Pekerja meninggalkan alat berat dan tumpukan kayu tanaman industri yang sudah dipanen di area Estate Pelalawan PT Riau Andalan Pulp and Paper (RAPP) di Kabupaten Pelalawan, Riau, Jumat (20/10). Kementerian Lingkungan Hidup dan Kehutanan pada 16 Oktober 2017 mencabut rencana kerja usaha RAPP sehingga diharuskan berhenti beroperasi, karena dinilai tidak kunjung mematuhi regulasi gambut pada hutan tanaman industri yang terbaru, sebaliknya RAPP beralasan belum bisa melaksanakan regulasi karena belum ada kepastian lahan pengganti dari pemerintah. | Kredit Foto: Antara/FB Anggoro
China's ban on the import of waste, including recycled paper products, gives Indonesia's paper producers an opening to expand in China, Fitch Ratings says. The ban, which went into effect in early 2018, has increased the cost of raw materials in China and caused many small and medium paper producers in the country to suspend business activities, resulting in reduced supply.
Indonesia's pulp and paper exports for January-August 2018 rose by 24% yoy to USD3.1 billion, according to Bank Indonesia. This is a reversal from the decline in pulp and paper exports between 2012 and 2016. Fitch believes much of the growth in exports is driven by shipments to the under-supplied Chinese market.
By segment, Fitch expects packaging paper exporters to benefit the most from the Chinese ban on waste imports due to the rapid growth in demand from e-commerce businesses and manufacturers of consumer products.
At the same time, many small- and medium-sized paper packaging makers in China, which rely on waste paper for raw material, have struggled with higher prices after the ban and many have halted production, giving overseas suppliers the chance to meet demand.
In 1Q18, the exports of Indonesia's two largest packaging paper producers, PT Fajar Surya Wisesa Tbk (FASW) and PT Indah Kiat Pulp & Paper Tbk (INKP), increased by 964% and 7%, respectively, from the same period last year. Currently, export sales account for around 25% and 60% of FASW's and INKP's revenue, respectively.
The higher share of exports in these companies' revenue will help improve profitability as exports fetch slightly higher prices than products sold locally. The EBITDA margin of FASW and INKP rose to 26.0% and 38.1% in 1H18, respectively, from 17.7% and 27.7% last year.
Fitch expects robust exports to China to remain robust over the next 18-24 months, as we believe the Chinese government is strongly committed to improving environmental standards. China imports around 50 million metric tonnes per annum (mtpa) of pulp and paper products, and we expect the figure to increase with the ban in place. Indonesia, which is the second-largest exporter in Asia, exports around 3 million-4 million mtpa of pulp and paper products.
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Penulis: Cahyo Prayogo
Editor: Cahyo Prayogo
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