Paper Industry in Indonesia Maintains Strong Performance

The paper industry in Indonesia has enjoyed a strong rally over the recent years. Indonesia’s growing paper production coupled with soaring export of paper products, especially uncoated paper products, has helped the country become one of the world’s leading paper suppliers in the global market. Despite the recent period of rapid growth, challenges do remain in Indonesia’s paper industry, such as high production cost, flat global paper price, and negative impact on the environment, it is still expected that the industry will continue its steady growth due to growing global paper demand.


According to a report from Indonesia Investments, today’s paper industry in Indonesia plays a major role in the country’s economy, accounting for 6.7% of its processing industry’s gross domestic product (GDP) and providing employment to 260,000 direct workers and 1.1 million indirect workers. In 2016, Indonesia’s pulp and paper industry exported a total of $3.79 billion USD worth of paper products; being ranked as the country’s 7th largest foreign exchange earners.


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The Indonesian Pulp & Paper Association (APKI) also suggests that Indonesia is currently ranked ninth in terms of biggest global pulp producers and sixth in terms of biggest paper producers. Moreover, there is still great potential for Indonesia’s pulp and paper industry as demand for paper is expected to stay strong in Southeast Asian nations, as well as in the USA.


Over the recent decades, uncoated paper has been the most popular product category in Indonesia’s paper industry. Indonesia is also the world’s largest uncoated paper producer and uncoated paper exporter.  As the statistics from the International Trade Centre indicate, Indonesia exported over $1.8 billion worth of uncoated paper products to the world, representing around 10% of the world’s total uncoated paper exports in that year.


As the global demand for writing paper, printing paper, paperboard and other uncoated paper types trend upwards, Indonesia is projected to remain as one of the top paper suppliers for the global market; driven by its strong export performance over the recent years. At present, most of the Indonesia’s pulp and paper output is exported abroad – over 60% of domestic paper production is shipped to Indonesia’s export destinations. The USA, Germany, UK, and France are some of the top exporting destinations for Indonesia’s uncoated paper products.


However, there are also few challenges that are restraining Indonesia’s paper industry to achieve faster growth. Environmental issues are one of the biggest challenges, as the government is increasing awareness of the importance to preserve the natural environment, resulting in less room for expansion of local pulp and paper plantations. Meanwhile, production costs in Indonesia’s paper industry are also high due to expensive gas prices. Despite all these challenges, Indonesia’s paper industry is still expected to have a promising future, thanks to its abundance of available natural resources with preferential trading access.


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