Cigarette too easy to tax: Putera<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Breaking a weeklong silence, the Sampoerna family has spoken out
\nabout the historic sale of 92-year-old cigarettemaker PT Hanjaya
\nMandala Sampoerna to Philip Morris International Inc.<\/p>\n
Putera Sampoerna, the head of the Sampoerna family and chief
\ncommissioner of the company, said his family would not take the
\nmoney from the sale out of the country, but would reinvest it in
\ninfrastructure and other projects in Indonesia.<\/p>\n
In an exclusive interview published by The Asian Wall Street
\nJournal on Monday, Putera explained the reasons behind the sale,
\nsaying the cigarette industry in Indonesia -- the fifth largest
\nin the world after China, the U.S., Japan and Russia -- would get
\ntougher in the future.<\/p>\n
The cigarette industry is "too easy to tax," which constrains
\nprofit, he said in Singapore.<\/p>\n
The 57-year-old executive said the cigarette industry "is not
\ngetting any easier" and excise tax rates on tobacco "are always
\ngoing to go up".<\/p>\n
"If we didn't sell (Sampoerna), we'd have to 'conglomeratize'
\nat some time," he said.<\/p>\n
A report in the Financial Times on Monday quoted Vice
\nPresident Jusuf Kalla as saying the country would increase the
\ntobacco excise due to health concerns and a need for more
\ngovernment revenue.<\/p>\n
Kalla said the largely unfettered cigarette industry would
\nsoon face increased levies to increase government revenue and
\nreduce consumption levels that make Indonesia one of the world's
\nheaviest smoking nations.<\/p>\n
His statements might worry U.S.-based Philip Morris, the maker
\nof Marlboro cigarettes, which announced on March 14 that it had
\nsealed a deal to buy a 40 percent stake in Sampoerna, the
\ncountry's second largest cigarette producer after PT Gudang
\nGaram, for Rp 48 trillion (US$5.2 billion).<\/p>\n
The deal itself, according to Tempo magazine, was signed in
\nThe Dorchester, a plush hotel near Hyde Park in London.<\/p>\n
The Asian Wall Street Journal quoted the media-shy Putera as
\nsaying he became teary when the agreement with Philip Morris was
\nsigned. Until that moment, he said, "I didn't think I was going
\nto sign."<\/p>\n
He signed the deal and said that it was "the right thing to
\ndo".<\/p>\n
Putera also dismissed talk that his family might pull its
\nmoney out of the country as "nonsense".<\/p>\n
"Sampoerna is an Indonesian family and will always have a
\nmajor presence in Indonesia," he said. "I'm Indonesian, I know
\nthe environment, I know Indonesian investment. Where do you want
\nme to go? Go to China? I don't even speak Chinese. Go to America?
\nAnd do what?"<\/p>\n
Putera hinted that he was considering investing in agriculture
\nand infrastructure projects in Indonesia, which he said was "what
\nthe country needs". He said Indonesia "is moving in the right
\ndirection, now is the time we can reinvest".<\/p>\n
Putera referred to political and economical stability, and
\nPresident Susilo Bambang Yudhoyono's focus on infrastructure
\nprojects.<\/p>\n
He said his family would maintain a stake in Sampoerna and
\nthat he had agreed to stay at the company as a senior adviser to
\nthe board "for as long as they want me".<\/p>\n
The cigarette company bears my name, he said, and he "just
\ncan't abandon it".<\/p>",
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"sponsor": "Okusi Associates",
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