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)