One of the most dynamic industries in the country over the last
decade has been pulp and paper. Growth in this industry comes as
a result of strong demand from educational, business, and
government sectors. Rising income level, along with higher
education and increasing awareness of personal hygiene, has also
produced growth in this sector. By 1997, the industry employed
over 75,000 workers nationwide.

The lifeblood of Indonesia's pulp and paper industry is the
country's large tracts of tropical rain forest of 141.4 million
HA which occupy 70% of Indonesia landmass.  92 million hectares
are available for production and conversion. At present 72
million hectares are in the process of rehabilitation and
reforestation. Moreover, the market has much room for expansion
as the per capita paper consumption of Indonesia's 200 million
people was only 16.5 kgs/capita in 1997.

Almost all pulp and paper machinery and parts are imported,
including some structural or civil works infrastructure which
involves stainless steel pipes and tanks. In addition, Indonesia
is largely reliant on imports of pulp, waste paper, and chemicals
which come mostly from the United States. Indonesia presents
excellent sales opportunities for U.S. products and services,
which Indonesian buyers value for their high technology and
excellent support service.  Sales potential will depend mainly on
quality and cost. Moreover, the Indonesian government is
committed to making its pulp and paper industry the most
competitive in the region. This ambition has encouraged demand
for pulp and paper equipment and technology.

This report presents an overview of the pulp and paper industry
in Indonesia and explores the future trends and opportunities in
the different segments of the industry.


A.1. Market Highlights

The economic and financial crisis which have besieged Indonesia
along with other Asian countries starting in the later half of
1997 has created a drop in industrial production, a reduction of
public spending, and the cancellation and postponement of a
number of expansion projects. However a number of international
agencies including IMF, foreign exim and private banks have
helped Indonesia in restructuring its monetary sector. Most
experts predict the Indonesian economy will recover by 2000.

All sectors experienced a slowdown in business in 1998. The pulp
and paper business in Indonesia has an important role in the
country's economic development, having shown a significant
improvement from USD 204 million in 1989 to USD 3.2 billion in
1996. Pulp trade itself increased from USD 36.5 million in 1989
to USD 431.6 million in 1996.

In Indonesia, pulp mills are often part of large scale and
integrated pulp and paper operations.  Please refer to Table 2
for a pulp and paper mill industry profile.

A.2. Statistical Data

It is difficult to predict the development of the pulp and paper
market due to the present instability of the rupiah.  The
following are available figures for export and import:

Table 1

                        1996        1997       1998*
                                      (Thousands of U.S.
Import Market            1,518.2    1,227.1     218.9
Local Production         n/a          n/a       n/a

Export Market             438.4      495.5      317.5
Total Market Size        1,079.8     731.6    -98.6
Import from the U.S.       228.3     259.4      n/a

The above figures are based on HS no. 470100000 to HS no.
470790900 and from HS no. 843910000 to HS no. 844190000.

* For the year of 1998, data only available for the months of
January, February, and March.

Sources: Biro Pusat Statistics (Central Bureau of Statistics) in
CIF value

Exchange Rates: 1 US Dollar equals:
1996 : Rp. 2,342
1997 : Rp. 2,450 - 15,000
1998 : Rp. 10,000 - 16,000

Based on Bank Indonesia (Central Bank) Middle Exchange Rates

Future Inflation Rate Assumed: 20% (BPS Estimate)

Table 2


STATUS/LOCATION      NO.OF        INSTALLED CAPACITY        1997                 MILLS             (TPA.*/000's)
                            Pulp      %        Paper     %

State Enterprises    3        240      6.15    338.9     4.69
Private Co.
Domestic Investment  66     845.6     21.65  4,376.3    60.51
Private Co.
Foreign Investment   11     2,820     72.20  2,517.6    34.81
TOTAL                80    3,905.6      100  7,232.8      100

(Pulp & Paper)       11      2,581    66.08    1,542    21.32
Non Integrated
Pulp                  4    1,324.6    33.92      -         -
Paper                65        -        -     5,690.7   78.68
TOTAL                 80   3,905.6     100    7,232.8     100

Java                  65       361    9.24    6,546.6   90.51
Sumatra               13      3,005   76.94     686.2    9.49
Kalimantan             2      539.6   13.82       -       -
TOTAL                 80     3,905.6    100   7,232.8     100

(TPA./000's)    1992      1993        1994       1995      1996

Pulp           1,100    1,334.7     2,054.7   2,608.6   2,740.6
Paper          3,304    3,580.6     3,882.4   4,472.5   5,595.3


Pulp            870         900   1,314.3     2,022.1  2,560.5
Paper         2,262.8     2,572.1   3,054    3,425.8   4,120.5
Waste Paper
Recovery       430        526.3      630       700       980

Pulp           447.7       705.7      687     511.9       836
Paper          114.6       111.4     171.3    140.1      197.7
Waste Paper    882.5       872.4    1,009.5  1,054.2     1,297

Pulp           111        123.6     243.2    576.2     1,127.4
Paper          533         591.8    826.2    924.5     1,198.2

Pulp        1,206.7      1,482.1   1,758.1   1,957.8   2,269.2
Paper       1,844.4      2,091.7   2,399.1   2,641.4   3,119.9
Waste Paper 1,312.5      1,398.7   1,639.5   1,754.1   2,277

(KG/CAPITA)     10         11          13       14      15.5

Source: Indonesian Pulp and Paper Association

*TPA stands for Tonnage Per Annum

A.3. Best Sales Prospects

Following is a list of best prospects compiled from interviewing
pulp and paper operators:

