The National Pulp and Paper Industry in Indonesia, which previously experienced a drastic decrease in the last 2 years is predicted to increase by 2.11% in 2022.

PULP AND PAPER INDUSTRY CHANGES IN 2022

The National Pulp and Paper Industry, which previously experienced a drastic decrease in the last 2 years is predicted to increase by 2.11% in 2022. This is driven by demand from the domestic market which is able to absorb paper products well from late 2021 to early 2022.

In addition, the plan to expand the production of paper materials will increase the ability of paper producers to compete globally, both in terms of product quality and price.

Growth of raw material packaging in Indonesia

For information, the Indonesian pulp industry is ranked eighth in the world and third in Asia. Meanwhile, the paper industry ranks sixth in the world and fourth in Asia after China, Japan and India. This gain was obtained from the production capacity of pulp which reached 11.83 million tons and paper of 17.94 million tons per year.

In the midst of the Covid-19 pandemic, global demand for pulp and paper is still increasing by around 2.1%. Domestic demand also grew 63% in the last five years. Currently, Indonesia has 99 pulp and paper companies spread across several parts of Indonesia. The productivity of the pulp and paper industry is inseparable from Indonesia’s geological conditions. Indonesian land is considered conducive to the development of industrial forest plantations (HTI).

However, despite having great potential, the pulp and paper industry is required to continue to implement sustainable management standards as an integral part of the production process. That way, a sustainable business will be maintained as well as make a positive contribution to the earth. In Indonesia, the assurance that a wood product comes from a legal and accountable source can be proven by having a Timber Legality Verification System (SVLK) certificate issued by the Ministry of Environment and Forestry (LHK). Timber is said to be legal if the source, logging permits, systems and procedures for harvesting, transporting, processing, and trading or transferring them meet all applicable requirements.

CHALLENGES OF THE NATIONAL PULP AND PAPER INDUSTRY

  1. Environment

Large-scale industries made from wood, namely pulp and paper, often encounter various problems related to the environment, forest and land fires. Moreover, apart from requiring a large area of land, the production hours of the sector’s factories are relentless. From the market side, the industry is also facing a new challenge, namely green consumers. They are consumers who prefer products that do not harm health and damage the environment.

  1. Operational

The management of monoculture timber plantations still faces problems related to industrial governance. One of them is the management of forest information and the management of forest and land resources which are not yet transparent. In terms of taxation, tax revenue has not been optimal due to transfer pricing problems and low taxpayer compliance. Meanwhile, the distribution of authority is still absolutely in the hands of the central government, causing an imbalance in the distribution of land use from the center and the regions. Improvements in pulp and paper industry governance need to be implemented, starting from encouraging transparent access to data related to concessions, monitoring concessions on permits that are not yet in production to monitoring new permits so they do not violate the law and encouraging the fulfillment of industry commitments to No Deforestation, Peatland, and Exploitation (NDPE).

  1. Trade

The pulp and paper industry is also still experiencing obstacles to export tariffs that are large enough to enter the Chinese market, even though the Regional Comprehensive Economic Agreement or RCEP is targeted for implementation in mid-2022. The Indonesian Pulp and Paper Association (APKI) said that the paper industry’s products, industrial paper and Indonesian tissues were of little benefit even before RCEP came into existence. Through the Asean-China FTA (ACFTA), which Indonesia has ratified since 2004, China has only liberalized tariffs for 8 paper products.

PULP AND PAPER INDUSTRY HELPS THE ABSORPTION OF THE NATIONAL LABOR

Apart from contributing to GDP, the pulp and paper industry also has an important role in creating jobs. Based on data from the Ministry of Industry (Kemenperin), the pulp and paper industry is recorded to have absorbed 261,000 direct workers and employed 1.1 million indirect workers along the industrial chain.

The pulp and paper industry is one of the sectors prioritized by the government. This is stated in Government Regulation No. 14 of 2015 concerning the National Industrial Development Master Plan (RIPIN) 2015–2035. This determination is not without reason. The paper industry contributes to the country’s economy. One of them, as a contributor to the country’s foreign exchange.