Paper-based industries warn that protection may harm exports

JAKARTA (JP): Government protection for the producers of pulp and paper will hamper the development of the country's exports, executives of paper-based associations said here yesterday.

A spokesman for the Indonesian Corrugated and Cardboard Industries Association, Johannes Aminoto, told reporters that the recent 65 percent increase in the prices of paper will adversely affect Indonesia's non-oil exports.

"Packaging contributes about 30 percent of the total prices of our export commodities," he said.

"Worse still, the price hike is actually due to deliberate manipulation by the Indonesian Pulp and Paper Association (APKI) rather than genuine market factors," Johannes, who spoke on behalf of paper-based associations, said.

The growth of Indonesia's non-oil exports has slowed down since last year and its trade surplus in February declined by 35.9 percent to US$649.2 million from the same month of last year.

The executive said that government policies allow APKI to keep prices on the domestic market at high levels, while the prices of their exports stay low.

The government's protection of the paper and pulp manufacturers is in the form of duties of up to 48.4 percent on imports.

"What makes us even more frustrated is that the APKI's paper is of poor quality," Johannes complained.

He said the protection has caused prices of paper on the domestic market to be far higher than those on the world market. The domestic price of HVS paper in April, for example, reached Rp 2,474/kg ($1.18), as compared to 31 U.S. cents in the United States.

Subsidy

APKI spokesman Suresh Kilam told Tempo magazine that paper producers should set domestic prices at levels allowing them to get subsidies for their exports because they had to resort to dumping to compete on the world market.

Suresh also said that the paper price increase was partially due to the 101 percent rise in the price of pulp since November 1993.

Fauzi Lubis, the chairman of Indonesian Printing Company Association, who was present at yesterday's press conference, challenged Suresh's claims. "According to the figures I got from a British paper mill called Argo Wiggins, the increase in the pulp price since last year reached only 35.48 percent to $450/ton in April from $340 in November," Fauzi said.

On the same occasion, an executive of the Association of Indonesian Newspaper Publishers who requested anonymity, said dumping was also practiced by newsprint producers such as PT Aspex Paper (controlled by tycoon Bob Hasan and Korean partners) and state-owned PT Pabrik Kertas Letjes.

Fauzi said the paper-based industry associations plan to take their pleas to the House of Representatives soon.

"The reaction of the Ministry of Industry to our recent complaints has been unsatisfactory," he said.

APKI officials were not available for comment yesterday.(hdj)