APKI blames high paper prices on interest and maintenance

JAKARTA (JP): Suresh Kilam of the Indonesian Pulp and Paper Association (APKI) said the higher prices for local paper compared to imports were caused by the high interest rates and maintenance costs faced by plants.

Suresh told reporters on Wednesday that plants' reliance on spare parts from the United States made their maintenance costs very high.

He added that the 105 percent rise in pulp prices from US$310 per ton, or Rp 707 per kilogram, in October last year to $610 per ton, or Rp 1,450 per kilogram, in April this year also prompted increases in domestic paper prices.

He said that Indonesia still imports around 700,000 tons of pulp annually, 70 percent of which comes from the United States, Canada, and Scandinavian countries, with Japan and Brazil accounting for 10 percent each, and five percent coming from South Korea and the remainder from various countries.

Suresh distributed a copy of an April 8 offering of pulp prices from a Japanese company, showing that the company was selling pulp at $610/ton.

However, Fauzi Lubis, the chairman of the Indonesian Printing Company Association (PPGI), told newsmen earlier that according to the figures he got from a British paper mill, Argo Wiggins, the increase in the pulp price since last year was only 35.48 percent to $450/ton in April from $340 in November 1993.

Lower

Fauzi said that because imports are subject to a 25 percent duty and 10 percent value added tax, local paper prices should be lower than those of imported paper.

Presently, APKI groups 54 pulp and paper mills with a combined capacity of 1.72 million tons of pulp and 3.58 million tons of paper. Six of the mills are owned by state firms, 42 by private domestic companies and six by foreign joint ventures.

In 1993, the 42 domestic private mills had a total annual capacity of 300,000 tons of pulp and 2.35 million tons of paper, while the six state firms had a total capacity of 369,000 tons of pulp and 392 tons of paper.

The six foreign joint venture firms owned a total annual capacity of 1.02 million tons of pulp and 837,500 tons of paper.

Kahar Haryopuspito, APKI's executive director, announced that to support the government's nine-year compulsory education program, three members of the association, PT Kertas Leces, PT Tjiwi Kimia and PT Suparma, will produce two special kinds of 60- gram HVS paper, which will be used for printing official school textbooks.

The paper, with 70 percent to 76 percent pure pulp content, will be sold at prices 25 percent less than the standard 60-gram HVS paper price. (03)