HS Codes  Product Description
470100000 Mechanical wood pulp
470200000 Chemical wood pulp, dissolving grades
470311000 Chemical wood pulp, soda or sulphate unbleached, of
470321000 Chemical wood pulp, soda or sulphate bleached, of
470329000 Chemical wood pulp, soda or sulphate bleached, of
470411000 Chemical wood pulp, sulphite, unbleached, of coniferous
470421000 Chemical wood pulp, sulphite, bleached, of coniferous
470500000 Semi chemical wood pulp
470710100 Waste of paper/paperboard of unbleach kraft paper for
paper making purpose
470790100 Unsorted waste and scrap for paper making purposes
843910000 Machinery for making pulp of fibrous cellulosic
843920000 Machinery for making paper or paperboard
843930000 Machinery for finishing paper or paperboard
843991000 Parts of machinery for making pulp of fibrous
cellulosic material
843999000 Other parts of machinery for making pulp of fibrous
cellulosic material


Some of the influencing factors in purchasing pulp and paper
machinery and raw materials are: provision of soft loan or
suppliers' credit, selling price, technical assistance,
availability of spare parts, quality, warranty and after sales

B.1. Domestic Production

B.1.1. Machinery and Parts

Nearly 100% of pulp and paper machinery and parts installed in
the mills are imported. There is no local production of pulp and
paper machinery.  Most of Indonesia pulp and paper manufacturers
have set up their own workshops to repair and produce spare
parts. Furthermore, pulp and paper operators or distributors
export a limited amount of pulp and paper machinery, mainly
refurbished machinery from their own plants for their foreign
expansion and/or investment in China, Vietnam, or other Asian
countries. Local content generally contributes less than 10
percent of the total installation cost of an Indonesian pulp and
paper operations. The smaller the overall investment, the larger
the percentage of local content.

B.1.2. Pulp

Indonesia produces both long and short fiber, although the
majority is short fiber pulp from local plantations - rice straw,
bagasse, kenaf, and wood. In the beginning of pulp mills
operation/production, before their own plantations matured for
harvesting, factories utilized logs from logging waste from
forests being converted into plantations such as palm oil, cocoa,
and from farm clearing. This is an interim action, since the
ultimate goal is for every pulp mill to use logs from its own
plantings. Getting logs from this means that the mills are using
raw materials from renewable resources and sustainable
development can be achieved.

Since pulp mills are often part of large scale and integrated
pulp and paper operations, pulp output is supplied to the paper
manufacturing operations.  Export is a secondary market for the
excess pulp supply only. Currently, there are 14 short fiber pulp
mills and 3 long fiber pulp mills in Indonesia. Industry output
in 1997 was approximately 3 million metric tonnes, while paper
capacity was over 6 million metric tonnes. Table 3 shows
statistics of pulp for period of 1987 to 1996.

Table 3


Year     Capacity  Production    Import    Export   Consumption
1987     515,000     325,000     232,500    7,500     550,000
1988     605,900     368,400     199,300    7,700     560,000
1989     705,900     461,400     208,000   86,480     582,920
1990    1,000,000    697,000     217,000  181,000     733,000
1991    1,100,000    850,000     242,300  107,200     985,100
1992    1,100,000    870,000     447,700  111,000    1,206,700
1993    1,334,700    900,000     705,700  123,600    1,482,100
1994    2,054,700  1,314,300     687,000  243,200    1,758,100
1995    2,628,600  2,022,120     511,850  576,200    1,957,770
1996    2,740,600  2,560,510     836,080 1,127,390   2,269,200

Source: Indonesian Pulp and Paper Association

B.1.3. Paper

By August 1997, there were 72 paper mills producing 2.1 million
tonnes (34.4%) of cultural and newsprint paper, 3.9 million
tonnes (64%) of industrial paper, and 0.1 million tonnes (1.6%)
of household and other kinds of paper. Table 4 shows statistics
on paper and paperboard production for period of 1987 to 1996.

Table 4


Year    Capacity    Production   Import   Export   Consumption
1987     980,000      826,500   144,400   188,480     782,420
1988   1,162,000      931,400   110,200   213,410     828,190
1989   1,481,000     1,154,800  124,700   204,370    1,075,130
1990   1,716,000     1,438,100  123,600   190,330    1,371,370
1991   2,374,000     1,749,000  114,900   384,800    1,479,100
1992   3,304,000     2,262,800  114,600   533,000    1,844,400
1993   3,580,600     2,572,100  111,400   591,800    2,091,700
1994   3,882,350     3,054,000  171,300   826,200    2,399,100
1995   4,472,500     3,425,800  140,110   924,520    2,641,390
1996   5,595,280     4,120,490 197,700   1,198,220  3,119,970

Source: Indonesian Pulp and Paper Association

The above figures cover Newsprint, Writing & Printing, Sack
Kraft, Kraft Liner & Fluting, Boards, Cigarette Paper, Wrapping
Paper, Tissue paper, and Other Paper.

The raw materials for paper mills are pulp from their own pulp
mills (integrated, imported pulp and waste paper from local
recovery as well as imports. Domestic waste paper recovery is
very efficient, however since there are many other uses, only
25-31% goes to paper mills. Table 5 shows statistics on waste
paper for the period of 1987 to 1996.

Table 5


Year    Paper   Capacity (paper Production  Import   Apparent
       Prod.   consumption)    (recovery)             Consump.

1987   826,500    782,420       158,000   225,500   383,500
1988   931,400    827,690       185,000   323,700   508,700
1989 1,154,800   1,075,130      315,000   382,500   697,500
1990 1,438,100   1,371,370      407,000   463,000   870,000
1991 1,749,000   1,479,100      410,000   549,100   959,100
1992 2,262,800   1,844,400      430,000   882,500 1,312,500
1993 2,572,100   2,091,700      526,300   872,400 1,398,700
1994 3,054,000   2,399,100      630,000 1,009,500 1,639,500
1995 3,425,800   2,641,390      700,000 1,054,150 1,754,150
1996 4,120,490   3,119,970      980,000 1,297,000 2,277,000

Source: Indonesian Pulp and Paper Association

Beside waste paper, recycled fibers are widely used for the
production of industrial paper and newsprint. Since local
equipment is not sufficient due to competition of the other uses
(wrapping, etc.), a large quantity of wastepaper has to be
imported. Table 6 compares the amount of local recycled fibers
used versus imports.

