Study : INDONESIAN PULP AND PAPER INDUSTRY PROGRESS, 2010

(After facing Global Crisis)

April, 2010 After going through global economy crisis, Indonesian pulp and paper industry rises again, encouraged by the world’s pulp price that begins increasing. For example, in November 2009, the pulp price skyrocketed to US$ 710 per ton. The price increase is estimated to continue until 2010. In fact, the pulp price once fell to the lowest point at the level of US$490 per ton. Before global economy crisis, Indonesian pulp and paper export was prone to increasing, in line with the high demand for paper product use in the home country and overseas. Paper export until 2008 was recorded increasing by about 5.1% per annum, whereas export of the raw materials thereof (pulp), was stagnant at the range of 2.4 million ton. The high export performance was caused by more competitiveness of Indonesian pulp and paper industry than products of other countries, especially from developed countries such as United States of America and Canada. The need for pulp and paper in this period was reflected from the increasing production capacity. During 2004 – 2008 period, domestic pulp capacity increased by 0.6% per annum on the average, namely from 5.2 million ton to 6.4 million ton per annum. In 2009, the installed capacity thereof increased again to 6,9 million ton per annum, in line with new factory operation. In the same period, paper production capacity went through significant increase as well, from 10 million ton to 10.9 million ton per annum. Meanwhile, Indonesian pulp and paper productivity still faced constraints in raw materials, because supply from Industrial Forest (HTI) has not fully replaced raw materials from natural forest. The Government gave opportunity to pulp factories to complete their supply from Industrial Forest not later than in 2009. With this deadline, pulp factories were expected to be capable of continuously fulfilling raw materials demand from their Industrial Forest. This study book prepared by PT Media Data Riset consisting of 350 pages also explain about performance aspect of each company, such as competition level and business map and strategy of large company (Group). The role of supporting industry thereof is also discussed, like machine and spare parts industry, and availability factor of power energy, infrastructure, waste treatment of pulp and paper industry, and so forth. In addition, it is completed with regulations on pulp and paper business. Therefore, this study is very beneficial for decision makers from pulp and paper producers, banking sector, suppliers, investors, capital market circles, and other relevant business sectors. This comprehensive study book is offered at the price of Rp 5,000,000 (Five million rupiah) per copy for the Indonesian version or US$ 750 (Seven hundred and fifty US Dollar) per copy for the English version. The interested applicant could directly contact PT Media Data Riset Jakarta through telephone number (021) 809 6071, 809 3140, facsimile (021) 809 6071, or e-mail to mediadata.co.id. The order form is attached to this proposal letter. For overseas or outside Jakarta order, additional delivery fee would be charged. Jakarta, April 2010 PT Media Data Riset

Drh. H. Daddy Kusdriana M.Si. President Director

LIST OF CONTENT INDONESIAN PULP AND PAPER INDUSTRY PROGRESS, 2010

(After facing Global Crisis) April, 2010

1. INTRODUCTION

1.1. Background 1.2. Coverage and Purpose of Study 1.3. Data and Information Source

2. POPULATION AND GENERAL DESCRIPTION OF INDONESIAN ECONOMY 2.1. Population of Indonesia

2.1.1. National population growth rate 2.1.2. Population growth by province 2.1.3. Composition of population by age

group 2.1.4. Projection of Indonesian

population growth 2.2. General Description of Indonesian

Economy 2.2.1. 2009 economic growth exceeds

the target 2.2.2. Inflation rate of 2010 is 5.7% 2.2.3. Income per capita of Indonesia 2.2.4. Rupiah exchange rate 2.2.5. Foreign exchange reserve 2.2.6. Current transaction balance sheet

2.3. 2010 Economic Rate is Projected 5.5% 2.3.1. 2010 APBN (State Budget and

Revenue) is affected 2.3.2. Increasing Rp 21.9 trillion 2.3.3. Revision opportunity

3. PULP INDUSTRY DEVELOPMENT 3.1. Description 3.2. Types of Pulp 3.3. Pulp Production Process 3.4. Loss Level in Production Process 3.5. Pulp Production Capacity

3.5.1. The Largest Domestic Investment 3.5.2. Integrated 3.5.3. Sumatera is the largest

3.6. Factories and their capacities 3.7. Controlled by Large Groups

3.7.1. Sinar Mas Group is the largest 3.7.2. Raja Garuda Mas Group 3.7.3. Barito Pacifik dan Citra Agratama

Group 3.7.4. Kalimanis Group 3.7.5. State-owned Company Group

3.8. Production Development 3.8.1. Pulp production increases by 1.6%

per year 3.8.2. Production by company

3.9. Demand for Pulp Increases again 3.9.1. Price reaches the highest point

3.10.60% of raw materials is supplied from Industrial Forest (HTI)

