The newsprint shortage<\/p>\n
The increase in the prices of wood pulp and paper actually
\nstarted early last year after five years of down cycle. But
\nindustrial users in Indonesia were not awakened to the real
\nmagnitude of the trend until early this year. The problem has
\nbecome a nationwide issue, especially since the print media,
\nseverely hurt by the steep rise in the price of newsprint, have
\nconsistently brought up the issue in their front page headlines.<\/p>\n
However, the debate thus initiated has so far not touched
\nupon the root of the problem because the causes of the price
\nincrease have not been assessed against the backdrop of
\ninternational trends.<\/p>\n
The blunt fact, we think, is that the paper industry is now
\nriding on an up cycle after its severe recession from 1989 up to
\nthe end of 1993 when the prices of wood pulp -- the main raw
\nmaterial for all kinds of paper -- decreased by more than 50
\npercent.<\/p>\n
The green campaign obviously has also been responsible for the
\nsharp price increase. The global campaign to protect the forests
\nand the green rules imposed by many governments on the pulp
\nproduction process have discouraged new investors from the pulp
\nand paper industry. The requirement of a totally chlorine free
\nbleaching process, or an effluent free pulp making process, has
\nsharply increased the capital costs in the industry.<\/p>\n
International analysts estimate that while the international
\nmarket demand has been increasing by 1 percent to 2 percent per
\nyear over the last six years, the world's capacity has remained
\nvirtually stagnant. That did not cause any supply problem until
\nthe end of 1993 because the industry still had spare capacity to
\naccommodate the growth in utilization.<\/p>\n
But the supply-demand equation began to experience
\ndisequilibrium early last year after the cumulative growth in the
\ndemand used up all the spare capacity in 1994, thereby forcing
\nmills to operate at full capacity. At this point, the market
\nforces dictate that the prices have to increase. The pulp prices
\nwhich fell to as low as US$350 at the end of 1993 have now risen
\nto $750 a ton and most analysts foresee a steady increase to
\nreach as high as $900 next year.<\/p>\n
Obviously, the steep rise in pulp prices has also been
\nincreasing the demand for substitute materials -- waste paper.
\nDuring the down cycle period, waste paper was virtually free as
\nthe users had to pay only the collection and transportation
\ncosts. Now waste paper sells for as high as $150 per ton.<\/p>\n
Since the two domestic newsprint producers -- PT Aspex Paper
\nin Bogor, West Java, and PT Kertas Leces in East Java-- rely
\nmostly (more than 80 percent) on imported waste paper, their
\nproduction costs have naturally increased as well. Set against
\nthis market trend, the request of the Newspaper Publishers
\nAssociation to the two producers to maintain the prices of their
\nnewsprint does not seem feasible, irrespective of however lofty
\nthe mission of the print media may be. The two companies would go
\nbankrupt if they were forced to sell below their production
\ncosts.<\/p>\n
We are, however, encouraged to learn that the government plans
\nto simplify the procedures for waste paper imports in the near
\nfuture. The current procedures are quite arduous as the clearance
\nhas to involve officials of the industry and trade ministries and
\nthe Attorney General's Office. Industry analysts estimate that
\nthe import deregulation will decrease the costs of waste paper at
\nleast by 15 percent.<\/p>\n
But that measure is only short term in nature. It is only an
\nelement of crisis management which will not bring about a long-
\nterm solution. The government should investigate the entry
\nbarriers to the newsprint industry and should act immediately to
\ntake the necessary reform measures. The fact is that no new
\ninvestors have been interested in the newsprint industry since
\nthe mid-1980s even though the market demand has steadily
\nincreased and the country boasts itself as the owner of the
\nworld's second largest rain forest resources.<\/p>\n
Also, the general public should be educated to accept the
\nhigher prices of paper, including newsprint, because companies
\nhave to spend more on complying with environmental rules and pulp
\nproduction will have to rely mainly on timber estates. That,
\nhowever, should not mean that our production costs cannot be
\nlower than those in other countries. In fact, they should be much
\ncheaper in view of our competitive advantages in the pulp
\nindustry.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/the-newsprint-shortage-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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