Table 6

million metric tonnes)

Year Consumption    Local supply             Import
1995 1.7            0.7                      1.0
1996 3.4            0.8                      2.6
1997 4.0            1.0                      3.0
1998 4.3            1.2                      3.1
1999 5.0            1.4                      3.6
2000 5.6            1.6                      4.0

Source: Paper Asia

B.2. Third Country Competitors

B.2.1. Pulp and paper machinery and parts

The United States' main competitors in Indonesia are Finland,
Japan, Germany, and Austria. Finland is known for its technology
and for having the longest experience in pulp and paper
machinery. Valmet is its leading brand.

However, p&p operators currently prefer to purchase Mitsubishi
equipment because the Japanese government has helped through its
exim bank by providing soft loans with a 20 year grace period to
the Indonesian private and government p&p operators. Other
well-known brands sold in Indonesia include Voith-Sulzer from
Germany, Andritz and Ahlstrom from Austria.

Total p&p equipment, raw material and chemical imports for 1996
was accounted at USD 1,518,193,491 while in 1997 imports totaled
USD 1,227,143,725. Table 7 and 8 show the market share of major

Table 7

Covering HS No. 843910000 to HS No. 843999000(IN USD 000's)

               1996        %             1997           %

Japan          191,425      23.53       107,746       17.64
Germany        120,034      14.75        82,912       13.58
Sweden         110,867      13.63        18,867        3.09
Finland        103,846      12.76        70,002       11.46
USA            44,390       5.45       107,743        17.64
Austria        29,537       3.63        67,101        10.99
Others         213,554     26.25       156,299        25.60
TOTAL          813,653    100.00       610,670        100.00

Sources: Biro Pusat Statistics (Central Bureau of Statistics) in
CIF value

B.2.2. Raw materials and Chemicals

Table 8

Covering HS No. 470100000 to HS No. 470790900(IN USD 000's)

               1996         %         1997          %

USA            183,921      26.10     151,633      24.60
Canada         114,877      16.30     103,101     16.72
New Zealand     62,144       8.83      37,692      6.12
Germany         45,675       6.48      24,706      4.00
South Africa    41,423       5.88      50,547      8.20
Brazil          31,872       4.53      64,730      10.50
Sweden          16,727       2.38      33,034      5.36
Others         207,903       29.50     151,030    24.50
TOTAL          704,542     100.00      616,473   100.00

Sources: Biro Pusat Statistics (Central Bureau of Statistics) in
CIF value

B.3. U.S. Market Position

The United States has been dominating the import market for both
pulp and paper machinery and raw materials. U.S. equipment and
raw materials are well represented in Indonesia and enjoy an
excellent reputation.  U.S. brands, known for their quality and
durability, have progressively gained market share, particularly
with regard to the waste paper and chemicals to process the
production waste. There are several U.S. machinery brands sold in

Total imports for the first quarter of 1998 were USD 7,205.6
million. Imports from the U.S. were USD 809 million, a decline of
40.84% from the first quarter last year. However, equipment
imports increased 12.19% last year from 5.45% in 1996 to 17.64%
in 1997. Part of the reason for the increase was that a U.S.
supplier offered credits to Sinar Mas Group for purchasing its
equipment for the recent pulp expansion at PT. Indah Kiat (unit 3
in Riau) and paper expansion at PT. Tjiwi Kimia (unit 11 in

U.S. suppliers should work closely with both local and foreign
engineering companies involved in detailing engineering and
design of large projects.  Close contact with end users is also
critical in obtaining timely information in order to quote on new

There are still plenty of opportunities for other U.S. products
to compete in Indonesia.  U.S. producers should consider the
following guidance in order to successfully enter the local

1. Build up a permanent and strong market presence.  It is not
enough to come in only when big transactions can be made.  Firms
must consistently work to build high awareness levels and a
strong reputation.

2. Appoint a knowledgeable local agent or distributor to
represent the firm's products.  The local agent/distributor
should provide good technical support to end users.

3. Focus on long term market development.  The U.S. principal
must draw up long term goals and the means and measures to
achieve them. He also has to build up a control mechanism, which
allows the principal to monitor the situation and take corrective
action jointly with the Indonesian agent, as the prevailing
situation requires.

4. Aggressively promote the products and participate in
Indonesian trade exhibitions whenever possible.

The United States & Foreign Commercial Service offers the Gold
Key Service (GKS) and Agent Distributor Service (ADS), which are
designed to assist U.S. exporters in finding appropriate sales
representatives in Indonesia.  The information on these services
can be obtained through your nearest U.S. Department of Commerce
Export Assistance Center.


Section B of this report mentioned that pulp industry in
general is integrated with its paper company, except for the
rayon pulp company. Therefore, most pulp production is
directed at meeting a firm's own paper factory needs. The
remainder is sold to paper companies which do not have their
own factory or are exported. The paper manufacturers which do
not have their own pulp production facility usually meet
their needs with imports.

C.1. Pulp and Paper manufacturers

The companies listed below account for nearly all of Indonesia's
pulp and paper exports and a very large share of the country's
total pulp and paper production.  Most of these companies are
engaged in important expansion programs as shown in Table 9.