3.11. Risks encountered by pulp industry

3.11.1. Price fluctuation 3.11.2. Competition 3.11.3. Change of interest rate and

exchange rate of foreign currency 3.11.4. Environmental factor 3.11.5. Scarcity of raw materials 3.11.6. Natural disaster

3.12. Use of Nonstandard Raw Materials 3.13. Investment Interest

4. RAW MATERIALS FOR PULP

4.1. Sources of Raw Materials for Pulp 4.1.1. Main log for pulp raw materials 4.1.2. Logging waste 4.1.3. Smallholders’ Forest 4.1.4. Log for Pulp Industry

4.2. Government Regulations Plan 2010 4.3. Riau Natural Forest is logged 4.4. The Opportunity of Smallholders’ Forest

(HTR) 4.5. Forest Area is narrowing 4.6. Soft Landing threatens wood raw

materials 4.6.1. Land Clearing: A Shortcut to get

Logs 4.7. Industrial Forest (HTI) Project

4.7.1. Potentials of HTI development areas

4.7.2. Issuing the permit of HTI of 7.8 hectare

4.7.3. HTI-Pulp becomes the mainstay 4.7.4. Non priority HTI-Pulp 4.7.5. Dominated by big business group 4.7.6. Raw material supply for Sinar Mas

Group 4.7.7. PT KBRI develops HTI 4.7.8. HTI Investors invested Rp 33

quintillion 4.7.9. Business permit will be revoked

4.8. High Capital and High Risk 4.9. 4 Plantation Government Owned

Companies (BUMN) develop HTI 4.10. Investors’ worries

5. WASTE PAPER RAW MATERIAL

5.1. Waste paper production increases by 5.5% each year

5.2. Waste Paper Import 5.2.1. Import is still quite high 5.2.2. Import by type 5.2.3. Import by country of origin

5.3. Export Development 5.3.1. Waste paper export is insignificant 5.3.2. Export by type 5.3.3. Export by country of destination

5.4. Consumption

6. PAPER INDUSTRY 6.1. Types of Paper

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. Total Plants and Capacity Thereof

6.3.1. Capacity increases 1.7% 6.3.2. Total paper plants by location

6.4. Production capacity by type 6.4.1. Industrial paper capacity 6.4.2. Cultural paper 6.4.3. Tissue Paper 6.4.4. Cigarette Paper 6.4.5. Types of Other Paper

6.5. Paper Business Is Controlled by Big Groups 6.5.1. Sinar Mas Group 6.5.2. Raja Garuda Mas Group 6.5.3. Garama Group 6.5.4. Indhasana Group 6.5.5. Kalimanis Group 6.5.6. State-Owned Company

6.6. National Paper Production 6.6.1. Production increases 0.9% per

annum 6.6.2. Paper production by type 6.6.3. Industrial paper production 6.6.4. Cultural paper industry 6.6.5. Cigarette paper production is

stagnant 6.6.6. Tissue production increases 6.6% 6.6.7. Other paper production

6.7. Dumping Charge 6.7.1. The United States of America

imposes BMI 6.7.2. Benefit Import Duty 6.7.3. Philippine Safeguard Action 6.7.4. Gulf countries threat 6.7.5. Exportation to Korea is pressed 6.7.6. Review

6.8. Investment 6.8.1. Japan’s Interest Is High

6.9. Producers complain about Regional Regulations

7. EXPORT-IMPORT DEVELOPMENT

7.1. Pulp Export Drops 7.2. Pulp Export by Type

7.2.1. The largest chemical wood pulp soda

7.2.2. China remains the largest 7.3. Paper Export

7.3.1. Gaining foreign exchange of US$ 3.7 billion

7.3.2. Paper export by type 7.3.3. Export by country of destination

7.4. Import Development 7.4.1. Absorbing foreign exchange of

US$ 958.9 million

7.4.2. Chemical wood pulp dissolving is the largest

7.4.3. Canada is the main market 7.5. Paper Import

7.5.1. Import increases by 15.8% 7.5.2. Kraft Linier Moves Sack Kraft 7.5.3. China is the main supplier

8. MARKET SIZE AND DOMESTIC

CONSUMPTION 8.1. Pulp 8.2. National Paper Consumption 8.3. Paper Consumption by Type

