The Indonesian Pulp and Paper Association (APKI) has urged the government to seek a reciprocal import tax policy with ASEAN countries selling pulp and paper products in Indonesia following the implementation of the ASEAN Economic Community (AEC).
“If they stick to the import tax, we also have to make one to make it fair and reciprocal,” APKI deputy chairman Rusli Tan said on Monday.
Rusli noted that currently Indonesia imposed no import tax for incoming pulp and paper products in contrast with Thailand, which imposed 15 percent, the Philippines with 17 percent to 20 percent, Malaysia with 10 percent and other ASEAN counterparts with at least 5 percent import tax. A reciprocal policy would also help Indonesian industry to compete, leading to more jobs not only for locals but also for the entire ASEAN population.
“It will also help accommodate the rapid development of industrial sectors in the region. Industries will produce more products that will need more packaging or cartons,” Rusli added.
Indonesia is currently the world’s ninth biggest paper producer, with the top three being China, the US and Japan. The country’s closest rivals are Scandinavian countries Finland and Sweden, settling at seventh and eighth place, respectively.
Every year, Indonesia produces around 10 million tons of paper out of a production capacity of 12 million tons, compared to China which produces 93 million tons.
Besides the import tax, APKI also called on the government to ease imports of raw materials, such as industrial salt from Australia and waste paper from European countries and Singapore.
Last year, the government started limiting industrial salt imports in a bid to protect local salt producers.
“Make it according to our needs at 1.166 million tons. Don’t import up to 2 million tons, let’s take care of our farmers too,” Maritime Affairs and Fisheries Minister Susi Pudjiastuti said previously.
However, according to Rusli, industrial salt is also needed by other industries, like the glass industry.
“Now importing [industrial salt] has become very difficult so we have to use household salt instead even though the salt doesn’t really suit our machines and results in lower quality paper,” he said, asking the government to revoke its restriction on imported industrial salt.
According to the Maritime Affairs and Fisheries Ministry, the national demand for salt currently stands at 4.02 million tons per year, comprising 2.05 million tons for industrial use and 1.97 million tons for the consumer market. With annual demand projected to grow by 10 percent per year, demand for salt is projected to hit 4.5 million tons by 2017.
The ministry is looking to achieve self-sufficiency in industrial-grade salt production by the end of this year, an acceleration from an initial deadline of 2017.
APKI also hoped the government would revise its regulation on waste paper imports as stipulated in Trade Ministry Decree No. 39/2009, which requires importers to pay state surveyor Sucofindo to check the toxic content of waste paper from abroad prior to importing.
“This adds up to be a big cost and a waste of time,” Rusli asserted.
Sufficient materials are needed because the industry is projected to see at least a 6 percent increase in production capacity this year.
Many new plants will start producing this year, including facilities set to produce 500,000 tons in South Sumatra; 250,000 tons in Riau, 300,000 tons in Bekasi, West Java; and some 300,000 tons in East Java.