Sinar Mas Group is the largest pulp and paper manufacturer in
Indonesia. It produces a huge variety of p&p products such as
writing & printing paper, wrapping paper, stationery, corrugating
medium, kraft liner, duplex/manila board, carton box, board box,
and tissue papers. Sinar Mas's seven subsidiaries include:

Company Name
  Installed Production Capacity
                      as of 1997

                                        Pulp         Paper
PT. Indah Kiat Pulp & Paper Corp.       1,435         1,254
PT. Pabrik Kertas Tjiwi Kimia               0            651

PT. Eka Mas Fortuna                        0            168
PT. Lontar Papyrus Pulp & Paper Industry 565            224
PT. Pindo Deli Pulp & Paper Mills          0            750
PT. The Univenus Company                   0             20
PT. Purinusa Eka Persada (converting)    n/a            n/a

Sinar Mas Group had formed 2 holding companies for its pulp and
paper operations: PT. Purinusa for its operations in Indonesia
and Asia Pulp & Paper Co. Ltd for all of its operation in the
rest of the world. Please refer to table 9 for Sinar Mas's
current expansion projects.

For details on Sinar Mas' expansion plans outside Indonesia,
please contact:

Company:  Asia Pulp & Paper Co. Ltd.
Address:  Plaza BII, Tower 2, 7th Floor
         Jl. M.H. Thamrin No. 51
         Jakarta 10350, Indonesia
Telp:     (62-21) 392-7663, 392-9355
Fax:      (62-21) 392-8875
Contact:  Ms. Prisca Deassy  or  Mr. Ronny Kurniawan

Raja Garuda Mas Group (RGM Group) represents the second largest
pulp manufacturer. It consists of PT. Riau Andalan Pulp & Paper
which produces 600,000 ton/year of pulp and PT. Inti Indorayon
Utama which produces 220,000 ton/year of pulp and 60,000 ton/year
of rayon fiber.  The RGM Group exports 70% of its annual
production of approximately 240,000 metric tonnes of hardwood
pulp and 60,000 tonnes of rayon fiber.

PT. Pakerin manufactures 150,000 ton/year of pulp and 700,000
ton/year of paper. Pakerin is the second largest p&p producer on
the the island of Java. Besides pulp, Pakerin produces
corrugating medium, kraft liner, and boards.

PT. Kiani Kertas has the largest single line pulp machine, which
produces 500,000 ton/year. Kiani is one of the subsidiary
companies of Kalimanis Group owned by the timber tycoon Mr.
Muhammad "Bob Hasan", known as a close friend of former President
Soeharto. Kiani's project in East Kalimantan includes a
deep-water port, an airport with a 2,500-meter runway, and a
residential complex for about 1,000 employees. Currently, Kiani
is restructuring and rescheduling its debts with South Korean and
Japanese bankers for the approximate amount of USD 1.3 billion.
At full capacity, the mill has a projected annual revenue of USD
225 million. Mr. Hasan estimated Kalimanis group to be worth of
USD 3 billion to USD 4 billion. A reliable source at Kiani
confirmed that Kiani has opened the opportunity for a strategic
partnership to help run the mill.

PT. Tanjung Enim Lestari Pulp & Paper's mill is currently still
under construction in South Sumatra. It will produce pulp only
with an estimated production capacity of 450,000 ton/year. It is
expected to commence operation in September 1999.

Some of the larger paper manufacturers which do not have their
own pulp production facility are as follows:

Company Name             Mill      Installed Capacity (ton/year)
                        Location          as of 1997
PT. Fajar Surya Wisesa    Bekasi, W.Java      500,000
PT. Aspex Paper           Gresik, E.Java      430,000
PT. Surabaya Agung        Gresik, E.Java      336,800
Industri Pulp&Paper
PT. Jaya Kertas           Nganjuk, E.Java     200,000
PT. Pelita Cengkareng     Tangerang, W.Java   157,000
      Paper & Co.
PT. Suparma              Surabaya,E.Java      150,000
PT. Surya Pamenang       Kediri, E.Java       150,000

Table 9


Company                            Mill    Capacity (000's/TPA)
                              Location       Pulp     Paper

PT. Indah Kiat Pulp & Paper Corp.    Riau       0       395

PT. Pabrik Kertas Tjiwi Kimia       Mojokerto   0       370

PT. Lontar Papyrus Pulp&Paper Ind. Jambi      440        0
PT. Lontar Papyrus Pulp&Paper Ind. Aceh         0       7.5
PT. Pindo Deli Pulp & Paper Mills  Karawang    0       713
PT. Riau Andalan Pulp & Paper       Riau      500      300
PT. Inti Indorayon                  Riau       0       30
PT. Pakerin                       Mojokerto    0       330
PT. Pakerin                      S. Sumatra    150       0
PT. Fajar Surya Wisesa          E.Kalimantan   300       0
PT. Kertas Basuki Rachmat       Banyuwangi     0       200
PT. Kertas Basuki Rachmat       W.Kalimantan   250       0

Sources:       Various interviews

C.2. Other industries

The packaging industry is the largest end-user of paper and
paperboard. It includes the food & beverage, cement, household
and many other industries.  By the end of 1996, the packaging
industry consumed nearly 2.4 million metric tons of paper inputs,
56 percent of the total volume of the market.  Additionally, some
packaging products may be 100 percent recycled paper and/or
paperboard, as most packaging materials do not require the
quality of virgin cellulose.


