4.3 Profile of Pulp and Paper Industry
Indonesia is the eleventh largest pulp and paper producer in the world with a pulp installed capacity at 7,902,100 tons and paper installed capacity of
12,895,950 tons. According to Indonesian Pulp and Paper Association APKI shown from Table 4.1, until 2010 there are 84 mills pulp and paper. Three of them
were owned by state enterprises, 65 of them owned by a private company from domestic investment, and 16 companies owned by private company from foreign
investment. Table 4.1 Status and Location of Installed Capacity of Pulp and Paper in
Indonesia 2010
Status Location No.
of Mills
Installed Capacity Pulp
Paper Volume
tons Volume
tons • State Enterprises
3 168,000
2.13 321,600
2.49 • Private Company
Domestic Investment 65
3,719,100 47.06
8,751,650 67.86 • Private Company
Foreign Investment 16
4,015,000 50.81
3,822,700 29.64 Total
84 7,902,100
100 12,895,950
100 • Integrated Pulp Paper
5 4,087,100
51.72 1,651,600 12.81
• Non Integrated: ‐ Paper
‐ Pulp 75
4 3,815,000
42.28 11,244,350
87.19 Total
84 7,902,100
100 12,895,950
100 • Location:
‐ Java ‐ Sumatera
‐ Kalimantan 69
14 1
148,000 7,229,100
525,000 1.87
91.48 6.64
11,159,950 1,736,000
86.54 13.46
Total 84
7,902,100 100
12,895,950 100
Source: APKI, 2012
From 84 mills in Indonesia, five companies have vertical integration between pulp mills and paper mills while 75 companies only have paper mills and
four companies only have pulp mills. Most of the mills were located in Java and
Sumatera. There are three main pulp and paper producers in Indonesia, Sinarmas Group, Raja Garuda Mas Group, and Barito Pasifik. Sinarmas Group is the
biggest producer, with the production reach around 2.67 million tons a year, which is actually almost forty percent from total national capacity. Even with a
huge scale of 84 companies, domestic demand is still cannot be accommodated.
4.4 Development of Pulp and Paper Industry in Indonesia
The Indonesian pulp industry is set to rebound from the global economic downturn by accommodating demand of international market have started to pile
up with domestic pulp producers. According to Indonesian Pulp and Paper Association APKI, the current orders from foreign market is over than 2.5
million tons of pulp a year, which is more than half of annual national production capacity amounted 4.5 million tons. High numbers of demand has been helping to
drive the growth of Indonesian paper and printing materials industry by achieving 10.16 percent growth in the first quarter from a quarter earlier, the fastest
quarterly growth since the financial crisis in the late 1990s that reflecting a surprisingly good economic environment. According to BPS Indonesia 2010,
paper production grew by 15.45 percent and 3.17 percent respectively in 2007 and 2008.
The Ministry of Industry and Indonesian Pulp and Paper Association APKI, the pulp and paper are definitely included among the top 20 commodity
sectors in the country. Indonesia has become the ninth largest pulp producer and the eleventh largest paper producer in the world. This industry also contributed
significantly to export as well as benefiting from a robust domestic market. Paper
export generated around 3,872,795 million tons and 4,246,390 million tons in 2009 and 2010, while for the pulp is around 2,244,080 million tons and 2,572,666
million tons in 2009 and 2010. Paper industry in Indonesia is a capital-intensive industry with relatively
low cost of raw material prices and labors. The development of pulp and paper industry in Indonesia has been increasing from year to year, to which Indonesia
has became one of the main players in the world for pulp and paper manufacturers since 2004. Paper production in Indonesia was ranked twelfth of the world, with a
market share of 2.2 percent of total world production. In 2006, the capacity of the paper industry reached 10,506,180 million tons per year, while the pulp capacity
reached 6,447,100 million tons per year and the waste paper capacity reached 5,602,840 million tons per year. Paper consumption also continues to increase, as
this caused Indonesia only able to supply 2.5 percent of the world paper needs that reach 350 million tons per year. Paper price also increased up to US 800 per ton
in 2007. The demand for waste paper has been increased due to the global warming. This situation makes a huge number of import for waste paper. The
import for waste paper reached 2,412,462 million tons, while the consumption reached 6,598,464 million tons in 2010. The import of waste paper is higher than
the export, which indicates that Indonesia still needs a huge amount of input due to the high number of demand for recycled paper.
