Indonesia Paper Sector Up Sharply in Q1 2009

May 27, 2009 - Strong demand, in part boosted by the recent general elections, helped propel Indonesia’s paper and printing materials industry to grow 10.16 percent in the first quarter from a quarter earlier, the fastest quarterly growth since the financial crisis in the late 1990s, reflecting a surprisingly good economic environment, according to a news report in The Jakarta Post.

Greenomics, a non-governmental organization focusing on mining and forestry industries, revealed that elections, both the legislative and regional elections, contributed to the high growth of demand for paper and printing materials.

“The first quarter growth in the industry is the highest quarterly growth since the 1998 crisis”, said Greenomics Indonesia national coordinator, Vanda Mutia Dewi, in a statement.

By comparison, in the same period in 2008, the industry grew only 1.05 percent, the organization said.

The figure is even higher than the 5.99 percent growth booked in the first quarter of 2004, prior to the April 2004 general elections.

However, Vanda could not explain as to why the growth in the paper and printing materials industry was so rapid at a time when it has actually been suffering from declining supply of raw materials.

In the first three-month period of the year, output from the upstream forestry industry – the supplier of raw materials for the paper industry – contracted by 16.07 percent. In the same period a year earlier, the contraction was 0.53 percent.

“Greenomics is therefore asking the government to pay attention to the cause of this occurence,” Vanda said in response to the phenomenon, dodging speculation that the paper industry may have been using illegally felled logs for raw materials as often suggested by many NGOs.

On a yearly basis, the growth in paper production has been very positive.

According to BPS data, paper production grew by 15.45 percent and 3.17 percent respectively in 2007 and 2008. In contrast, wood production contracted by 16.41 and minus 5.57 percent, respectively, in the same period.

According to the Industry Ministry and the Indonesian Pulp and Paper Association (Apki), the pulp and paper sector is definitely included among the country’s top 20 commodity sectors.

Indonesia, the Ministry said, is the ninth largest pulp producer and the 11th largest paper producer in the world.

The industry also contributed significantly to exports as well as benefiting from a robust domestic market. It generated around US$4.5 billion and $4.2 billion in exports in 2008 and 2007, respectively.

SOURCE: The Jakarta Post

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