D.1. Import Climate

Until the foreign currency exchange rate upheavals throughout
South East Asia in the second half of 1997, Indonesian imports
were increasing in recent years between five and ten percent
annually.  Imports virtually halted at the end of 1997 through
Summer 1998, but a new government and new agreements with the IMF
and other donors in March/April 1998 offer the promise of
stabilizing the currency, repairing the banking system, and
getting the economy moving again in the latter half of 1998.  By
the middle of November 1998, rupiah had strengthened to as much
as 7,500 per USD from 12,000 in July and early August. Imports
totaled some $40 billion in 1997, and $4.5 billion (f.o.b. value)
came from the United States.  This represents a higher share of
the market than the U.S.'s traditional share in the 12 percent

Japan dominates Indonesia's imports, supplying about one-fourth
of imports.  Other main suppliers include Australia, Denmark,
England, Germany, Italy and Japan.  American technology is viewed
favorably by Indonesians and often preferred if price is
competitive.  However, German and Japanese suppliers in
particular are strong competitors.  Both offer good technology.
Japanese products are cheaper than those from the United States.
The German Government offers financial assistance to German
firms. Japanese economic assistance to Indonesia of nearly $2
billion annually gives Japanese firms a strong advantage.
Japanese trading companies (keiretsu) have many employees in
numerous Indonesian locales, giving them market savvy difficult
to duplicate.  The Japanese carry an image of being closer to
market needs and more responsive than Americans.

Over the past decade Indonesia has initiated periodic import
deregulation packages and tariff reductions, but its tariffs
(which average over 12 percent) remain among the highest in the
ASEAN region.  Non-tariff barriers are legion and numerous
documents are required to process imports, although the country
is moving to a paperless electronic data interchange system by
which information is submitted electronically by importers.

There is no known market barrier to import pulp and paper
equipment and raw materials .  The following is a list of import
duties applied to items related to pulp and paper industries. A
10% value added tax (VAT) is charged to all of the following

Product Description           Import(%)
Pulp                              0
Writing and Printing paper        0
Industrial paper                  10
Newspapers                        5
Households & Others               10
Environmental Equipment           0
Other machinery                   0 (if production is proven
for export oriented)

D.2. Distribution/Business Practices

Distribution regulations changed in late 1997 and early 1998 as a
result of agreements with the International Monetary Fund.  Until
then, import/export, wholesale and retail distribution were
reserved for Indonesian companies 51 percent or more Indonesian
owned.  As of November 1997, foreign-owned firms can obtain a
foreign investment license to wholesale any product if they also
have a license to manufacture something in Indonesia.  As of
April 1998, foreign-owned firms can obtain a license to retail
any product if they also have a licensed manufacturing operation
in Indonesia.  However, a foreign firm cannot simultaneous both
wholesale and retail, because this is viewed as a monopoly, and
foreign firms cannot import the products that will be wholesaled
or retailed, but must use an Indonesian import firm.

Sole national agents are required for specified products only,
mainly certain types of heavy equipment such as road rollers,
hoist and lifting equipment, tractors, and cement-mixing
machines, motorcycles, cars and trucks.  For other sales to the
private sector, sole agents are not required, although
Indonesians prefer to become a foreign firm's sole agent or
distributor.  In any case a trial period of at least six months
should be standard practice.  For sales to the Government,
Indonesian agents must be used, and the agents are encouraged to
have a direct relationship with the foreign supplier rather than
be a sub-agent of a Singapore (or similar outsider) regional

Traditionally Indonesian importers have not specialized in
particular product lines, but instead handle a wide range of

Foreign firms may open a local representative office in all 27
provinces with permission of the Indonesian Department of
Industry and Trade.  The representative(s) may be an Indonesian
company or individual, or a foreign national.  Trade
representatives may not engage in direct sales nor conclude
deals, but they may engage in sales promotion and marketing, or
do market research and provide technical advice. In many cases,
foreign companies have established close connections with
Indonesian national importers, allowing the two companies to
function as one.  The Indonesian company acts as importer and
distributor, and the foreign company promotes its products,
sometimes seconding expatriate staff as employees to its
Indonesian distributor/partner.  A more active role for the
foreign firm can be arranged through a management contract, which
can take many forms.

D.3. Financing Methods

The economic crisis of 1997-98 has brought financing to the
forefront of business issues in Indonesia. At the time of this
writing the banking system is barely functioning and local
interest rates are prohibitively high.  Despite government
guarantees of all commercial banks' obligations, most Indonesian
bank letters of credit are not recognized overseas at this time.
This will change perhaps by mid-1999 as banking reform proceeds.
In the interim, to sell here, U.S. suppliers must offer generous
and creative financing terms to Indonesia buyers to make a sale.

Indonesia continues to maintain an open capital account and no
foreign exchange controls. Since mid-1997 the rupiah has floated
freely. The value of the rupiah has dropped 70 percent in value
vis-a-vis the value of U.S. dollar as of early April 1998.
However by the middle of October 1998, the rupiah had
strengthened by 62 percent over its value in July.

U.S. Export Import Bank guarantees have often been used by
American banks, and project financing is available from the World
Bank, the Asian Development Bank, and bilateral donors including
- under special conditions - Japan's Overseas Economic
Cooperation Fund (OECF).

American Express Bank, Bank of American, Chase, and Citibank have
branches in Indonesia. Bank of Boston, National Bank of
California, Bankers Trust, Core States, J.P. Morgan, and Republic
National Bank maintain representative offices.  Many U.S. banks
have correspondent relationships with some 86 Indonesian banks,
i.e. with about 40 percent of all banks registered in Indonesia.

Financing through soft loan terms is required for most Indonesian
government projects.  Most contract award decisions hinge on
terms that typically include seven years grace and an interest
rate of 3.5 percent over 25 to 40 years.  Indonesian government
funds provide typically 20 to 35 percent of the budget for
capital projects; the rest comes from foreign lending.  This
scenario is unlikely to change for the foreseeable future.


