Indonesia may produce 11m tons pulp by 2010

Indonesia may produce 11m tons pulp by 2010

RIO DE JANEIRO (Reuter): Indonesian pulp production capacity could reach 11.1 million tons by the year 2010, the chairman of RGM International Corp told an international pulp and paper conference here.

No less than 23 pulp production projects are currently on the drawing board and if the majority are completed, capacity could exceed 11 million tons by 2010, Sukanto Tanoto said in a speech to the two-day seminar which ended on Tuesday.

Indonesian pulp production capacity was 3.1 million tons in 1996 and should grow to 4.4 million tons this year, 5.2 million in 1998 and 5.7 million in 1999 and the year 2000.

"The time when Asia had to depend solely on pulp and paper produced from slow-growth trees with expensive labor and transported half-way round the world is coming to an end," Tanoto said.

Annual production at the Riaupulp factory belonging to RGM's pulp and rayon fiber divisions, Asia Pacific Resources International Holdings Ltd should almost triple to two million tons by the year 2000 from 750,000 tons currently.

The anticipated rise in total Indonesian production would represent an increase of 40 percent between last year and the next century, Tanoto said.

Internal demand, plotted at 2.5 million tons in 1996, is expected to grow to 2.9 million tons this year, 3.2 million tons in 1998, 3.6 million in 1999 and four million tons by the year 2000.

This would mean a 60 percent rise from 1996 levels, driven by an expected annual economic growth rate of eight percent which should boost demand for paper and packaging.

Export potential for pulp should rise from one million tons in 1996 to 2.8 million tons in 2000, and for paper and cupboard from 1.7 million tons last year to 2.9 million tons in the year 2000.

In the next four years there should be no threat of a wave of cheap Indonesian pulp flooding the world market, Tanoto said.

Most of these potential exports will be destined for Asia due to more advantageous freight costs and moreover they will be insignificant given an anticipated surge in demand in Asian countries where GDPs are expected to grow 10 percent annually.

But as the new projects come on stream, this situation will change, Tanoto said.

"I believe exports of Indonesian pulp...could eventually became the standard with which other producers will have to compete in terms of cost efficiency and quality," Tanoto said.

"Indonesian producers will become price-makers not price- takers, that is, they will establish the market price and not have to accept the price offered to them," he added.