Dec 28, 2005. /Lesprom Network/. After enjoying two years of growth, Taiwan's paper-making industry will see its annual output decline by 2.7% year-on-year to reach 4.95 million metric tonnes in 2005 from 5.18 million metric tonnes in 2004. The output drop is mainly caused by the hikes in energy prices and transportation costs, and the relocation of many producers. Tsai Tung-ho, chairman of Taiwan Paper Industry Association, stated that the ups and downs of the paper-making industry has close relations with the growth of gross domestic product (GDP), which is expected to post a lower growth of 3.8% in 2005 than in 2004. Despite the 2.7% year-on-year decline in output and a 5% cut in domestic sales, the industry is expected to see exports grow between 3.5% and 4%, indicating it still retains export competitive edge. Mainland China is expected to stand as the largest export outlet of the industry by absorbing 60% of the total output in 2005. At present, Taiwan's paper makers are able to account for 70% of total domestic consumption. But the total domestic paper consumption is expected to decline by 4% annually this year, especially in the items of industrial-use paper and wood-free printing and writing paper. Taiwan Paper Industry Association said the decline in consumption could be attributed to the domestic economy tilting toward services and high-value-added industries. The industry said domestic paper makers would see a decline in profitability in 2005, because they are incapable of passing the hikes of energy prices and transportation costs onto downstream customers. Mr. Tsai noted energy accounts for approximately 10% of the industry's overall operating costs, only behind raw materials. As Taiwan has entered the World Trade Organization, Mr. Tsai called for domestic paper makers to pay more attention to maintaining market orders securing a sound development of individual producers.