The U.S. Commercial Service (CS) in Indonesia encourages American
company participation in local trade fairs to introduce products
to the market.  While most fairs are useful as a venue to meet
relevant contacts, their quality varies according to the
experience of the organizer and its ability to advertise and draw
customers to the events.  Expect only a handful of U.S. and
foreign firms in most shows, but lots of local representatives,
licensees and distributors of foreign suppliers.  Ideally,
prospective U.S. exhibitors should link the exhibition to a
targeted appointment schedule, which the CS can organize through
its Gold Key program.

The following shows are recommended for U.S. companies:


    Held on November 2-6, 1999, at Jakarta International
    Exhibition Center, Kebayoran, Jakarta
         Which includes:
-    Pollution & Environment Technology Indonesia
-    Clean Manufacturing Indonesia

Held on January 26-29, 2000, at Jakarta International Exhibition
Center, Kebayoran Jakarta
  Organizer:  PT Pamerindo Buana Abadi
Attn:  Ms. Monalisa Zen, Project Manager
              Deutsche Bank Building, 13th Floor
Jl. Imam Bonjol 80
Jakarta 10310
Tel: (62-21) 316-2001
Fax: (62-21) 316-1981, 316-1982

Other Sources of Information

The Commercial Service publishes annually a comprehensive
"Country Commercial Guide for Indonesia" describing business
dynamics, best prospects, economic and political analyses, trade
and investment regulations and statistics, and upcoming trade
events.  This document is available in CD-ROM format or by
subscription to the National Trade Data Bank via the following:
tel: 1-800-STAT-USA, or on-line at  It
can also be downloaded from the U.S. Embassy Jakarta home page
(, or via home pages of the U.S.
Department of Commerce ( or the U.S. Department
of State (  Print versions of Country Commercial
Guides on all countries having a U.S. Embassy can also be ordered
from the National Technical Information Service at

Other commercial, economic, consular and educational information
relevant to Americans interested in Indonesia, and to
Indonesians, is available on line from the U.S. Embassy Jakarta
at the following address:

The U.S. Commercial Service in Indonesia offers a wide range of
programs to open the Indonesian market to interested U.S.
companies.  Our main office is in Jakarta, and we have commercial
staff in Indonesia's second city and gateway to the eastern
islands: Surabaya.  We will give timely responses to business
queries sent to us at the following mailing, fax and Internet

A.   U.S. Commercial Service
American Embassy Jakarta
Mailing address from U.S. Box 1, Unit 8129,
APO AP 96520-0001

Physical location: U.S. Commercial Center
Wisma Metropolitan II, 3rd Floor
Jl. Jend. Sudirman Kav. 29-31
Jakarta 12920, Indonesia
Tel: (62-21)526-2850
Fax: (62-21)526-2855
Internet email:

B.   The Commercial Service
American Consulate General Surabaya
Mailing address from U.S. (same as Embassy, above)
Physical location:
Jl. Dr. Sutomo, No. 33
Surabaya 60264, Indonesia
Tel: (62-31) 561-9213, 567-6880
Fax: (62-31) 567-7748
Internet email:



1.   Asosiasi Pulp dan Kertas Indonesia (APKI)
    Indonesian Pulp and Paper Association
    Address:  Jalan Cimandiri No. 6 Flat 1/2
    Jakarta 10330, Indonesia
    Tel.:     (62-21) 326-084
    Fax:      (62-21) 314-0168
    Contact:  Mr. M. Mansur, Chairman
         Mr. Kahar Haryopuspito, Executive Director

2.   Masyarakat Perhutanan Indonesia (MPI)
    Indonesian Forestry Community
    Address:  Manggala Wanabakti Building
              Blok IV, Wing B, 9th Floor
              Jl. Jend. Gatot Subroto, Senayan
              Jakarta 10270, Indonesia
    Tel.:     (62-21) 573-7036 and 570-1154 (direct),
                   570-3265 Ext. 5472, 5420,
    Fax:      (62-21) 573-2564
    Contact:  Mr. Hendro Prastowo, Deputy Executive President

3.   Institute for Research and Development of Cellulose Industry
    Address:       Jalan Raya Dayeuhkolot No. 132
                   Bandung 40258, Indonesia
    Tel:          (62-22) 520-2871
    Fax:           (62-22) 520-2871
    Contact:       Mr. H. Surmawi Abas, Director


Ministry of Industry and Trade
Attn:     Directorate General of Agricultural and Forestry-based
Address:  Jl. Gatot Subroto Kav. 52-53
         18th Floor
         Jakarta, Indonesia
Telp:     (62-21) 525-2713, 525-5509
Fax:      (62-21) 525-2450
Contact:  Dr. Gatot Ibnusantosa, Director of Pulp and Paper



1.   PT. Pabrik Kertas Tjiwi Kimia
    Address:       Jalan Raya Surabaya
                   Mojokerto Km. 44
                   Jawa Timur, Indonesia
    Tel:          (62-321) 361-552
    Fax:           (62-321) 361-615
    Contact:       Mr. Jody Setiawan Lin, President Director
                   Mr. Tjatur Prasetya, Head of Environment
                   Mr. Budi Sutanto, Senior Engineering
                   Mr. Hanafi Pratomo, R & D Manager

2.   PT. Pabrik Kertas Indonesia (PAKERIN)
    Address:       Head Office:
                   Jl. Kertopaten No. 3
                   Surabaya 60145, Indonesia
    Tel:          (62-31) 371-6173
    Fax:           (62-31) 371-4345, 371-7223
    Contact:       Mr. Steven Tirtowidjojo, Plant Director
                   Mr. Nyono Purnomo, Plant Manager

3.   PT. Fajar Surya Wisesa
Address:  Head Office:
Jl. Abdul Muis No. 30
Jakarta 10160
Tel:     (62-21) 344-1316, 385-0126
Fax: (62-21) 345-7643
Contact:  Mr. Winarko Sulistyo, President Director
Mr. Roy Teguh, Director

