Newsprint price to increase 35% next month

JAKARTA (JP): The producers and consumers of newsprint agreed yesterday on a 35.88 percent increase in the price of newsprint to Rp 2,310 (US1.03) per kilogram for the July-September period, from the current level of Rp 1,700.

"After next month's price increase, I hope there will be no newsprint crisis anymore," Minister of Industry Tunky Ariwibowo told journalists after chairing the negotiations between newsprint producers and newspaper publishers -- the main consumer of newsprint.

The minister added that the new price of newsprint will only be effective from July 1 through Sept. 30, which will also affect book publishers.

Tunky said the new "reasonable" price was expected to attract new investors to the newsprint industry.

"A bigger number of producers will provide more choices to the consumers and will generate more market competition," he added.

Indonesia at present has three newsprint producers, the state- owned PT Kertas Leces in East Java , PT Aspex Paper and PT Gede Karang of the Post Kota Group in West Java. However, PT Gede Karang started limited newsprint production only recently for use by its own publishing group.

On hand at yesterday's negotiations were executives from the Association of Pulp and Paper (APKI) and the Association of Newspaper Publishers (SPS) as well as officials from the ministries of industry, trade and information.

"There were no pressures from any party, and we negotiated freely," Lee Won Je, president of Aspex Paper, said. He added that the two parties -- SPS and APKI -- will meet again in the future to negotiate newsprint prices for October.

Kusmadi, president of Kertas Leces, said earlier that his company's production costs stood at Rp 2,320 per kilogram, while Lee hinted that his company's production costs were lower than those of Kertas Leces but higher than the current newsprint price of Rp 1,700.

Since mid-1994, local newsprint prices have increased from Rp 1,170 a kilo in August to Rp 1,270 for the September-December period of last year, up again to Rp 1,320 for the January-March period, Rp 1,320 for April, Rp 1,700 for May and June and lastly Rp 2,310 for the August-September period.

President Soeharto suggested on Tuesday that, in view of the current high newsprint price, publishers reduce the number of newspaper pages rather than raising sale prices.

Subrata, director general of press and graphics at the Ministry of Information, said the price increase of newsprint will surely affect newspaper publishers. Small publishers especially will suffer, as newsprint normally constitutes 30 to 35 percent of their total production costs.

"I hope this increase will not reduce the number of newspapers or their circulations," Subrata said.

Currently Indonesia has 287 publishers of both newspapers and magazines, with some 13 million copies in circulation. According to the Ministry of Industry, all the publishers need 12,000 tons of newsprint per month, of which Aspex Paper supplies 10,500 tons and Kertas Leces supplies the rest.

Leo Batubara, head of SPS's special task force on newsprint, said SPS-owned PT Inpers trading firm would be reactivated to handle newsprint orders from newspaper publishers, especially those outside Java. (rid)