Indonesia's Pulp and Paper Market Growing 5% in 2015

 

The Jakarta Globe, Jakarta, Indonesia, reported this week that Indonesia’s pulp and paper market is forecast to grow by 5% by next year, amid intensifying global competition for rising paper consumption in China, according to an executive at Riau Andalan Pulp and Paper which is headquartered in the country.

RAPP president director Kusnan Rahmin said the Asian market — China in particular — has been showing an upward trend in pulp and paper demand.

Global pulp demand is expected to grow 2.6% annually, to 38.9 million tons by 2025 from 24.5 million tons in 2010.

China’s market in particular is forecast to grow 6.4% annually, reaching 14.3 million tons in 2025.

RAPP exports around 70% of its total production, while the remainder is sold to Indonesian customers.

Despite steady growth in Asia, demand for paper in North America and European countries is slowing as the use of computers and mobile device in the digital age rapidly grows, according to Rusli Tan, deputy chief of the Indonesia Pulp and Paper Association (APKI).

"Just think about it, in Western countries nowadays, most people access everything on the Internet," Rusli commented on Thursday.

Many of Indonesia’s pulp and paper companies have faced slower demand this year due to an oversupply of paper and declining paper consumption globally. Facing an oversupplied market, Kusnan said the competitiveness of Indonesia’s pulp and paper manufacturers must be maintained in order to keep their hold on the Asia-Pacific market. Rusli echoed Kusnan’s sentiments, adding that the government must take part in facilitating the industry’s growth to assist local companies.

"For now, Indonesia’s pulp and paper companies must remain competitive and uphold their market share by increasing production capacities," Rusli said.

The total paper production in Indonesia reached 6 million tons last year, with around 2.8 million tons coming from RAPP. In 2014, production is expected to reach 8 million tons, 33% higher from last year, with the growth of Sinar Mas’s pulp and paper plant in Palembang, South Sumatra, which commenced operations earlier this year. Rusli remains upbeat that if the next government, led by President-elect Joko Widodo, succeeded to improve Indonesia’s infrastructure, the pulp and paper industry could grow by up to 20% in 2016.

"Improved infrastructure will lead to higher purchasing power, which will spill over to the pulp and paper industry," he said.

Environmental groups often single out pulp and paper manufactures such as RAPP, but Kusnan emphasized that ensuring the sustainability of RAPP’s forest area simply makes business sense.

"Why would we burn our own forest if we need to timber from it?" he said. "RAPP only has a limited area of land. We can’t add on more land, so optimization is key."