INDONESIA

GENERAL ECONOMIC SITUATION OF INDONESIA - 2001

After the serious monetary and banking crisis which started in 1997, Indonesia has not yet recovered, although now the situation is less severe. Below are some current basic data.

Population (million)

: 203.5 (2000); 206 (2001)

Poor people (million)

: 100

Unemployment (million)

: 40

GDP growth

: 4.8% (2000); 3,5% (2001)

GDP per capita US$

: 755 (2001); 905 (2002)

GDP (US$ billion)

: 154.8

Inflation

: 14.42% (2001)

Government loan US$ billion

: 140 (foreign: 70; domestic: 70)

Currency rate US$1

= Rp17 000 (1998); Rp10 000 (2001)

Paper consumption per capita

: 20.8 kg (2000); 23.6 kg (2001)

The main problem encountered by Indonesia is instability in many fields: political, law and order, monetary, banking, security, etc. All of these factors have discouraged the entrance of foreign investment. They are in a wait-and-see position, preferring to make the mills more competitive in export markets.

Although all indicators discourage progress, some improvements have been felt in the currency rate, prices rising slightly, etc.

INDONESIA'S PULP AND PAPER INDUSTRY

Since the crisis, the pulp and paper industry has been unable to expand and/or establish new projects. However, while unable to expand or establish, industry is improving the efficiency of the mills and the quality of products. The increase in capacity is minimal.

Table 1: Profile of pulp and paper industry, 2002


Status and location	No. of mills	Installed capacity
Status and location	No. of mills	Pulp	Paper	Pulp	Paper
		(t per annum)		(%)
State enterprises	3	240 000	322 900	4.3	3.3
Private company domestic investment	66	1 322 100	4 941 280	23.7	49.8
Private company foreign investment	12	4 025 000	4 666 500	72.0	47.0
Total	81	5 587 100	9 930 680	100.0	100.0
Integrated (pulp and paper )	10	4 372 100	2 502 000	78.3	25.2
Non-integrated
- Paper	68	-	7 428 680	-	74.8
- Pulp	3	1 215 000	-	21.7	-
Java	65	340 500	8 439 540	6.1	85.0
Sumatera	14	4 682 000	1 491 140	83.8	15.0
Kalimantan	2	564 600	-	10.1	-
Total	81	5 587 100	9 930 680	100.0	100.0

There are 81 pulp and paper mills in Indonesia consisting of 10 integrated pulp and paper mills, 68 paper mills and 3 pulp mills. The installed capacities for pulp and paper are 5.6 million tonnes per annum and 9.9 million tonnes per annum, respectively.

All kinds of paper, except banknote paper, have been produced locally with extra capacity of exports. Export trade is brisk. The capacities have placed Indonesia as ninth in pulp and twelfth in paper worldwide, according to "Pulp and Paper International".

Local consumption

Local consumption has increased, surpassing the pre-crisis period. Consumer preference for high quality paper is increasing.

While per capita consumption in early 1997 (before the crisis) was 16.5 kg, in 2000 it was 20.8 kg, and in 2001 23.6 kg.

Exports

Exports are increasing every year, almost unaffected by the monetary crisis.

Exports in 2001 were 4.7 million tonnes compared to the 4.6 million tonnes of 2000, but the earnings of 2001 were lower than 2000 (US$2.5 billion compared to US$3 billion). Prices in 2001 were not as good as expected.

Imports

Imports are almost stable with an increase in the import of wastepaper.

