Newsprint makers, consumers fail to reach agreement

Newsprint makers, consumers fail to reach agreement

JAKARTA (JP): Newsprint producers and newspaper publishers
failed again yesterday to reach agreement on a new price
for newsprint for next month.

Minister of Industry Tunky Ariwibowo told journalists after a
meeting with the negotiating parties that they had agreed to
resume and finalize their talks tomorrow.

"There has been progress in today's negotiations. Hopefully,
we can finalize everything on Wednesday. So, be patient," Tunky
said.

Present at yesterday's negotiations were executives from the
Association of Pulp and Paper Producers and the Association of
Newspaper Publishers, as well as officials from the ministries of
industry, trade and information.

Last week the two associations held negotiations under the
auspices of the Ministry of Industry but failed to reach
agreement.

A. Roesilah K. of the publishers' association hinted that
yesterday's negotiations had been deadlocked, with each party
sticking firmly to its respective position.

Roesilah, who is also the business manager of the Kompas
daily, said newspaper publishers were prepared to accept a price
increase next month, but not the "steep increase", proposed by
the newsprint producers, to Rp 2,450 per kilo, from the current
price of Rp 1,700 (76 U.S. cents) per kilo.

Margin

Kusmadi, president of the state-owned newsprint producer PT
Kertas Leces, said on behalf of the producers' association that
the price of Rp 2,450 per kilo would give his company a profit
margin of only five percent, because, he said, its production
costs had increased to Rp 2,320 per kilo.

However, Kusmadi acknowledged that his company's production
costs might be higher than those of PT Aspex Paper, the other
newsprint producer.

"If it turns out that my company is inefficient, it is not
fair to burden the people with that inefficiency, notably
newsprint consumers," Kusmadi said.

He said that if the publishers' association could not accept
the price of Rp 2,450 per kilo, his company could lower its bid,
provided that the yet-to-be-agreed price could be offset against
his company's cash costs.

"We could accept a new (compromise) price level as long as it
is such that our company will still be running," Kusmadi said.

The newsprint crisis, which is part of the global newsprint
crisis, hit Indonesia last month when a number of small newspaper
publishers encountered newsprint shortages. The global crisis has
been triggered by the increasing prices of raw materials -- waste
paper and long-fiber pulp -- on the international market.

According to the Ministry of Industry, Indonesia's newspaper
publishers need 12,000 tons of newsprint per month, of which
privately-owned Aspex supplies 10,500 tons and Kertas Leces most
of the balance.

Kertas Leces' annual production capacity stands at 65,000
tons, while Aspex' is 190,000 tons. In addition to Kertas Leces
and Aspex Paper, Indonesia has one other newsprint producer, PT
Gede Karang of the Pos Kota Group, which has an annual production
capacity of 30,000 tons.

However, informed sources said Gede Karang did not produce
newsprint until recently due to unattractive domestic newsprint
prices.

Soegiarti of the Pos Kota daily said yesterday that Gede
Karang had now started limited newsprint production. "However, we
are supplying only publishers in our group." (rid)