BUSINESS CLIMATE OF PULP AND PAPER INDUSTRY INCONDUCIVE

The government has not provided a conducive business climate for the development of pulp and paper industry. “Many government policies on this sector are inconsistent”, said Misbahul Huda, Chairman of Indonesian Pulp and Paper Association.

For exampiu, land provision for Industrial For­est. Many concessions issued by the Government is not yet clear and  clean therefore businessmen have difficulty in out land as they come face-to-face with the local community. Other problem is import of waste paper.

Now, import of waste paper must be verified by Sucofindo and Surveyor Indonesian by applying Technical Verification of Import. The procedure is quite complicated so that importers are unwilling to import waste paper to Indonesia and shifted waste paper import to China and India. Consequently, Indo­nesia’s recycled paper industry could die.

Waste paper is used as raw material for pack­ing paper industry and newsprint industry. Around 70% of its demand must tie imported. “In this situa­tion, there are some pulp and paper industries who reduce production, even there are some who stop their operations, particularly packing paper and newsprint. If this continues, Indonesia could become net import­er of packing paper and newsprint”, Huila said.

Indonesia’s pulp end paper market experienc­es decline of demand. This can be seen from produc­er’s stocks which usually reach 2,000 ton, but now it only reaches 4.000 ton.

Main world’s pulp and paper markets are America and Europe. Almost all pulp and paper indus­tries targeted these two continents. The crisis which is happening at present causes demand from these two continents in decline.

In such condition, China and India started to shift their markets, and Indonesia is one of their tar­get markets. “Our export is declining, and now we come face-to-face with imported paper from China and India”, he said.

China has problem with its domestic market­ing. As the world’s biggest exporter, demand for pack­ing paper in China is very high. Now, China’s export increasingly declines so that demand for packing paper also declines. Consequently, they seek new markets, and Indonesia is one of its main targets", he said.

In good condition, price of pulp could reach USD1,000/ton, while price of paper could reach USD1,400/ton. But, in condition of sluggishness of demand, price of paper reaches USD800 – 850/ton and price of pulp USD650/ton. “This is an abnor­mal price because paper price should be more than USD250/ton if compared to pulp price”, he said.

Other anomaly is decline of paper demand in advanced countries since July. Normally, paper de­mand in advanced countries in July rises sharply due to new school year, and near the winter season pulp and paper producers stop production so they buy pulp and paper from tropical countries. In the third quarter of this year, production declines by 2%-3% if compared to the second quarter.

In addition to the worsening of world’s economy, other factors that cause in demand for Indonesia’s pulp and paper is massive campaign by foreign non-governmental institutions attacking Indonesia’s pulp and paper product as the main source of environmental harming. Refusal from Disney and con­tract cancellation by several companies in Australia are also a form of attack.

“In fact, they were not purely campaigning about environmental saving. They brought the in­terests of business competitors. This is evident that they were rampantly attacking Indonesia’s pulp and paper industry, while pulp and paper industries of other countries are untouched by them”.

Business News - November 21, 2012