Seven Companies infest Rp. 69 Trillion for Pulp and Paper

*Tuesday, 5 June 2007 01:56:00*

*JAKARTA, Investor Daily *

Seven Foreign Capital Companies and local companies will build Rp. 69 Trillion Pulp and paper mill in Indonesia.

The expansive of pulp and paper industry and bankrupt of several same industries in North America and North Europe has potential to placed Indonesia as the third biggest pulp and paper producer in the world, from the seventh place right now.

According information from *Investor Daily* from Capital Plants Coordination Biro in Jakarta last week, PT Indah Kiat Pulp & Paper Tbk will release total infestation Rp 15,43 trillion. Sub company of Asian Pulp and Paper (APP) under Sinar Mas group will build paper mill with capacity of 562.000 ton equal to Rp 10,57 trillion in Siak District, Riau Province. At the same location, Indah Kiat also will build pulp mill with capacity 600.000 ton per year equal to Rp 4,86 trillion.

Other foreign companies, PT Intiguna Primatama intends to build pulp industry in Riau with capacity 500.000 ton with amount of infestation Rp 1,5 trillion. By the Local capital companies infestation, PT Putra Adil Laksana, PT Tranindo Sinar Utama, and PT Karawang Ekawana Sukses, will build pulp industry at Barito Kuala (South Kalimantan) District respectively, Kapuas (Central Kalimantan), and Pontianak (West Kalimantan). Each pulp mill has capacity about 2 million tons per year with infestation value Rp 17,13 trillion.

In the other hand, PT Surabaya Agung Industri Pulp dan Kertas Tbk and PT Wirajaya Packindo will build paper mill in Java. PT Surabaya Agung is planning to build paper mill in Gresik (East Java) with value Rp 774,72 billion with capacity 110.000 ton per year, meanwhile PT Wirajaya will infest Rp 250 billion to build paper mill with capacity 150.000 ton per year in Tangerang (Banten).

Meanwhile, through APRIL, Raja Garuda Mas (RGM) group is in progress of building their second paper mill in Sumatera. Started last year will finish at the end of 2007, so the paper production will increase to 800.000 ton per year. APRIL which is one of the biggest pulp producers in the world has pulp mill in Indonesia with production capacity 2 million tons per year.

Chairman of Indonesian Pulp and Paper Association (APKI) HM Mansur Said, domestic or foreign pulp and paper investors are very interesting to build new plant in this country. This is related to many pulp mills in North America and North Europe is not competitive anymore.

Before, pulp from those two nations control 56,4% world production which reach 221,3 million ton. Meanwhile, production capacity for pulp in Indonesia estimated 6,73 million ton in 2007 with world market about 2,5%.

Senior Director Corporate Logistic Division of Sinar Mas Raymond A Liu said, amount of pulp industry with total of capacity 2,4 million ton in North America has been close down in last two years. Those industries are Domtar, Neenah Paper, Sappi, Bowater, Fraser, Tembec, and Western Pulp

*. *

Thus the pulp and paper industry in North Europe has been close down and relocated the mills because of the high of labour cost or the engine which already old.

Mansur explain, world pulp industries has relocated their mills to South America, so its pulp industry capacity increased, estimated becomes 8 million tons on 2008.

*The third biggest

*

According to Mansur, right now is a gold opportunity for Indonesia to take foreign infestation to pulp and paper industry. South America even scared if Indonesia becomes the strong competitor, because the wide of Indonesian Forest, competitive production cost, and close to Tiongkok which becomes their target for their pulp export.

Because of it, Mansur and Secretary General of Indonesian Forestry Society Agung Nugraha optimist, Indonesia has a chance becomes the third biggest pulp and paper producers. Because this country is still has supply for Timber Estate Plantation which very large.

According to Agung, if the government and forestry entrepreneur able to reach target of Timber Estate Development for 5 million hectares and Community based Timber estate Plantation for 9 million hectares until 2009, demand for material for pulp industry will never become problems anymore. "If all planted target can be fulfilled, Indonesia will become the third biggest pulp and paper producers in the world, at least at year 2012," said Agung.

Same optimism also said by President Director of Riau Andalan Pulp and Paper (RAPP) Rudi Fajar. He said that the close down of pulp mills in North America and North Europe gives a chance for Indonesia to draw infestation in this sector.

"In vary of forum already mentioned that Indonesia’c chance to draw large scale infestation in pulp and we can move from the world seventh producer to the third biggest producer" said Rudi.

Rudi Fajar explains, world pulp consumption will keep increase, supported by the increase of paper consumption for all types due to world economic healing.

In Rudi point of view, government policy is in line of the Indonesian ambition to become the world third biggest producers. This ambition can be achieved if land is provided with strong law protection for Timber Estate Plantation development. "RAPP still interest to expanse, if there still available land for Pulpwood Plantation," he said.

To solve the problems of infestation on the field, said Rudi, usually investor only acquitting critical Pulpwood Plantation Company or even pulp and paper industry. Later, those new investor just have to fix the management and technology.

Mansur adding, right now total of concession are which owned by national pulp company estimated only 3,3 million hectares, of the total production forest area and conversion production forest which can be exploited about 70 million hectares.

*A lot of quotations

*Mansur revealed amount of problems which obstruct the progress of investor to infest in large scale in Indonesia, for instant the law assurance and a lot of quotations.

Investor, he said, needs law assurance and consistency for long term also the security assurance, like free of land conflict and illegal logging in Pulpwood plantation. Investor also put attention on problems in labour, corruption, quotations.

"In Indonesia doesn’t provide infestation safety assurance, other nations like Tiongkok, Vietnam, Thailand, and Cambodia will become the infestation destination which seeing by foreign investor," Mansur said.

Agung Nugraha admitted that the big amount of quotation which experienced by the forestry manufacturer. "These days, forestry manufacturer has obligation to the country and community through taxes and non taxes, includes 13 items of quotations like reboisation fund, PSDH, and building and land taxes," said Agung.

*(c92/c107/shd/en)