4.2 percent in
\n1995 and 4.5 percent in 1996.<\/p>\n
North America's production capacity is expected to increase by
\nonly 0.6 percent in 1995 and 0.9 percent next year. No new
\ncapacity in Europe is planned at this time. And the emerging
\nEastern European economies will more than absorb any overcapacity
\nin the near future, while booming Latin American economies are
\ncreating new demands. That is the situation, even without
\nconsidering the fact that the Pacific Rim's economic explosion
\nhas included higher demand for newsprint.<\/p>\n
In short, the world supply of newsprint is very tight as
\ncompared to world demand. And some observers predict that this
\nsupply situation can be expected to continue for three to five
\nyears.<\/p>\n
Fortunately for Indonesia, local capacity is still higher than
\nlocal consumption. The installed capacity of the three newsprint
\nproducers is 285,000 metric tons a year, or about 23,750 metric
\ntons a month. Their combined actual output is estimated at around
\n14,000 metric tons per month, which is higher than the local
\ndemand of around 12,000 metrics ton a month.<\/p>\n
In light of these facts, there is still the possibility for
\nlocal newsprint producers to maintain a reasonably lower price on
\nnewsprint for domestic publishers. Clearly they will not lose any
\nmoney because they can substantially increase their actual
\ncapacities, lowering production costs in the long run, while they
\ncan expect to benefit from higher export prices.<\/p>",
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"sponsor": "Okusi Associates",
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