Prospect Of Pulp And Paper Industry In The Middle Of Raw Material Crisis, 2008

FOREWORD

Facing the recent global economic crisis, pulp and paper industry in Indonesia receives a serious challenge, because some of its product is export commodity. Even, the government has decided that pulp and paper product as one of the ten largest export products in obtaining foreign exchange. During the last five years, foreign exchange gained from this commodity was increased averagely 8.9% each year, from US$ 2.7 billion to US$ 4.1 billion in 2007, so currently, Indonesia ranks 13 in global pulp production.

It was noted that before the global economic crisis, pulp and paper export of Indonesia tended to increase, along with the high needs of paper product utilization domestically or abroad. Paper export within the last five years was increased averagely 3.7% per year. While its raw material (pulp) export was stagnant at the level 2.4 million tons. The high export performance was caused by the more competitive pulp and paper industry compared to the same product from other countries, especially from advance countries, such as United States of America and Canada.

But currently, according to the Association of Pulp and Paper Indonesia (APKI), paper industry by the end of 2008, is predicted would suffer loss, as a result of the global financial crisis. For example, there are many cancellation of export to USA and European Union, while domestic sales were also decreasing. The decreasing demand affected the increase of potential loss of pulp and paper producer about US$ 864 million. Even currently, Riau Andalan Pulp & Paper, the largest domestic producer of pulp industry has lain off their employees up to 1,000 persons.

In November 2008, pulp price in global market has decreased from US$ 800 per ton to US$ 600 per ton, or decreased about 44.4%. As the weakening of demand, domestic production of pulp and paper is also decreased. At the same time, production cost is increased as the decrease of Rupiah exchange rate against US Dollar.

Until now, the productivity of pulp and paper industry in Indonesia is still obstructed by the raw material, because the supply from Industrial Plant Forrest (HTI) has not fully replaced the raw material from natural forest.

The increase needs of pulp and paper is reflected from the increasing capacity. During the period of 2003-3008, domestic pulp capacity was increased averagely 0.6% per year, which was from 5.2 million tons to 6.4 million tons per year. And in 2010, the installed capacity of pulp industry is predicted to increase again to 7.5 million tons per year, in line with the operation of the new factory. At the same period, paper production capacity was increased significantly, from 9.0 million tons to 10.3 million tons per year. This increase was in line with the factory extension in this industry sector. In Indonesia, at least there were 84 pulp and paper factories, consisting of 14 integrated paper factories with its raw material industry (pulp), 67 paper factories, and 3 pulp factories.
 
Then, the government gave a chance to pulp factories to conclude their HTI at least in 2009. So, with this time limit, it is expected that the pulp factory is able to fulfill the raw material needs from its HTI areas continuously.

In this study, which was prepared by PT Media Data Riset, also discussed the performance aspect of each company, such as competition level, business map and strategy of large corporation (Group). Even, it also discussed the role of its supporting industry, such as machinery and spare parts industry, and electric energy availability, waste treatment of pulp and paper industry, and so on.

Furthermore, this 400 pages study is equipped with government regulation concerning pulp and paper business. So, hopefully, this study would be beneficial to the decision makers from the pulp and paper producers, banking, supplier, investor, capital market, and other involved business circle.

This comprehensive study is offered at the price of Rp 5,000,000.00 (Five million rupiah) per copy for the Indonesian version and US$ 750 (Seven hundred and fifty US dollar) for the English version with negotiable exchange rate. For those who is interested, please do not hesitate to contact PT Media Data Riset through telephone 021-8093140, mobile phone: 085217061945 or through e-mail: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it / This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .The order form is attached to this letter. For overseas or outside Jakarta order, additional delivery fee would be charged. Thank you for your kind attention.

TABLE OF CONTENT

I.    INTRODUCTION
1.1. Back ground
1.2. Purpose and Scope of study
1.3. Data and Information source

II. POPULATION AND GENERAL DESCRIPTION OF INDONESIAN ECONOMIC
2.1. Indonesian Population
2.1.1. Population growth rate nationally
2.1.2. Population growth base on  province
2.1.3. Composition of population basedOn age group
2.1.4. Projection of Indonesia's population growth
2.2. General description of Indonesian economy
2.2.1. General review of Indonesian economy
2.2.2. Indonesia's economic growth
2.2.3. Income per capita Indonesia
2.2.4. Inflation rate
2.2.5. Rupiah exchange rate
2.2.6. Foreign loan
2.2.7. Foreign Exchange Reserve
2.3. Balance of Payment
2.3.1. Indonesia's Balance of Payment
2.3.2. Current Transaction Balance
2.3.3. Export Development
2.3.4. Import Development
2.4. Prospect of Indonesian Economic
2.5. Economic growth 2009 projected 5.5%

