Attorney General Singgih frees waste paper imports

Attorney General Singgih frees waste paper imports

JAKARTA (JP): Attorney General Singgih has freed the
importation of waste paper to reduce the production cost of
newsprint, Industry Minister Tunky Ariwibowo confirmed yesterday.

"I got confirmation about the measure from Attorney General
Singgih this morning," Tunky said at his office yesterday.

Tunky called a press conference, which was also attended by
paper producers, to straighten out the controversy over the tight
control of waste paper imports.

The paper producers, especially newsprint makers, greatly
welcomed the measure which, they said, could slash procurement
costs of waste paper by at least 40 percent.

Allowing waste paper imports to be shipped in bulk, instead of
in container boxes as previously required by the Attorney
General's Office, will reduce the shipment cost by 40 percent,
Suresh Kilam, managing director of the paper producing Sinar Mas
group, said yesterday.

Kilam said the requirement for waste paper to be imported in
containers had increased shipment costs to as high as 110 percent
of production cost.

Tunky declined to specify when the attorney general revoked
the ruling it issued in the early 1980s to prevent the smuggling
of pornography and ideologically dangerous information, like
communist publications.

Until Singgih admitted on Thursday that his office had ordered
waste paper to be imported in containers, the industry ministry
had assumed the ruling had been issued by the trade ministry and
Environmental Management Agency.

The controversial ruling was unveiled early this week when
newsprint producers, frustrated at being blamed for the steep
increase in the price as well as the severe shortage of
newsprint, blew the whistle.

The producers complained that import costs were unnecessarily
high due to the container regulation because the containers had
to be checked by officials from both the trade and industry
ministries as well as the Attorney General's Office.

Skyrocketed

However, Kilam warned against expecting lower paper prices
despite the 40 percent reduction in the procurement costs of
waste paper.

"The fact is that the international price of waste paper has
skyrocketed to US$410 a ton from only $110 in the first quarter
of last year," Kilam said.

He even hinted that the price of newsprint might have to be
raised next month from its present Rp 1,700 ($0.75) a kilogram.

Nonetheless, Tunky asked newsprint producers to at least
maintain their selling prices.

Lee Won Je, the managing director of PT Aspex Paper, which
produces 80 percent of the country's newsprint, contended that
his company and the other newsprint maker -- state-owned PT
Kertas Leces -- have been losing money because the current sale
price is far below production cost.

"We are actually subsidizing the prices of newsprint to
newspaper companies," Lee added.

Based on the waste paper price of $410 per ton, the production
cost of newsprint amounts to Rp 2,300 per kg, much higher than
the current selling price of Rp 1,700, he added.

"We have been losing money as we have cut down our exports
even though we have to sell below our production costs to
domestic users," Lee said.

When asked why no investors are interested in the newsprint
industry, Kilam said, "As long as the government is involved in
fixing the price of newsprint, nobody will be interested in this
industry."

Private-to-private

However, Tunky rejected Kilam's argument, saying that the
government hadn't directly intervened in setting the price of
newsprint.

"It's purely a private-to-private price making negotiation.
And the government is only the referee," Tunky said, referring to
periodic negotiations between the Association of Pulp and Paper
Producers and the Association of Newspaper Publishers to set the
domestic price of newsprint.

Tunky denied press reports that stocks of newsprint would run
out in the next few days.

"I can assure you that stocks are adequate," Tunky stressed,
adding that the government had requested the two producers to
stop exports and give top priority to domestic need.

Lee supported Tunky's statement, saying "this month, the
supply may be very tight but as of July, I can guarantee that
there will be ample stocks."

Tunky said the combined production capacity of Aspex and Leces
is 300,000 tons a year, while the national demand is only 150,000
tons per annum for newspaper consumption and 70,000 tons for non-
press needs.

Tunky declined to estimate the newsprint price for next month
but he said he would soon assign a special team to assess the
production costs of the two newsprint manufacturers. (rid)