Eyes on Indonesia

Export markets for recovered fiber have been challenging most of this year. Challenges could be increasing in Indonesia, in particular, as that nation announced to the Institute of Scrap Recycling Industries (ISRI), Washington, at the end of August that it was revising its Recovered Import Paper Standard. According to ISRI, the Indonesian government has announced plans to direct preshipment inspection companies to inspect materials for a 0.5 percent prohibitives tolerance.

Members of ISRI’s Paper Stock Industries (PSI) Chapter met with Indonesian government representatives and U.S. Embassy officials in September in Jakarta, Indonesia, to address the nation’s pending import restrictions on scrap paper.

“It’s important that we work with [the] Indonesian government in finding an acceptable and realistic specification.” – Leonard Zeid, president, ISRI’s PSI chapter

“Indonesia has been a growing market for our members since the potential closure of the Chinese market,” says Leonard Zeid, president of ISRI’s PSI Chapter and executive vice president and director of the brokerage division at Midland Davis Corp., Moline, Illinois. “An increase in total scrap exports of 130 percent [went to Indonesia] between 2017 and 2018—1.7 million metric tons.”

He says it’s possible other countries in the Association of Southeast Asian Nations (ASEAN) community could implement similar standards if Indonesia’s pending import restrictions go into effect.

ISRI President Robin Wiener led the ISRI delegation, which included three ISRI members—Zeid, Peter Kong of Genesis Resource Enterprise of Mountainside, New Jersey, and Janet Goh of SIHU (Singapore) Pte. Ltd., part of Genesis Resource Enterprise. Simon Ellin of The Recycling Association also participated in the trip, representing the U.K. recycling industry.

“Export markets are a huge issue in the U.K., as well,” Zeid says. “Having Simon there helped us to emphasize the global importance of the issue.”

Zeid says the ISRI delegation’s goals included gaining a deeper understanding of the underlying issues behind the new rules, attempting to make the final impurity levels in Indonesia’s new rules consistent with prohibitive levels in ISRI’s specifications and discussing trade issues with the U.S. Embassy leaders and staff to enlist their help.

“Indonesia has been a growing market for our members since the potential closure of the Chinese market.” – Leonard Zeid, president, ISRI’s PSI chapter

During the two-day visit, ISRI reports that its delegation met with representatives from the Indonesian Ministry of Environment, Indonesian Pulp & Paper Association (APKI) and KSO Sucofindo, which oversees the implementation of preshipment inspections for commodities, including scrap. While there, the APKI affirmed to the delegation that the country’s paper industry depends on recovered fiber imports to meet its raw material needs.

“APKI put forward their own proposal to the Indonesian government,” Zeid says. “Their proposal included some of the same things we’ve talked about, including registration and certification of suppliers. They were suggesting a 5 percent maximum impurity level, but their proposal also included proper management disposal of impurities by the mills.”

With these discussions, Zeid says it’s important to figure out clear definitions for terms such as “prohibitives” and “impurities.” ISRI has said its specifications might need to be modified to help better address export transactions. In meetings with Indonesian government groups, Zeid says they reported legitimate reasons for wanting to further restrict scrap imports.

He says KSO indicated the nation’s impurity levels likely would be raised slightly from the 0.5 percent level, only to be lowered over time to 0.5 percent. Zeid says the timeline of that transition has not been finalized, but it’s likely that the initial restriction will start by November at the latest.

Zeid concludes that it’s incumbent upon recyclers in the U.S. to make sure the products they export are of high quality. “Otherwise, we’ll endanger our ability to trade our scrap throughout the world,” he says. “It’s important that we work with [the] Indonesian government in finding an acceptable and realistic specification. I’d like for the ISRI specs to be used globally so there aren’t different specs in every country.”