PAPER INDUSTRY IS HAMPERED BY CRISIS

The financial crisis in several countries hampers paper industry in Indonesia. The reason is that the largest part of paper product is sold un the export market. Currently, 40% of paper product is exported to European and American countries. According to Indonesian Pulp and Paper Association (APKI), sine the end of 2010 until now, paper factory utilization nationally is only 11 million tons or 90% of total capacity of 12.9 million tons.

This also affects the development of world’s paper prices since the end of 2010 until now which only ranges between USD 1,000 – USD 1,100/ton. Paper producers could not enjoy high profit from sales of paper and pulp. Pulp production since 2010 is stagnant at 7.9 million tons/year. So far, around 50% of national pulp production has been exported.

In such a less profitable condition, some paper factories show a less satisfactory performance. Take for example, Asia Pulp and Paper (of the Sinar Mas Group) which in the first half of 2010 only recorded a relatively low increase in sales. Tjiwi Kimia recorded net sales of USD 721.09 millions or only increases 4.7% if compared to the same period in 2010. Indah Kiat recorded sales at USD 1.34 millions or only increases 8% if compared to 2010.

Performance of paper industry in the second half of 2011 is predicted to increase 5% if compared to its growth in the first half of 2010 in line with prediction of increase of national paper consumption. Growth of national paper industry will not be facing significant challenges in the future as currently volume of production of paper industry is increasing in line with expansion and construction of nine new paper factories since end of 2010. The nine factories are located, amongst others, in Medan, Jakarta, and East Java.

Currently, installed capacity of national paper factory is recorded at 12.9 million tons/year, but only 90% that has been utilized. Domestic consumption only reaches 6.8 million tons so there is a surplus of domestic paper production which is exported. Meanwhile, imported paper product is recorded at 0.3 million tons.

If compared to other countries, paper consumption in Indonesia is still far ideal. Paper consumption in Malaysia, for example, reaches 36 kg/capita, Singapore 46 kg/capita, and European countries 41 kg/capita/year. Based on APKI’s data, pulp productions capacity in Indonesia reaches 8 million tons/year, while paper production nationally reaches 10 million tons/year. The production level is not yet optimal. Utilization rate of pulp industry is only around 93%.