2 forest industry products become Indonesia’s flagship product

2 forest industry products become Indonesia's flagship product

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President Joko Widodo reminded the role of an ambassador to a foreign country in addition to performing the function of political diplomacy and also able to promote economic diplomacy. Meetings of the Ambassadors of the Republic of Indonesia related to the diplomacy of Indonesia's flagship product economy. The event was attended by the Candidates of Indonesian Ambassador, as well as the Secretary General of Foreign Affairs, Kristiarto Legowo.

Two Indonesian flagship products that are the focus of this meeting are agroindustry products, namely palm and pulp-paper. Both were chosen given their significant contribution to national trade.

Until today, Indonesia is still the largest producer and exporter of palm oil in the world, followed by Malaysia in the second position. A total of 85 percent of the global palm oil market is controlled by both countries.

During 2016, Indonesia recorded export of palm worth USD 17.8 billion, up 8 percent from the previous USD 16.5 billion. The value of palm oil exports in 2016 accounted for 12.32 percent of total Indonesian exports. In terms of labor, the palm oil industry absorbs 4.2 million direct workers, and 12 million indirect workers.

The next best product is pulp and paper. At the world level, Indonesia's pulp industry is ranked 10th, while paper is ranked 6th. For the Asian level, Indonesia's pulp & paper industry is ranked 3rd, while at the ASEAN level, Indonesia is dominant.

Data of 2015 shows, the contribution of pulp exports worth USD 1.7 billion, while paper exports USD 3.5 billion. If the total export value of both commodities amounts to Rp 67 trillion. The pulp and paper industry is able to open employment as much as 260,000 direct workers, and indirect labor as much as 1.1 million people.

According to the Ministry of Industry, export capacity of pulp of 3.4 million tons and 4.2 million tons of paper per year is still wide open for further improvement. Currently, the world's paper needs about 394 million tons, and is expected to increase to 490 million tons by 2020. Estimated world paper demand will grow by 2.1 percent per year, in developing countries will grow by 4.1 percent year and developed countries 0.5 percent per year.

Executive Director of the Indonesian Pulp and Paper Association (APKI) Liana Bratasida discloses increasingly stringent market and regulatory conditions, the development of the digital industry, and changes in consumer behavior posed a major challenge for the pulp and paper industry. All three elements will affect the output cost of production, environmental footprint, and produce products that are environmentally friendly.

"To improve competitiveness and profit in the pulp and paper industry, there are three things that must be considered sustainability, innovation, and resource efficiency," said Liana in Jakarta, Saturday (11/2).

Liana also highlighted the various obstacles faced by the global pulp and paper industry, such as the rise of trade protectionism, the tendency of increasing the application of tariff instruments, trade remedies and non-tariff barriers, policy regulation and negative sentiment.

Meanwhile, Managing Director of Sinar Mas Gandi Sulistiyanto said the technical handling of trade barriers can be done through solid synergy between stakeholders. In this case the government as regulator and business actor as its operator.Gandi Added, Sinar Mas felt the impact of the negative campaign especially on forest and land fire cases in 2015. The attack was not only for palm oil products, but also pulp and paper.

"It needs help from various associations for our ambassadors so that misunderstanding can be explained," Gandi said.

Meanwhile, Chairman of the Indonesian Forest Concessionaires Association (APHI) Indroyono Soesilo said, the national forestry industry products whose raw materials are supplied from industrial timber plantation concessions (HTI) donate up to USD 10.7 billion of foreign exchange in 2016. [sau]

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