Global Value Chain Analysis and Demand Analysis for Indonesia’s Pulp Export

This paper analyzed the determinant factors of the Indonesia’s pulp export, whether it is affected by internal or external condition. Data during the period of 1997-2006 is analyzed descriptively and econometrically using global value chain analysis and demand analysis with fixed effect model of panel data to give a comprehensive insight. The internal condition shows pulp industry in Indonesia is dominated by three integrated pulp and paper companies that supply for 73.3% of total pulp production. In general, pulp mills get wood as the input of production from HTI and IPK due to limited supply timber from natural forest. Thus development of HTI remains an important element to ensure the input since the total production capacity is growing from increasing in utilization rate and establishing of new pulp mills. From the external condition, price seems important. However, due to a common mechanism in pulp market where the producer has a contract in advance with the buyer then changing in price does not directly affect export of pulp. The only statistically significant factor of pulp export is population. Here, Indonesia benefits from highly populated countries.