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)