III.    PULP INDUSTRY
3.1. Description
3.2. Pulp type
3.3. Pulp manufacturing Process
3.4. Loss rate in production process
3.5. Pulp production capacity
3.5.1. Foreign investment is still high
3.5.2. Integrated
3.5.3. Sumatera is the largest
3.6. Factory location, Status, and capacity
3.7. Dominated by large group
3.7.1. Sinar Mas Group the largest
3.7.2. Raja Garuda Mas group
3.7.3. Barito Pacifik and Citra Agratama group
3.7.4. Kalimanis group
3.7.5.     BUMN group
3.8. Pulp production development
3.8.1. Pulp production is increasing
3.8.2. Production based on company
3.9. Used non-standard raw material
3.10. Investment interest

IV.    PULP RAW MATERIAL
4.1. Raw material source
4.1.1. Wood-pulp main raw material
4.1.2. Logging waste
4.1.3. Public forrest
4.2. Log need for pulp industry
4.2.1. Forrest territory is decreasing
4.2.2. Soft landing policy threat wood raw material
4.2.3. Land Clearing: short cut to gain wood
4.2.4. Illegal logging and police line
4.3. Industrial Plant Forrest Project (Hutan Tanaman Industri - HTI)
4.3.1. Land potency of HTI development
4.3.2. HTI-Pulp become mainstay
4.3.3. Realization reached 70%
4.3.4. HTI-Pulp non-priority
4.3.5. Dominated by large business group
4.3.6. HTI development is slow
4.3.7. 16 HTI Investors, invested Rp 33 trillion
4.3.8. PT KBRI develops HTI
4.3.9. HTI new license is halted
4.3.10. Targeted in 2009
4.4. Capital intensive and high risk

V.    USED PAPER RAW MATERIAL
5.1. Used paper production reached 3.6 million tons
5.2. Used paper import
5.2.1. Import is still high
5.2.2. Import based on type
5.2.3. Import based on originating country
5.3. Export development
5.3.1. Used paper export is not significant
5.3.2. Export based on type
5.3.3. Export based on destination country
5.4. Consumption

VI.    PAPER INDUSTRY
6.1. Paper type
6.1.1. Industrial Paper
6.1.2. Cultural Paper
6.1.3. Cigarette Paper
6.1.4. Tissue/Household paper
6.1.5. Other Paper
6.2. Paper manufacturing process
6.3. Number of factories and production capacity
6.3.1. Production capacity only increased 2.4% per year
6.3.2. Paper producer status and Production capacity
6.3.3. PMDN company is quitedominant
6.3.4. Paper producer based on location
6.3.5. Cultural paper is the largest
6.4. Paper business is dominated by large group
6.4.1. Sinar Mas group
6.4.2. Garama group
6.4.3. Raja Garuda Mas group
6.4.4. Indhasana group
6.4.5. Kalimanis group
6.5. Paper national production
6.5.1. Production kept increasing
6.5.2. Paper production based on type
6.5.3. Production of  Sinar Mas is the largest
6.6. Industrial Paper
6.6.1. Industrial paper producer
6.6.2. Kraft linier capacity is the largest
6.6.3. Industrial paper production
6.7. Cultural paper
6.7.1. Factory and its capacity
6.7.2. Production development
6.7.3. Sinar Mas leader of paper market
6.8. Cigarette Paper
6.8.1. Gudang Garam is ahead
6.8.2. Production tends to decrease
6.8.3. PT Surya Zig Zag production is the largest
6.9. Tissue paper
6.9.1. Factory and its capacity
6.9.2. Production development
6.10. Other Paper
6.10.1. Factory and its capacity
6.10.2. Production development
6.11. Investment
6.12. Paper Dumping accusation
6.13. Producer complained about Perda

VII.    EXPORT-IMPORT DEVELOPMENT
7.1. Pulp export fell 13.3%
7.1.1. Pulp export based on type
7.1.2. Pulp export based on destination country
7.2. Paper Export
7.2.1. Export gained US$3.1 billion
7.2.2. Cultural paper export is quite dominant
7.2.3. Export based on destination country
7.3. Import development
7.3.1. Pulp import absorbedUS$605.5 million
7.3.2. Import based on type
7.3.3. Canada, the main supplier
7.4. Paper Import
7.4.1. Import increase 15.8%
7.4.2. sack kraft import is the largest
7.4.3. Paper from China is the largest

VIII.    MARKET SIZE AND DOMESTIC CONSUMPTION
8.1. Pulp
8.2. Paper national consumption
8.3. Paper consumption based on type
8.3.1. Industrial paper consumption
8.3.2. Industrial paper consumption Based on type
8.4. Cultural paper consumption
8.4.1. Cultural paper consumption Based on type
8.5. Market Size and cigarette paper consumption
8.6. Tissue paper
8.7. Other paper consumption
8.8. Paper consumption Per capita

