Indonesia's paper industry has seen remarkable growth in the last forty years, driven by new investments primarily focused on communication papers. This shift has led the nation into a prominent position as a key player in market pulp production.
Indonesia's tissue sector has also experienced significant progress, marked by recent capacity expansions in the past two decades. While currently overshadowed by market pulp and packaging grades, forecasts suggest that tissue production is poised to surpass communication grades by approximately 2026.
The rapid expansion of the pulp and paper industry in Indonesia led to extensive deforestation, with a large portion of it being done illegally. This rampant deforestation primarily took place on the island of Sumatra, triggering devastating wildfires, thick smog, and the destruction of vital habitats for endangered wildlife.
A Brief Overview of Indonesia's Tissue Market
The industry's growth is attributed to several factors, including Indonesia's demographic characteristics. As the fourth most populous country and the third-largest democracy globally, it boasts a large domestic market. The population's growing awareness of hygiene, coupled with increased consumer incomes, steady population growth, and technology improvements, has led to a rise in per capita tissue consumption.
Indonesia stands as a dominant force in the tissue export market, strategically positioned to uphold its leadership in Southeast Asia. With rich sources of low-cost tropical hardwood from Sumatra's acacia plantations, Indonesian tissues boast excellent softness properties.
Indonesia positions itself as a potential leader in the tissue export market, benefiting from the lowest production costs in the region and owning one of the youngest fleets of tissue machines, which allows for higher production speeds. Nevertheless, the high carbon emissions from the Indonesian electric grid remain a concern.
The future of Indonesia's pulp and paper industry appears to be subject to changes influenced by fluctuating prices, exchange rates, environmental regulations, and industry consolidation, suggesting an evolving landscape.
More on Elements Shaping Indonesia's Tissue Market
To gain a thorough understanding of Indonesia's tissue market, be sure to access our detailed report "Indonesia Emerges as a Major Player in Tissue Exports Across Southeast Asia."
Our report includes insight and data on crucial variables such as:
Population and GDP purchasing patterns
Tissue import and export trends
An overview of Indonesia's type of mill and tissue products
Comparative analysis with other nations regarding machine quality, cost assessments, and carbon emissions
Bruce Janda
Rajat Sarkar: Jul 15, '24