8.3.1. Industrial paper 8.3.2. Cultural paper consumption 8.3.3. Cigarette paper consumption 8.3.4. Tissue Paper 8.3.5. Other papers consumption

8.4. Paper Consumption per capita 9. THE WORLD’S PULP AND PAPER

INDUSTRY 9.1. The World’s Pulp Production Capacity

9.1.1. The largest product is wood pulp for paper & paperboard

9.1.2. Indonesia is number 12 9.2. The world’s paper production capacity

9.2.1. The world’s paper production 9.2.2. The world’s writing and

printing paper production 9.3. The world’s pulp price

9.3.1. The world’s paper price 10. INFRASTRUCTURES AND FACILITIES OF

PULP AND PAPER INDUSTRY 10.1. Condition of Factory Machines and

Instruments 10.2. Technology and Machine Application 10.3. Dependence on Imported Machines is

still High 10.4. Imported Machines should be reduced 10.5. Need for Power Energy Source

10.5.1. Power need is supplied by PLN 10.5.2. Cause of power energy supply

crisis 10.5.3. Electricity condition in Sumatera 10.5.4. Power deficit in Sumatera needs

Rp 3.7 trillion 10.5.5. Estimated condition of Java –

Bali system condition 2008 10.6. Human Resources 10.7. Cost Aspect

10.7.1. Classified into capital intensive industry

10.7.2. Capital market fund is quite desired

10.8. Issues

11. INDUSTRIAL WASTE TREATMENT 11.1. Type of Pulp and Paper Industry Waste 11.2. Government Regulation on Pulp and

Paper Industry Waste Treatment 11.2.1. Analysis on Environmental

Impacts (AMDAL) 11.2.2. Emission standard

11.3. Waste Treatment in Pulp and Paper Industry 11.3.1. PT Indah Kiat Pulp & Paper 11.3.2. PT Toba Pulp Lestari 11.3.3. PT Pindo Deli 11.3.4. PT Lontar Papyrus 11.3.5. PT Suparma 11.3.6. PT Surabaya Agung 11.3.7. PT KBRI 11.3.8. PT Fajar Surya Wisesa

11.4. Chemical Substance for Pulp and Paper Industrial Waste Treatment

12. MARKETING ASPECT

12.1. Distribution channel 12.2. Domestic Production Distribution

Channel 12.3. Pulp and Paper Distribution Channel 12.4. Competition

13. GOVERNMENT’S POLICY ON PULP AND

PAPER INDUSTRY, AND FORESTRY 13.1. Investment Sector 13.2. Investment Facility

13.2.1. Fiscal facility 13.2.2. Imported goods and materials

contained in the master list 13.2.3. Granting of tax holiday facility

is expanded 13.3. Presidential Decree on One-Roof

Investment 13.4. Approval of Investment Permit

13.4.1. Approval letter 13.4.2. Expansion permit 13.4.3. Amendment approval letter

13.5. Application of the Decree of the President on One-Roof Investmen 13.5.1. One-Roof Investment

Presidential Decree is profitable for certain regions only

13.5.2. Mechanism of one-roof service system

13.6. Formation of National Team for Export and Investment Increase

13.7. Government’s Policy on Forestry Sector 13.7.1. Forestry layout is arranged

again 13.7.2. Forest-plants Concession Right

is increased to 35 years 13.7.3. Timber Use Permit for Peat Soil

Development area is stopped 13.7.4. Reforestation Fund 13.7.5. 50% of IPK (Timber Use Permit)

wood must be used for domestic consumption

13.8. Forestry investment permit is assigned to BKPM

13.9. Policy on Industrial Sector 13.9.1. Industrial Operation Permit

13.9.2. Licensing procedure simplification

13.9.3. Pulp and paper product quality standard

13.10. Policy on Trading Sector 13.10.1. Facility for the purpose of

increasing export 13.10.2. Simplification of regulations

on export 13.10.3. Organization of harbor

14. CONCLUSION AND PROSPECTS

14.1. Conclusion 14.1.1. Supply-demand and export

aspect 14.1.2. Every year a paper factory

needs to be built 14.1.3. Superiorities of Indonesian

pulp and paper industry 14.1.4. Constraints faced

14.2. Pulp and Paper Business Opportunity is still Fine 14.2.1. Government’s guidelines for

pulp investment 14.3. Prospect 14.4. Pulp and Paper Export Potential

DIRECTORY : PULP AND PAPER PRODUCER IN INDONESIA

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Study : INDONESIAN PULP AND PAPER INDUSTRY PROGRESS, 2010

(After facing Global Crisis) April, 2010

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