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Jakarta Post

RAPP shifting export focus to Asia on sluggish Europe demand

  • Rizal Harahap

    The Jakarta Post

Singapore   /   Sat, December 6, 2014   /  12:02 pm

The country'€™s major pulp and paper producer, Riau Andalan Pulp and Paper (RAPP), says it is looking to shift its export focus to Asia, as demand from Europe has dipped in the last three years.

RAPP president director Kusnan Rahmin said that since 2011, the market for bleach hardwood kraft pulp in more developed countries in the Americas and Europe had stagnated, with only Eastern Europe and Latin America experiencing relatively high growth, up by 3.2 and 3.4 percent, respectively.

Demand from North America, he said, had decreased by around 0.9 percent in the last three years, while demand from northern and western Europe slumped by 4.4 percent and 0.4 percent, respectively. '€œNorth America, Nordic countries and Western Europe used to be promising markets during 2001 and 2011, with their high demand, growing by 1.6, 5.2 and 2.4 percent each,'€ Kusnan explained.

'€œ[But now,] there'€™s no room to grow in the European market, while at the same time supplies keep flowing in '€” leading to oversupply. Meanwhile, the Asian market is experiencing a lack of supply due to its large population '€” creating an opportunity to provide the market,'€ he added.

China is the world'€™s largest paper market, accounting for 52 percent of world demand, followed by India with 13 percent and Southeast Asia with 11 percent, according to Kusnan.

'€œIndia leads growth in paper demand, reaching 4.2 percent on average, followed by China with an average growth of 2.6 to 3.3 percent,'€ he explained.

As for pulp, demand from China grew by 7.7 percent, while overall demand in Asia and Africa markets rose by around 2 percent.

'€œPulp demand has shifted to Asia and Africa, with China leading global demand,'€ he said.

RAPP, a subsidiary of Indonesian pulp and paper giant Asia Pacific Resources International Ltd. (APRIL), is a key player in the Asian market, having established itself as the region'€™s main supplier for bleached hardwood kraft pulp with a capacity of 2.2 million tons per annum.

The RAPP-affiliated ASIA Symbol factory, located in China, is the second largest supplier in the region with an output capacity of 1.8 million tons per year.

RAPP is benefitting geographically from its proximity to China as the world'€™s largest pulp consumer.

The company needs around a week to 10 days to ship its products to the world'€™s second largest economy, compared with shipments to European suppliers that might take over a month.

Also, cultivating acacia in Indonesia requires less time '€” between five and six years '€” in comparison to the cultivation period in Europe, which lasts around 30 to 80 years.

Indonesia is also seen as promising by RAPP because of its 130 million-hectare (ha) forest, of which only around 10 million ha are allocated as industrial forest, with about half marked as planted areas.

However, firms doing business in Indonesia faced the issue of ever-changing regulations that hindered production and investments, according to Kusnan, who urged the government to accommodate the forest-related industry with more supportive rules and to better check claims for environmental groups so it could give a more balanced perspective.

'€œIndonesia exported pulp and paper worth 45.6 billion. The country might suffer a great loss of opportunity if [the pulp and paper industry] keeps being obstructed. It'€™s a very competitive business,'€ he added. (aml.)