Indonesia currently produces 750 thousand MT/Yr of Towel and Tissue (T&T) paper. That makes Indonesia the largest T&T producing nation in the Southeast Asia Geographic Zone* and eleventh largest in the world. This capacity is coming from a combination of smaller mills with modest machines to a very large complex with several mid-sized machines. Growth has been accelerating with many new machines coming on line in the past 10 years.

A nation of nearly 250 million and growing, Indonesia is the fourth most populated country in the world. The economy of Indonesia is sixteenth in the world and showing sustained solid GDP growth in the 6% to 6.5% range over the past three years. During the global recession Indonesia outperformed its regional neighbours joining China and India as the only G20 members posting growth in 2009. The government has promoted fiscally conservative policies, resulting in a debt-to-GDP ratio of less than 25%, a fiscal deficit below 3%, and historically low rates of inflation. However, Indonesia still struggles with poverty, unemployment, inadequate infrastructure and a complex regulatory environment. The government in 2013 faces challenges of improving Indonesia’s insufficient infrastructure to remove impediments to economic growth. They also need to reconsider their fuel subsidy programme in the face of high oil prices. Geography presents some challenges as well. Indonesia is the largest archipelago nation in the world with more than 17 thousand islands. The nation is in a geologically active region where quakes are common, with some leading to significant tsunamis. The area is also susceptible to severe weather and typhoons.

Indonesia’s T&T mills are located on the two large islands of Java and Sumatra (Maps 1 & 2). The country ranks first among the five T&T producers in the Southeast Asia Zone (Figure 1) significantly ahead of the other four countries combined. This is noteworthy because the number of machines in Indonesia is the largest (Figure 2), but not to the degree that answers for the production differences. T&T machines in Southeast Asia vary from narrow two-metre machines to six-metres. The machines in Indonesia are on the high-end of the trim range for the region, with the average being in the 3.0 metre range (Figure 3). On average, mill production in Indonesia is higher than that of the remaining mills in Southeast Asia with averages at 30,000 MT/Yr. What is more, the technical age of the machines is among the youngest averaging at approximately 11 years (Figure 4). Fibre mix at Indonesian mills is heavily weighted to virgin pulp which is a deviation from the other Southeast Asia countries which use significant amounts of recycled fibre (Figure 5). The heavy reliance on virgin fibre is reflected in Indonesia’s position on a cost curve resulting in a middle of the pack cost position (Figure 6). Indonesia’s position would be even higher if not for very low labour and energy rates.

T&T machine production rates in Indonesia tends to be dispersed with nearly as many machines producing less than 10,000 MT/Yr as there are above that rate (Figure 7). The number of mid- sized machines helps lift the production rate for the country. Machine trims in Indonesia cover the spectrum of mid (3m – 5m) to very narrow (less than 2.5m) with the average being 3m (Figure 8). Machine speeds are equally dispersed with as many at less than 1,000mpm in speed as there are at higher rates (Figure 9). On the international scale, Indonesian machines tend to have above average capacity and newer than average ages (Figure 10). The source for market data and analysis in this article is FisherSolveTM. Data tables behind Figures 1 – 10 can be obtained from Fisher International. E-mail requests to

*The following countries comprise paper producers in the Southeast Asia Geographic Zone: Indonesia, Laos, Malaysia, Myanmar (Burma), the Philippines, Singapore, Thailand, Vietnam. T&T producers in the same region are Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.

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