APRIL sees brigth future in RI pulp, paper industry

Dadan Wijaksana, Singapore

Indonesia's pulp and paper industry still has plenty of room for improvement if it wants to be internationally competitive, according to a major player.

The Asia Pacific Resources International Holdings Ltd. (APRIL), which owns a 98.5 percent stake in PT Riau Pulp & Paper, or Riaupulp, said that Indonesia had advantages over many of its global rivals.

While it has been deemed a sunset industry by most of the world's traditional players, such as Scandinavian and North American nations, the industry is relatively new in Indonesia and has much to offer, APRIL's vice president Ibrahim Hasan said.

"With only 1.5 million hectares of forest allocated so far for the industry, the potential for its development is enormous," Ibrahim, also the vice president of Riaupulp, said last week in Singapore during the launch of the company's sustainability report.

The allocated land is relatively small compared to that of Brazil, for instance, which has been grouped with Indonesia as among the fastest growing newcomers to the industry. Brazil has over 5 million hectares of forest, which are allocated for pulp plantations, he added.

Indonesia boasts a yearly pulp production of around 6 million tons. Riaupulp, which operates a pulp mill on a 1,750-hectare site in Kerinci, Riau province, has an installed capacity of 2 million tons per year.

These figures are expected to increase to meet the rising global demand. In Asia alone, demand for pulp -- the main raw material for paper and other paper-related products -- is rising by 3 to 4 million tons each year.

Another advantage Indonesia has over other established competitors is its location and climate. "The manufacturing cost here is much lower, as our tropical forests can be harvested within six to seven years, compared to around 40 years for sub- tropical forests," said Ibrahim.

"So, the government should provide more support for the industry, because countries like Indonesia currently have the competitive edge," he added.

Asked whether such a support should be transformed into additional forest concession in Riau, A.J. Devanesan, president of both APRIL and Riaupulp, replied: "We have yet to negotiate that particular issue with the government, but we'd welcome any efforts, which could lead us in that direction."

APRIL has a forest concession of around 350,000 hectares, which supplies some 95 percent of Riaupulp's fiber -- mostly Acacia -- supply. The other 5 percent comes from two projects developed by the company involving the local community in the form of joint ventures and partnership.

A press statement said that APRIL also owns a 100 percent stake in Riau Andalan Kertas, or Riaupaper, through its subsidiary APRIL Fine Paper. It operates a 350,000-tons-per-year uncoated wood-free paper machine.