Foreign markets beckon to local paper, pulpmakers

JAKARTA (JP): Indonesia's pulp and paper exports should grow in the coming years as supplies from the world major's producers in North America and Scandinavia continue to decline, a government official said here on Tuesday.

"Market opportunity is good. We just need to keep improving our product competitiveness and boost production to grasp the opportunity," the director general of agroindustry, chemical and forest products, Gatot Ibnusantosa, said during a seminar on the prospects of the pulp and paper business.

He said the world's leading pulp and paper suppliers -- North American and Scandinavian countries -- were facing a possible decline in their production and exports due to a lack of new industrial forest estates.

As a consequence, these countries are expected to lose their leading position in the pulp and paper markets over the next 15 years to Indonesia and Latin American countries, which have tropical climates and vast undeveloped industrial forest areas, he said.

Gatot said Indonesia's share in the world's pulp and paper markets over the last 10 years had grown by about 65 percent and 31 percent, respectively.

The market shares of the world's leading suppliers from North America and Scandinavia grew only 3 percent for pulp and 2 percent for paper over the same period, he said.

Data from the directorate general predicts Indonesian pulp production will increase from 2.92 million tons in 1999 to 3.7 million tons this year, 4 million tons in 2001 and 4.5 million tons in 2002.

The country's pulp exports are projected to rise from 1.1 million tons in 1999 to 1.5 million tons this year, 1.9 million tons in 2001 and 2.3 million tons in 2002.

For paper, production is expected to reach 6.9 million tons this year, 7.3 million tons in 2001 and 7.6 million tons in 2002.

Paper exports are projected to increase from 2.9 million tons in 1999 to 3.4 million tons this year, 3.7 million tons in 2001 and 3.8 million tons in 2002.

Gatot said Indonesia so far had not experienced any major difficulties in marketing its pulp and paper because the products were of good quality, inexpensively priced and mostly met the environmental requirements set by the government.

He said possible problems could emerge from local administrations when the new law on regional autonomy comes into effect later this year.

He said local governments would likely charge local industries, especially those like pulp and paper which could pose environmental concerns, higher taxes in a bid to increase their coffers.

"We may lose competitiveness if local administrations overexploit their rights by charging the industries higher taxes, because it will increase production costs and thus affect the prices of the products," he said.

He said Indonesia's pulp and paper were less expensive than those produced in North America, Scandinavia, Brazil and Chile, because the country was able to squeeze production costs.

Gatot said that despite all the efforts to meet local demand, which has always been far less than production, Indonesia would have to continue importing certain types of pulp and paper.

He said Indonesia was currently a major importer of long fiber pulp, which import figures last year put at 915,000 tons. A great deal of paper also is imported every year, particularly by the country's publishing companies.

He predicted the country's import of pulp would increase to 1.2 million tons this year from 915,000 tons in 1999. (cst)