Capacity, production, imports, exports and consumption 1999-2001

Table 2: 1999 (m. t)

Description	Installed capacity	Production	Imports	Exports	Apparent consumption
PULP	4 543 600	3 694 630	956 960	1 179 400	3 472 190
WASTEPAPER	3 913 560	1 917 650	2 035 850	0	3 953 500
PAPER AND PAPERBOARD	9 097 180	6 720 560	143 800	2 950 800	3 913 560
1. Newsprint paper	650 800	470 700	1 035	296 140	175 595
2. Writing-printing paper	3 704 800	2 611 080	22 630	1 927 160	706 550
3. Sack kraft paper	155 000	86 320	36 300	15 600	107 020
4. Kraft liner and fluting	2 459 200	1 951 060	26 370	299 460	1 677 970
5. Boards	1 595 500	1 268 560	19 230	251 750	1 036 040
6. Wrapping paper	69 900	91 680	23 720	10 070	105 330
7. Cigarette paper	27 400	17 800	8 540	3 450	22 890
8. Tissue paper	283 000	143 510	635	74 000	70 145
9. Specialty paper	13 400	3 750	5 340	2 370	6 720
10. Joss paper	138 180	76 100	0	70 800	5 300

Table 3: 2000 (m. t)

Description	Installed capacity	Production	Imports	Exports	Apparent consumption
I. PULP	5 228 100	4 089 550	768 590	1 329 460	3 528 680
II. WASTEPAPER	4 224 420	1 679 265	2 428 160	0	4 107 425
III. PAPER AND PAPERBOARD	9 116 180	6 849 000	212 630	2 837 210	4 224 420
1. Newsprint paper	650 800	495 250	3 860	323 125	175 985
2. Writing-printing paper	3 704 800	2 686 050	38 390	1 802 230	922 210
3. Sack kraft paper	155 000	53 570	66 800	10 550	109 820
4. Kraft liner and fluting	2 459 200	1 944 370	49 245	246 760	1 746 855
5. Boards	1 598 500	1 326 980	26 790	287 030	1 066 740
6. Wrapping paper	72 900	63 410	16 710	2 560	77 560
7. Cigarette paper	40 400	21 225	6 740	2 905	25 060
8. Tissue paper	283 000	168 085	2 660	78 940	91 805
9. Specialty paper	13 400	5 380	1 435	4 360	2 455
10. Joss paper	138 180	84 680	0	78 750	5 930

Table 4: 2001 (M. t)

Description	Installed capacity	Production	Imports	Exports	Apparent consumption
PULP	5 587 100	4 325 920	632 740	1 748 230	3 210 430
WASTEPAPER	4 862 360	1 869 900	2 647 620	0	4 517 520
PAPER AND PAPERBOARD	9 904 080	6 951 240	202 690	2 291 570	4 862 360
1. Newsprint paper	659 800	510 800	4 600	336 010	179 390
2. Writing-printing paper	4 184 900	2 696 100	28 320	1 429 290	1 295 130
3. Sack kraft paper	155 000	53 580	79 030	1 840	130 770
4. Kraft liner and fluting	2 644 200	1 974 260	46 780	115 780	1 905 260
5. Boards	1 642 900	1 349 480	27 930	243 440	1 133 970
6. Wrapping paper	72 900	76 240	4 270	2 220	78 290
7. Cigarette paper	40 800	25 010	6 510	6 260	25 260
8. Tissue paper	286 000	175 080	1 480	74 460	102 100
9. Specialty paper	13 400	5 430	3 770	2 980	6 220
10. Joss paper	204 180	85 260	0	79 290	5 970
Notes : Temporary figures

Exports - Imports 1999-2001 (t and value)

Table 5: Exports


Description	1999		2000		2001*
	M. t	US$ thousand	M. t	US$ thousand	M. t	US$ thousand
PULP	1 179 400	474 949	1 329 460	707 802	1 748 230	583 240
WASTEPAPER	0	0	0	0	0	0
PAPER AND PAPER BOARD	2 950 800	1 477 165	2 837 210	1 713 097	2 291 570	1 319 730
1. Newsprint paper	296 140	125 902	323 125	164 754	336 010	192 820
2. Writing-printing paper	1 927 160	1 076 961	1 802 230	1 229 464	1 429 290	900 200
3. Sack kraft paper	15 600	11 457	10 550	6 251	1 840	1 990
4. Kraft liner and fluting	299 460	77 401	246 760	80 584	115 780	30 920
5. Boards	251 750	68 073	287 030	100 545	243 440	70 830
6. Wrapping paper	10 070	7 188	2 560	2 246	2 220	1 860
7. Cigarette paper	3 450	4 051	2 905	4 182	6 260	6 760
8. Tissue paper	74 000	57 285	78 940	64 038	74 460	55 520
9. Specialty paper	2 370	1 482	4 360	3 073	2 980	3 330
10. Joss paper	70 800	47 365	78 750	57 960	79 290	55 500
TOTAL	4 130 200	1 952 114	4 166 670	2 420 899	4 039 800	1 902 970
FINISH PRODUCTS	578 150	430 441	426 405	588 081	741 460	650 210
TOTAL EXPORTS	4 708 350	2 382 555	4 593 075	3 008 980	4 781 260	2 553 180