IX.    GLOBAL PULP AND PAPER
         INDUSTRY
9.1. Production capacity of global pulp
9.2. America the largest supplier
9.3. Wood Pulp type for Paper is the largest
9.4. Global paper Capacity and production
9.4.1. America's paper production is the largest
9.4.2. Global writing and printing paper production
9.5. Global writing and printing paper consumption
9.6. Price development
9.6.1. Pulp global price decreased
9.6.2. Paper price in the international market

X.    INFRASTRUCTURE AND FACILITY OF PULP AND PAPER INDUSTRY
10.1. Condition of machinery and factory equipment
10.2. Technology and Machinery utilization
10.3. Dependency on imported machinery is still high
10.4. Dependency on imported machinery Needs to be reduced
10.5. Electric energy source needs
10.5.1. Electric needs supplied by PLN
10.5.2. Cause of electric energy supply crisis
10.5.3. Electricity condition in Sumatera
10.5.4. Estimated condition of Java – Bali system 2008
10.6. Human Resource
10.7. Cost Aspect
10.7.1. Falls under capital intensive industry
10.7.2. Capital market fund is favoured

XI.    MANAGING INDUSTRIAL WASTE
11.1. Pulp and paper industrial waste type
11.2. Government regulation in Handling pulp and paper industrial waste
11.2.1. Analysis of environment impact (Analisa Masalah Dampak Lingkungan – AMDAL)
11.2.2. Emission standard
11.3. Development of waste treatment in Pulp and paper industry
11.4. Chemical compound type for waste treatment in pulp and paper industry

XII.    MARKETING ASPECT
12.1. Distribution channel of imported pulp and paper
12.2. Distribution channel of domestic production
12.3. Distribution channel of Pulp and paper
12.4. Competition

XIII.    GOVERNMENT POLICY IN PULP AND PAPER INDUSTRY SECTOR
13.1. Policy in investment
13.2. Investment facility
13.2.1. Fiscal facility
13.2.2. Imported goods and material listed in the master list
13.2.3. Tax holiday facility is extended
13.3. Keppres of One Roof Investment
13.4. Approval letter of investment license
13.4.1. Approval letter
13.4.2. Extension license
13.4.3. Changes approval letter
13.5. Validating One Roof investment Keppres
13.5.1. One Roof Keppres only favoured certain area
13.5.2. One Roof service system mechanism
13.6. Forming of National Team of Improving Export and Investment(Tim Nasional Peningkatan Ekspor dan Investasi  - Timnas PEPI)
13.7. Government Policy on Forrestry sector
13.7.1. Forrestry space should be reorganized
13.7.2. HPH-plant conssesion is extended to 35 years
13.7.3. Forestry businessman should pay HR fund
13.7.4. Wood utilization license for PLG area is halted
13.7.5. DR paid in     rupiah, since January 1, 1998
13.7.6. 50% IPK wood is obligatory for domestic consumption
13.8. Policy in industry sector
13.8.1. Industry business license
13.8.2. Simplifying licensing procedure
13.8.3. Pulp and paper standard quality
13.9. Policy in Commercial sector
13.9.1. Facility to increase export
13.9.2. Simplifying export provision
13.9.3. Port implementation

XIV.    PROJECTION OF SUPPLY AND DEMAND
14.1. Projection of pulp production capacity
14.2. Paper
14.2.1. Industrial Paper
14.2.2. Cultural Paper
14.2.3. Tissue Paper
14.2.4. Cigarette Paper
14.2.5. Other Paper
14.3. Production Projection
14.3.1. Pulp
14.3.2. Paper Type
14.3.2.1. Industrial Paper
14.3.2.2. Cultural Paper
14.3.2.3. Tissue Paper
14.3.2.4. Cigarette Paper
14.3.2.5. Other Paper
14.4. Projection of National paper production
14.5. Consumption Projection
14.5.1. Industrial Paper
14.5.2. Cultural Paper
14.5.3. Tissue Paper
14.5.4. Cigarette Paper
14.5.5. Other Paper
14.5.6. Projection of pulp and used paper needs

XV.    CONCLUSION AND PROSPECT
15.1. Conclusion
15.1.1. Supply-demand and Export aspect
15.1.2. Each year should build paper factory
15.1.3. Superiority of Indonesia's  pulp and paper industry
15.1.4. Problem faced
15.2. Pulp and Paper business opportunity is still good
15.2.1. Government guidance for pulp investment
15.3. Prospect
15.4. Pulp and paper export potency

DIRECTORIES