Newsprint prices set after tight negotiations

JAKARTA (JP): The Association of Indonesian Pulp and Paper Producers (APKI) and the Association of Indonesian Newspaper Publishers (SPS) have agreed to cut the new price of newsprint to between US$500 and $505 a ton.

Minister of Industry and Trade Tunky Ariwibowo said yesterday that the new prices, which will be effective from Jan. 1 to March 31, were settled after lengthy and tight negotiations.

The price of newsprint was last set at $535 a ton on Oct. 3.

Under the agreement, newsprint producer PT Aspex Paper will sell newsprint for $505 a ton, while state-owned PT Kertas Letjes will sell it for $500 a ton. Other newsprint producers will sell the paper based on negotiations.

The associations also agreed to use the average rupiah-dollar exchange rate from the previous week as the base for transactions.

The associations held three meetings prior to the agreement to negotiate prices. The Ministry of Industry and Trade acted as mediator in the negotiations.

Representatives of the two associations said yesterday they were satisfied with the new prices.

"We finally agreed on something that was fair. If we're going to lose, we'll both lose, and vice versa if we profit," SPS chairman Leo Batubara said yesterday.

PT Aspex Paper president Lee Won Jie said the agreed price was costly to newsprint producers, but said his company would improve efficiency to reduce production costs.

"This will save us from losing money," Lee said.

The monetary crisis, which has lowered the value of the rupiah by about 60 percent since July, has made newsprint expensive. The rupiah's depreciation partly contributed to the rise in the newsprint price to Rp 6,025 per kilogram this month as compared to Rp 1,254 per kilogram in January and Rp 1,304 per kilogram in March this year.

The sharp rise threatens the susceptible press industry which has already seen several publications shut down in the past month.

At least two major dailies had cut several pages because of the price hike.

Batubara said the negotiations were tough because APKI insisted on adjusting the prices with the increase in production costs.

"APKI argued that production costs rose 80 percent, while we estimated it at 27 percent," he said

Lee said production costs rose sharply as producers had to import newsprint's raw material -- recycled newspapers.

PT Aspex Paper has to allocate 7,500 tons of its product for the domestic market monthly, while PT Kertas Letjes will supply 3,500 tons locally every month.

Other newsprint producers will provide 4,000 tons for the domestic supply. (das)

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