Indonesian paper exports total 4.4m tons this year
Indonesian paper exports total 4.4m tons this year
JAKARTA (JP): Indonesia's paper exports are expected to jump
to 4.4 million metric tons this year from 1.5 million tons in
1997, according to a top executive at a local paper operation.
Chief executive operating officer of publicly-listed PT Tjiwi
Kimia Suresh Kilam said on Friday that the surge in exports would
help compensate for this year's 1.6 million ton drop in domestic
demands due to the economic crisis.
"The Indonesian crisis has affected domestic consumption but
increased export drive," he told participants at the Indonesia
Forum business conference.
He explained that although the depreciation of the rupiah has
reduced wood and labor costs, the high U.S. dollar-denominated
capital costs diminished the net impact on production cost to a
mere 10 percent.
"Drop in domestic demand due to the crisis means companies
whose primary focus is in the domestic market are hit hard," he
said.
He projected that this year the total production capacity of
the country's paper industry would reach 10.3 million tons coming
from 73 mills.
Tjiwi Kimia is a unit of Indonesia's widely-diversified
conglomerate the Sinar Mas Group, which operates the country's
largest integrated pulp and paper operation.
"We plan to employ an additional 37,000 employees at Tjiwi
Kimia if the shopping bag division expansion goes ahead," Kilam
said, adding that Sinar Mas pulp and paper currently employed
about 45,000 out of the total 100,000 people employed in the
industry.
He projected that the country's pulp and paper industry would
have a turnover of US$5.2 billion in 1998, which represents 5.7
percent of the total gross domestic product.
He added that the total export value of the pulp and paper
industry would reach $3 billion, or 7 percent of the country's
$43 billion non-oil and gas export revenue.
He explained that although the international prices for pulp
and paper commodities were currently weak, with no visible signs
of strengthening, the Indonesian industry was cushioned by
natural advantages.
He pointed to the vast forests covering 141 million hectares,
with nine million hectares under industrial usage, and the fact
that the tropical climate allows fast growing plantations that
result in a lower pulp production cost.
He said that the harvesting cycle in Indonesia was 7-8 years
versus the 25-50 years in South American and Scandinavian
countries.
"We're also within the fastest growing region, despite the
current Asian crisis," he said, adding that Asia was a net
importer with a total deficit of 11.1 million tons.
"The Indonesian pulp and paper operations that have access to
low cost domestic raw materials will survive," he said.
However, he said that due to the crisis there would be
consolidation in the industry.
"Foreign companies are seeking to acquire or enter into joint
ventures with local companies," he said, adding that the end
result would be a stronger pulp and paper industry in Indonesia,
with a more international character. (rei)
JAKARTA (JP): Indonesia's paper exports are expected to jump
to 4.4 million metric tons this year from 1.5 million tons in
1997, according to a top executive at a local paper operation.
Chief executive operating officer of publicly-listed PT Tjiwi
Kimia Suresh Kilam said on Friday that the surge in exports would
help compensate for this year's 1.6 million ton drop in domestic
demands due to the economic crisis.
"The Indonesian crisis has affected domestic consumption but
increased export drive," he told participants at the Indonesia
Forum business conference.
He explained that although the depreciation of the rupiah has
reduced wood and labor costs, the high U.S. dollar-denominated
capital costs diminished the net impact on production cost to a
mere 10 percent.
"Drop in domestic demand due to the crisis means companies
whose primary focus is in the domestic market are hit hard," he
said.
He projected that this year the total production capacity of
the country's paper industry would reach 10.3 million tons coming
from 73 mills.
Tjiwi Kimia is a unit of Indonesia's widely-diversified
conglomerate the Sinar Mas Group, which operates the country's
largest integrated pulp and paper operation.
"We plan to employ an additional 37,000 employees at Tjiwi
Kimia if the shopping bag division expansion goes ahead," Kilam
said, adding that Sinar Mas pulp and paper currently employed
about 45,000 out of the total 100,000 people employed in the
industry.
He projected that the country's pulp and paper industry would
have a turnover of US$5.2 billion in 1998, which represents 5.7
percent of the total gross domestic product.
He added that the total export value of the pulp and paper
industry would reach $3 billion, or 7 percent of the country's
$43 billion non-oil and gas export revenue.
He explained that although the international prices for pulp
and paper commodities were currently weak, with no visible signs
of strengthening, the Indonesian industry was cushioned by
natural advantages.
He pointed to the vast forests covering 141 million hectares,
with nine million hectares under industrial usage, and the fact
that the tropical climate allows fast growing plantations that
result in a lower pulp production cost.
He said that the harvesting cycle in Indonesia was 7-8 years
versus the 25-50 years in South American and Scandinavian
countries.
"We're also within the fastest growing region, despite the
current Asian crisis," he said, adding that Asia was a net
importer with a total deficit of 11.1 million tons.
"The Indonesian pulp and paper operations that have access to
low cost domestic raw materials will survive," he said.
However, he said that due to the crisis there would be
consolidation in the industry.
"Foreign companies are seeking to acquire or enter into joint
ventures with local companies," he said, adding that the end
result would be a stronger pulp and paper industry in Indonesia,
with a more international character. (rei)