4.   PT. Kiani Kertas
Address:  Site Office:
Mangkajang, Berau
East Kalimantan, Indonesia
Tel:     n/a
Fax: n/a

Jakarta Office:
Wisma Kalimanis 4th Floor
Jl. M.T. Haryono Kav. 33
Jakarta 12770
Tel:     (62-21) 798-6065, 798-6066
Fax: (62-21) 797-5124, 798-6036
Contact:  Mr. Suharsono Kramadibrata, President Director
              Mr. Teddy Suratmadji, Production & Environment
Mr. Arie Nouvel, Public Affairs & Environment

5.   PT. Tanjung Enim Lestari Pulp & Paper
    Address:  Head Office:
Wisma Barito Pacific, Tower B, 4th Floor
              Jl. Letjen S. Parman Kav. 62-63
              Jakarta 11420, Indonesia
Tel:     (62-21) 535-8450
Fax:      (62-21) 534-7088
    Contact:  Mr. Jansen Wiraatmadja, President Director
              Mr. Daniel Lunoto, Purchasing Manager

6.   PT. Surabaya Agung Industri Pulp & Kertas
Address:  Head Office:
Jl. Bongkaran No. 68
Surabaya 60161, Indonesia
Telp:     (62-31) 353-9457, 353-9462
Fax:      (62-31) 353-5043
Contact:  Mr. Tirtomulyadi Sulistyo, President Director
Mr. Sinduchayana Sulistyo, Director


1.   PT. Kertas Leces
    Address:  Factory/Head Office:
Jl. Raya Lumajang, Leces
              Probolinggo 67202
              East Java, Indonesia
    Telp:     (62-335) 680-993, 680-994, 680-995, 680-996
    Fax:      (62-335) 680-954
    Contact:  Mr. Kusmadi, President Director
              Mr. Robert Simandjuntak, Production Director
Mr. I. Made Dastry, Marketing Director

2.   PT. Kertas Kraft Aceh
Address:  Factory/Head Office:
Ds. Jamuan, Kec. Nisam, Kab. Aceh Utara,
PO Box 20, Lhokseumawe
Sumatra, Indonesia
Telp:     (62-645) 41733, 41734, 42533, 41815
Fax:      (62-645) 41482, 41822, 41053
Contact:  Mr. Soeparnadi Prawotokoesoemo, President
Mr. Sutamat, Director


1.   PT. Indah Kiat Pulp & Paper Corporation
    Address:  Head Office:
Wisma Indah Kiat
              Gedung B. Lantai 2
              Jl. Raya Serpong Km. 8
              Jawa Barat, Indonesia
    Telp:     (62-21) 531-20001
    Fax:      (62-21) 531-20342
    Contact:  Mr. Teguh Ganda Wijaya, President Director
Mr. Njauw Kwet Meen, Director
Mr. Yan Chandra Winata, Purchasing Division

2.   PT. Lontar Papyrus Pulp & Paper Industry
Address:  Medan Office:
Wisma Bank Internasional Indonesia 6th Floor
Jl. Diponegoro No. 18
Medan 20152
North Sumatra, Indonesia
Telp:(62-61) 555-175, 555-859, 557-015
Fax: (62-61) 555-175

Riau Office:
Jl. Teuku Umar No. 51
Pekanbaru, Riau, Indonesia
Telp:(62-761) 21627, 335-580, 33535
Fax: (62-761) 33662

Contact:  Mr. Hendra Jaya Kosasih, President Director
Mr. Lin Sun Keng, Vice President Director

3.   PT. Inti Indorayon Utama
Address:  Head Office:
Uniplaza Tower 6th Floor A-1
Jl. Let. Jen. M.T. Haryono
Medan 20231, Indonesia
Telp:     (62-61) 532-532, 530-895
Fax:      (62-61) 530-967
Contact:  Mr. Roland Mazery, President Director
Mr. Protasius Daritan, Director

4.   PT. Riau Andalan Pulp & Paper
Address:  Factory:
Pangkalan Kerinci, Kec. Langgam, Kab. Kampar
Pekan Baru, Riau
PO Box 1080, Indonesia
Telp:(62-761) 95529
Fax: (62-761) 95681

Jakarta Office:
BNI Building 20th Floor
Jl. Jend. Sudirman Kav. 1
Jakarta 10220, Indonesia
Telp:(62-21) 570-6047, 570-2610
Fax: (62-21) 570-1771, 570-1221

Contact:  Mr. Rune Roger Ingvasson, Director
         Mr. Protasius Daritan, Director

5.   PT. Aspex Paper
Address:  Head Office:
Wisma Eka Life 11th Floor
Jl. M.T. Haryono Kav. 62
Jakarta 12780, Indonesia
Telp:     (62-21) 797-5959
Fax:      (62-21) 797-6402
Contact:  Mr. Iskandar Jr., President Director
Lee Won Je, Director

6.   PT. Pindo Deli Pulp & Paper Mills
Address:  Head Office:
Plaza BII Menara II, 17th floor
Jl. M.H. Thamrin No. 51
Jakarta 10350, Indonesia
Telp:     (62-21) 392-9266-69
Fax:      (62-21) 392-9460-61
Contact:  Mr. Teguh Ganda Wijaya, President Director
Mr. Rudy Wirianata, Vice President Director


    Agent of: DCS System, Accuray Quality Control System, ABB
              Sectional Drive, etc.
    Address:  Jakarta office:
              Mid Plaza II Building 2nd Floor
              Jl. Jend. Sudirman Kav. 10-11
              Jakarta 10220, Indonesia
              Telp:     (62-21) 573-9690
              Fax:      (62-21) 573-9692
              Contact:  Mr. Kastanto Ledi, Pulp and Paper Div.

