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Jakarta Post

Surging imports hurting domestic paper industry

  • Khoirul Amin

    The Jakarta Post

Jakarta   /   Wed, September 23, 2015   /  05:28 pm

The government says coated paper and paperboard imports from China, South Korea and Sweden have harmed the domestic paper industry, reducing the market share and profitability of local producers.

Indonesian Trade Safeguard Committee (KPPI) chief Ernawati announced recently that a Trade Ministry committee had found a causal relationship between surging imports of coated paper and paperboard from the three countries and losses experienced by many local paper producers.

'€œBased on our investigation, there has been a notable surge in the import volume of coated paper and paperboard from 2010 to 2013,'€ she said on Monday.

Imports of the two products from China, South Korea and Sweden soared by 86 percent to 43,778 tons in 2013 from 6,500 tons in 2010, according to Trade Ministry data.

The data showed that China contributed 36.72 percent to the total imports, followed by South Korea and Sweden with contributions of 28.02 percent and 12.05 percent, respectively.

Indonesian Pulp and Paper Association (APKI) chairman Misbahul Huda said on Tuesday that surging paper imports from China, South Korea and Sweden had contributed to a decline in the local paper industry, which was already squeezed by the ongoing domestic economic slowdown.

In addition, between six and 10 local paper companies had reduced their production capacity as they could not compete with giant paper makers that had integrated production facilities, he went on.

'€œThese situations are hard knocks for the local industry amid both the domestic and global economic downturn,'€ he told The Jakarta Post, adding that China'€™s increased exports of paper may be due to overproduction. One of the country'€™s largest paper producers, PT Pabrik Kertas Tjiwi Kimia, for example, saw its net sales drop by 7.97 percent to US$587.6 million in the first six months of this year from $638.5 million in the same period last year.

The company'€™s net profits dropped by 2.98 percent year-on-year to $14.1 million in the first half of this year from $17.08 million last year, partly due to declining foreign exchange (forex) gains, according to its financial report.

Based on all the findings, the Finance Ministry has officially imposed import tariffs on the two products since earlier this month, with the tariffs set to gradually decrease from this year until 2018.

The tariffs are set at 9 percent for the period from September this year to September next year, 7 percent for the 2016-2017 period and 5 percent for the 2017-2018 period.

Protection measures in the form of tariff barriers are a common tool to protect local industries from possible unfair trade practices by other countries.

Last month, the government imposed a 14.5 percent import duty on steel wire rod as it found dumping practices in the local market by a number of exporting countries.

The European Union, meanwhile, has imposed an import duty on Indonesian biodiesel entering the European market as the product is deemed as being sold at below market price.

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