Jakarta – Indonesians do not read books because they are expensive; publishers do not produce books because demand is low.

This vicious cycle has forced hundreds of book publishers to close in recent years. While many have given up, the few publishers who remain say they are caught in a bind between the need to produce books that are affordable to most people and the need to survive as business concerns.

"Book publishing is not a lucrative business. Unless you have some idealism about public education, you won't survive," said Petrus Damianus Subagya, marketing manager of book publishing company PT Grasindo.

A country with a population of more than 210 million should be a top prospect for any industry, including publishing. Yet statistics published by the advisory council of the Indonesian Book Publishers Association (IKAPI) make for dispiriting reading.

Indonesia publishes a mere 4,000 new titles, mostly reference and general books, every year. On average, each title sells only 3,000 copies. The 1997 economic crisis made things worse – 200 publishers have folded in the past four years and now there are only 400 left. Subagya said those who survived were mostly publishers with strong capital, or who efficiently managed, or had other businesses to fall back on during the lean times.

In the quest for making books more affordable, the initiative remains with the publishers, and probably the government, to get Indonesia out of its chicken-and-egg situation, rather than with the people. People's low spending on books and poor reading habits are variables beyond a publisher's control, as are volatile paper prices.

But Mr Subagya said heavy taxation and an inefficient distribution system – two factors that contribute to the high cost of manufacture – were variables that could be controlled. He believed book prices could still be reduced if there was a strong will, particularly from the government. Prices could be cut if the government eliminated or reduced the tax components and applied special prices for paper procured by publishers, and postal rates for shipping books.

All books – except school textbooks, holy books and religious books – are subject to 10 per cent value-added tax (VAT). This is on top of the various taxes already levied on paper and printing materials. Imported books are also subject to another 10 per cent tariff. "We could cut our prices by 10 per cent immediately if the government waived at least the VAT. It's not much but at least it could entice the public," said Mr Subagya.

IKAPI chairman Arselan Harapan agreed the government held the key in the quest for making books affordable.the vote on independence.

The repatriation operation caps months of negotiations involving the de Carvalho family, Indonesian officials, independence leader Jose "Xanana" Gusmao, and N.Parameswaran, chief of staff of the United Nations transitional administration.

Ainaro, in the foothills of the southern highlands, was once a thriving coffee-growing town. It was almost destroyed in the violence that followed the 1999 UN-brokered referendum for self-determination from Indonesia.