Why this is important to Wisconsin businesses: Domestic demand is rising, and the country is also ramping up production for exporting.
Indonesia is the world's ninth-largest paper producer, with the top three being China, the U.S. and Japan. Every year, Indonesia produces around 10 million tons of paper, much of it designated for exports. The Indonesian government aims to rise in the rankings from the ninth-largest paper producer to the sixth-largest, and from the sixth-largest pulp producer to the third.
The industry is projected to see a 6 percent increase in production capacity 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, with demand being driven by the rapid development of industrial sectors in the region.
In addition to rising demand for imported waste paper, the country is also seeing a surge in imports of coated paper and paperboard, particularly from China, South Korea and Sweden. The volume of coated paper and board imports in 2011 increased by 51 percent compared to 2010. An increase of 54 percent was logged from 2011 to 2012, with imports rising another 44 percent in 2013, representing a growing opportunity for the Wisconsin paper industry.
Additionally, there is a small but growing movement toward supporting sustainable paper products in Southeast Asia as the region chokes under a thick haze of smog caused by the annual burning of land for the production of pulp, paper and palm oil in Indonesia.
Indonesia currently imposes a 9 percent tariff on imported coated paper and paperboard products. In September 2016, this will be reduced to 7 percent for 2016-2017 and 5 percent for 2017-2018.