              Surabaya office:
              Jl. Margomulyo No. 29B
              Tandes, Surabaya 60183, Indonesia
              Telp:     (62-31) 749-7999
              Fax:      (62-31) 749-7130
    Contact:  Mr. Ronald C. Kusuma, Branch Manager

    Agent of: Valmet
    Address:  Jl. Raya Jatiwaringin No. 54
              Jakarta, Indonesia
              Telp:     (62-21) 848-0130
              Fax:      (62-21) 848-0140
    Contact:  Mr. Djoni, Paper Machinery Dept.

    Agent of: Beloit, Huyck, Nash, etc.
    Address:  Head office:
              Jl. Gembong No. 2-16 Blok B7
              Surabaya, Indonesia
              Telp:     (62-31) 371-3776, 371-6917
              Fax:      (62-31) 371-4090
              Contact:  Mr. Sugeng Hadilaksono, Director

              Jakarta office:
              Jl.  Buana Biru Besar II No. 29
                   Taman Permata Buana
                   Jakarta 11610, Indonesia
              Telp:     (62-21) 580-8310, 582-4872
              Fax:      (62-21) 582-4873
Contact:  Mr. Lukas Agustinus, Area Sales

    Agent of: Jagenberg coating and rewinder machine, etc.
    Address:  Jl.  Majapahit 34/12
              Jakarta 10160, Indonesia
              Telp:     (62-21) 380-8101, 384-2817
              Fax:      (62-21) 384-2901
    Contact:  Mr. Josep Taslim, Director

5.   PT. Multan Kusuma Sakti
Sole Distributors of various pumps, fans, vacuums/blowers, and
compressors, such as:    Warren Rupp, Desmi, Stubbe, Roots
Holmes, PoweRupp, Seepex, Apollo, Schiele, Pulsa, Leistritz,
Siemens, PGW, Hartzell, Spencer, etc.
Address:  Perkantoran Kebon Jeruk Baru
Blok A  No. 3
             Jakarta 11530, Indonesia
              Telp:     (62-21) 530-8440
              Fax:      (62-21) 530-8462, 533-0248
Contact:  Mr. Sunardi Tjandra Kusuma, Director

6.   MEASUREX Surabaya Representative Office
    Agent of: DCS & QCS System
    Address:  Jl.  Simpang Darmo Permai Selatan II No. 32
              Surabaya 60226, Indonesia
    Telp:     (62-31) 732-9577 (6 lines)
    Fax:      (62-31) 732-9845
    Contact:  Mr. Frans Venter, Regional Manager Sales &

    Agent of: Blades and Ceramic foils for paper industry such
              as Essco, Wefa Press, Dienes
    Address:  Jl. Darmo Baru No. 59
              Surabaya 60183, Indonesia
    Telp:     (62-31) 731-9372
    Fax:      (62-31) 734-1589
    Contact:  Mr. SK. Guritno, Branch Manager and Paper
                        Division Manager

              ISA Customer Satisfaction Survey
                U.S. Department of Commerce
              * International Trade Administration*
                   The Commercial Service

The U.S. Department of Commerce would appreciate input from U.S.
businesses that have used this ISA report in conducting export
market research.  Please take a few moments to complete the
attached survey and fax it to 202/482-0973, mail it to QAS,
Rm. 2002, U.S. Department of Commerce, Washington, D.C. 20230, or
Email: Internet[].

* * * About Our Service * * *

1. Country covered by report: _______________________________
Commerce domestic office that assisted you (if applicable):
2. How did you find out about the ISA service?
   __Direct mail
   __Recommended by another firm
   __Recommended by Commerce staff
   __Trade press
   __State/private newsletter
   __Department of Commerce newsletter
   __Other (specify): _______________________________

3. Please indicate the extent to which your objectives were
   1-Very satisfied   2-Satisfied
   3-Neither satisfied nor dissatisfied
   4-Dissatisfied   5-Very dissatisfied
   6-Not applicable

   __Overall objectives
   __Accuracy of information
   __Completeness of information
   __Clarity of information
   __Relevance of information
   __Delivery when promised
   __Follow-up by Commerce representative

4. In your opinion, did using the ISA service facilitate any of

   the following?
   __Decided to enter or increase presence in market
   __Developed an export marketing plan
   __Added to knowledge of country/industry
   __Corroborated market data from other sources
   __Decided to bypass or reduce presence in market
   __Other (specify): _______________________________

5. How likely would you be to use the ISA service again?
   __Definitely would
   __Probably would
   __Probably would not
   __Definitely would not



                    * * * About Your Firm * * *

1. Number of employees:  __1-99   __100-249   __250-499
                         __500-999   __1,000+

2. Location (abbreviation of your state only):______

3. Business activity (check one):
   __Agent, broker, manufacturer's representative
   __Export management or trading company
   __Other (specify):_______________________________

4. Export shipments over the past 12 months:
   __0-1   __2-12   __13-50   __51-99   __100+

May we call you about your experience with the ISA service?
Company name: _______________________________________________
Contact name: _______________________________________________
Phone: ______________________________________________________

-------- -------------------------------------------------------

                    Thank you--we value your input!

This report is authorized by law (15 U.S.C. 1512 et seq., 15
U.S.C. 171 et seq.).  While you are not required to respond,
your cooperation is needed to make the results of this evaluation
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collection of information.  Send comments regarding this burden
estimate or any other aspect of this collection of information,
including suggestions for reducing the burden, to Reports
Clearance Officer, International Trade Administration, Rm. 4001,
U.S. Department of Commerce, Washington, D.C. 20230, and to the
Office of Information and Regulatory Affairs, Office of
Management and Budget, Paperwork Reduction Project (0625-0217),
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