* Temporary figures

Table 6: Imports


Description	1999		2000		2001*
	M. t	US$ thousand	M. t	US$ thousand	M. t	US$ thousand
PULP	956 960	449 093	768 591	506 831	632 740	300 300
WASTEPAPER	2 035 850	194 807	2 428 165	400 061	2 647 620	328 580
1. Newsprint paper	1 035	450	3 860	1 525	4 600	2 290
2. Writing-printing paper	22 630	18 226	38 390	31 149	28 320	25 590
3. Sack kraft paper	36 300	19 085	66 800	34 828	79 030	50 300
4. Kraft liner and fluting	26 370	14 214	49 245	29 429	46 780	25 850
5. Boards	19 230	11 123	26 790	19 120	27 930	17 970
6. Wrapping paper	23 720	3 512	16 710	5 611	4 270	4 270
7. Cigarette paper	8 540	21 909	6 740	18 791	6 510	20 320
8. Tissue paper	635	1 143	2 660	3 056	1 480	1 960
9. Specialty paper	5 340	32 326	1 435	5 676	3 770	17 710
10. Joss paper	0	0	0	0	0	0
TOTAL	3 136 610	765 888	3 409 386	1 056 077	3 483 050	795 140
FINISH PRODUCTS	46 285	96 268	59 720	134 785	58 230	129 880
TOTAL IMPORTS	3 182 895	862 156	3 469 106	1 190 862	3 541 280	925 020

* Temporary figures

Woods supply (forestry)

Indonesia has a very big forest area despite the reduction due to improper and illegal logging.

In 1997 there were 141 million hectares of forest, the majority of which being natural forest, and at present there are 120 million hectares remaining. Because of the economic crisis and political instability, which caused national indiscipline, Indonesia is suffering a forest area decrease due to forest burning and illegal logging. Especially illegal logging which is happening on a large scale. During the last five years, Indonesia has been losing 1.6 million hectares of forest area every year, mainly because of illegal logging. At the same time government apparatus are unable to counter it successfully. The illegal loggers enter the forest area complete with heavy equipment.

The government issued a decree making log export illegal.

Future prospect

The future of the pulp and paper industry in Indonesia seems very bright. About 141 million hectares can always be reforested, and it can be done when the country reaches stability.

From 141 million hectares, there are 90 million hectares classified as production and conversion forest which can be compared to the present tree plantation area for pulp industry, about 3 million hectares. This shows that the development capacity could be huge, 3 million hectares is similar only to 3.3 percent of our forest for production and conversion.

At the same time, almost all Asian countries have no spare forest for pulp raw material and, therefore, in the next several years there will not be any new pulp projects in Asia, except in Indonesia.


Population (million)	: 203.5 (2000); 206 (2001)
Poor people (million)	: 100
Unemployment (million)	: 40
GDP growth	: 4.8% (2000); 3,5% (2001)
GDP per capita US$	: 755 (2001); 905 (2002)
GDP (US$ billion)	: 154.8
Inflation	: 14.42% (2001)
Government loan US$ billion	: 140 (foreign: 70; domestic: 70)
Currency rate US$1	= Rp17 000 (1998); Rp10 000 (2001)
Paper consumption per capita	: 20.8 kg (2000); 23.6 kg (2001)