From Table 4.2, paper has higher value of production, export, and consumption than pulp in 2006 until 2010. In the other hand, pulp has a high
number of import and utilization. This shows that a huge demand for paper not followed by an increase in the amount of raw material, which are pulp and waste
paper. The increase in demand forced the pulp and paper industry to raise the production volume from year to year. The production of paper increased by 6
percent in 2007, while in 2010 increased for 15 percent. Table 4.2 The Development of Paper, Pulp, and Waste Paper in Indonesia 2006 –
2010
Description 2006
2007 2008
2009 2010
Installed Capacity
MTPY: -Paper
-Pulp -Waste Paper
10,506,180 6,447,100
5,602,840 11,025,080
6,483,100 5,985,700
12,178,650 7,902,100
6,351,110 12,242,950
7,902,100 6,559,018
12,895,950 7,902,100
7,751,865 Production:
million tons -Paper
-Pulp -Waste Paper
8,853,280 5,672,210
2,750,000 9,461,660
5,769,960 3,600,000
9,736,500 5,371,000
3,711,000 9,988,169
5,700,210 3,804,230
11,500,658 6,293,090
4,186,002 Import
million tons: -Paper
-Pulp -Waste Paper
290,020 922,520
2,810,670 347,620
864,160 2,161,160
424,940 1,165,500
2,700,000 443,644
1,081,350 2,284,656
497,588 1,251,202
2,412,462 Export
million tons -Paper
-Pulp -Waste Paper
3,540,460 2,800,680
3,823,580 2,437,380
3,810,330 2,731,730
3,872,795 2,244,080
4,246,390 2,572,666
Consumption million tons
-Paper -Pulp
-Waste Paper 5,602,840
3,794,050 5,560,670
5,985,700 4,196,740
5,761,160 6,351,110
3,804,770 6,411,000
6,559,018 4,537,480
6,088,886 7,751,856
4,971,626 6,598,464
Utilization Recovery
Rate: -Paper
-Pulp - Waste Paper
84.27 87.98
49.08 85.82
89.00 60.14
79.95 67.97
58.43 81.58
72.14 58.00
89.18 79.64
54.00
Source: APKI, 2012
Paper consumption in the world increased up to 3 percent a year. Domestic paper consumption also increased to 5.6 million tons or an average of 5 percent
per year. In 2006, the consumption was 25.2 Kg per capita and in 2010 reached
32.6 kg per capita Figure 4.1. This growth is expected to be use by paper mills in Indonesia with the advantages of a shorter harvest age for inputs that is 6 to 8
years.
Source: APKI, 2012
Figure 4.1 The Development of Pulp and Paper Consumption in Indonesia With 84 pulp and paper manufacturers and a total production capacity of
6.29 million tons per year, Indonesia has the ability to develop the pulp and paper industry. The main players in pulp and paper industry in Indonesia are Sinarmas
Group SMG and Raja Garuda Mas Group RGM that have a large production scale and global market network. The technologies that are used by companies are
based on export-oriented paper in general and promoting equivalent of modern technology with the technology in developed countries. Most of Indonesia pulp
and paper mills produce more than one type of paper production and composition to follow the dynamics of the existing market.
5 10
15 20
25 30
35
2006 2007
2008 2009
2010
C o
n su
m p
ti o
n k
g c
a p
it a
Year
4.5 Profile of The Pulp and Paper Companies in Riau Province