Govt likely to revise downward 2003 excise revenue target<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The government is likely to revise its 2003 excise revenue
\ntarget due to the declining demand for cigarettes on the market
\nand troubles in several regencies that ban the sale of alcohol,
\nan official said.<\/p>\n
Excise director at the Directorate General of Customs and
\nExcise Erlangga Mantik told The Jakarta Post on Friday that the
\ngovernment's excise revenue during the first semester of this
\nyear might reach only around Rp 11 trillion (US$1.3 billion), or
\n41 percent from this year's target.<\/p>\n
\"With the current unfavorable market, I think we have to
\nrecalculate our excise revenue target for this year,\" said
\nErlangga.<\/p>\n
This year's excise revenue is estimated at Rp 27.9 trillion
\n(about US$3.3 billion), which accounts for more than 10 percent
\nof the projected 2003 tax and excise revenue of Rp 241.7
\ntrillion.<\/p>\n
The cigarette industry, comprising clove and non-clove
\ncigarette manufacturers, usually contributes 98 percent of the
\ngovernment's excise revenue. The remainder is contributed by the
\nalcohol industry.<\/p>\n
Erlangga said the country's cigarette companies were currently
\nhaving difficulties in maintaining their production over the
\ndwindling demand on the market due to the people's declining
\npurchasing power.<\/p>\n
Thus, he added, his office would propose to the House of
\nRepresentatives Commission IX for state budget and financial
\naffairs around September to review the excise target.<\/p>\n
The latest report from the Central Statistics Agency (BPS)
\nshows that the first quarter's household consumption declined by
\n1.23 percent from the previous quarter. Analysts said the decline
\nwas caused by an increase in unemployment.<\/p>\n
Since 1999, the government has hiked the excise-related clove
\ncigarette prices five times. For example, the price of machine-
\nmade clove cigarettes has been raised from a range of Rp 110 to
\nRp 225 per cigarette in 1999 to a range of Rp 320 to Rp 400 at
\npresent.<\/p>\n
The Association of Clove-Blended Cigarette Manufacturers
\n(Gappri) has urged the government to cut the excise tariffs in
\norder to help the ailing industry recover.<\/p>\n
According to the association, the number of clove cigarettes
\nproduced by Gappri members in 2002 declined to about 170 billion
\nsticks from about 187 billion in 2001.<\/p>\n
Cigarette companies such as PT H.M. Sampoerna and Indonesia's
\nlargest cigarette producer PT Gudang Garam are also experiencing
\nwoes.<\/p>\n
Sampoerna, for example, recorded a decline in its first
\nquarter sales to Rp 3.4 trillion from Rp 3.7 trillion in the same
\nperiod last year.<\/p>\n
Although Gudang Garam booked a first quarter increase in its
\nsales to Rp 5.8 trillion from Rp 4.6 trillion in the same period
\nlast year, the company's net profit tumbled to Rp 785 billion
\nfrom Rp 835 billion due to the increase in sales cost.<\/p>\n
Gudang Garam contributes around 30 percent to the government's
\nexcise revenue.<\/p>\n
Not just from cigarettes, according to Erlangga, the
\ngovernment's excise revenue was also affected by the persisting
\nlow sales of alcoholic drinks due to several regencies' policies
\nin banning the products for religious reasons.<\/p>\n
Erlangga said sales of alcohol was originally expected to grow
\nthis year so that the excise revenue could increase.<\/p>\n
The agency has asked the Directorate General of Fiscal Balance
\nfor the Central Government and Regional Administrations to help
\nannul the policies.<\/p>",
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"sponsor": "Okusi Associates",
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