Foreign markets beckon to local paper, pulpmakers

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)