Indonesia's pulp export target hard to reach

JAKARTA (JP): Indonesia has an ambitious target for pulp exports of 1.15 million tons this year, but such hopes may have to be played down if prices on the international market are unfavorable, an official says.

The Ministry of Industry and Trade's Director of Pulp and Paper Industry Gatot Ibnusantoso told The Jakarta Post in a recent interview that the country's revenues from pulp and paper exports reached US$1.45 billion last year, accounting for 3.19 percent of Indonesia's total exports and 13.86 percent of non-oil exports.

The figure recorded last year indicated a 98.02 percent increase from the previous year. Most of the increase was attributed to pulp exports, which jumped by 564.8 percent to $440 million last year from $66.3 million in 1994.

Meanwhile, exports of cultured paper grew by only 55.4 percent from $412.9 million in 1994 to $641.7 million last year and industrial paper by 16.9 percent from $142.9 million to $167.1 million.

However, the increase in export values was mainly because of good prices on the international market, Gatot noted.

Although pulp exports last year reached 577,812 tons -- up from 110,049 tons in 1994 -- this was below the target of 900,000 tons.

"This year we aim at exporting 1.15 million tons from our plants with a total installed capacity of 2.89 million tons. The question is, can we manage to export almost twice of what we did in 1995?" he asked.

Gatot pointed out that from the production viewpoint, Indonesia would have no trouble achieving the target.

"But in the end, the market will be the one to determine how much we can export," he said.

Exports

In the first two months of this year alone, he said, pulp exports reached only 59,389 tons worth $29.98 million, or only 10 percent of the annual export target.

"If prices remain as low as they have been in the past few months, it will be difficult for us to reach our target," he added.

Indonesia's exports presently go to countries outside North America, Scandinavia and Europe, which are the major consumers of paper.

Exports of short-fiber pulp, which reached 547,046 tons last year went mostly (75.7 percent) to South Korea, China, Italy, the Netherlands, Taiwan, Japan and Thailand. The remaining 24.3 percent, or 133,000 tons, went to 37 -- mostly Asian -- countries.

"Indonesia actually has a great potency to expand, especially to the North American and Scandinavian countries, which are not only the world's largest producers, but the largest consumers as well," he said.

The United States is currently the biggest pulp consumer in the world, with its consumption level reaching 5.9 million tons in 1995, he said. Other major consumers include West European countries (11.6 million tons) and Japan (4.1 million tons) in 1995.

Meanwhile, Indonesia's pulp production of about 2.02 million tons accounted for only 1.19 percent of world production last year.

The main producers are America, which in 1995 produced 59.3 million tons or 35 percent of the world's total production; Asian countries, excluding Indonesia, with 30.85 million tons (18.2 percent); Canada, with 23.4 million tons (13.8 percent); and Scandinavian countries, with 22.2 million tons (13.1 percent).

"Indonesian pulp mills are presently producing at only 72.5 percent of their installed capacity of 2.79 million tons. If we can increase this to 94 percent -- as developed countries are doing -- our production last year could have reached 2.6 million tons," Gatot said.

Prices of short-fiber pulp produced by the U.S. is currently $340 per ton and long-fiber pulp, $400 per ton. Earlier this year, they were as high as $740 per ton and $560 per ton, respectively.

The government's call to seize the pulp export market seems to be getting a quick response from businesses.

For the next decade, the domestic pulp and paper industry can expect to see 16 newcomers who will be using raw materials from the first harvest of pulpwood estates planted in the late 1980s.

Together with a number of other commodities, the pulp and paper is expected to boost the growth of Indonesia's non-oil and gas exports that have slumped over the last couple of years.

The Pulp and Paper Association in its 1995 directory stated that the 16 new pulp mills will add to the 65 already operating in the country, bringing the total up to 81.

The 16 mills are PT Adindo Pulp and Paper in East Kalimantan, which is estimated to start in 2003 with a capacity of 300,000 tons per annum; PT Aspex Paper (East Kalimantan), to start in 1998 with 250,000 tons p.a.; PT Dharma Trieka Sejahtera (East Kalimantan), to start in 2003 with 300,000 tons p.a.; Djajanti Group (Irian Jaya), to start in 2003 with 300,000 tons p.a.; PT Fajar Surya Swadaya (East Kalimantan), to start in 1998 with 300,000 tons p.a.; Guhara Lestari Cellulosa (Sulawesi), to start in 2003 with 300,000 tons p.a.; and PT Intan Prima Cellulosa Utama (Jambi), to start in 1998 with 200,000 tons p.a.

The others are PT Intim Nusapersada (in Jambi), to start in 1998 with 150,000 tons p.a.; PT International Timber Corporation (East Kalimantan), to start in 2003 with 500,000 tons p.a.; PT Kiani Kertas (East Kalimantan), to start in 1997 with 450,000 tons p.a.; PT Mayangkara Tanaman Industri (East Kalimantan), to start in 2003 with 300,000 tons p.a.; PT Nityasa Prima (East Kalimantan), to start in 2003 with 500,000 tons p.a.; PT Perawang Sukses Perkasa Industri (Riau), to start in 2003, with 350,000 tons p.a.; PT Sumatera Sinar Plywood Industry (North Sumatra), to start in 2003 with 500,000 tons p.a.; PT Takengon Pulp and Paper (Aceh), to start in 2003 with 300,000 tons p.a.; and PT Tanjung Enim Lestari Pulp and Paper, to start in 1997 with 450,000 tons.

Most of the new mills have already begun construction and, by the time the pulpwood estates are ready to be harvested, the mills will have started operating.

"But fluctuations in monthly pulp and paper prices will make it difficult to predict the annual revenues we can expect from the industry," Gatot said.

"For now, we have to hope for the best," he added. (pwn)