Local cigarette production to fall<\/p>\n
JAKARTA (JP): The Association of Indonesian Cigarette
\nProducers estimated yesterday that the country's cigarette output
\nand sales would fall between 25 percent and 30 percent this year
\ndue to higher prices.<\/p>\n
Association chairman Ismanu Soemiran said cigarette sales in
\nthe domestic market had fallen by 30 percent in the past three
\nmonths.<\/p>\n
\"The downfall in sales will continue due to higher prices,\" he
\nsaid in a hearing with the House of Representatives Commission V
\nfor for industry, mining, trade, manpower, cooperatives and the
\nenvironment.<\/p>\n
He estimated that the sales volume of cigarettes in the
\ndomestic market in the 1998\/1999 fiscal year, which ends next
\nMarch, were projected to fall by 25 percent from about 220
\nbillion cigarettes in the last fiscal year.<\/p>\n
\"In the current situation where most people's buying power is
\ndeclining, the rise in prices makes cigarettes too expensive,\" he
\ntold the House members in the hearing.<\/p>\n
In April, the government issued a decree which increases the
\nretail prices of cigarettes.<\/p>\n
The decree states, among other things, that companies with a
\nproduction of up to 15 million cigarettes per year are required
\nto increase their prices by 50 percent to Rp 45 from Rp 30, while
\nthose producing above 15 million to 2.5 billion a year are
\nrequired to increase their prices by 50 percent to Rp 60 from Rp
\n40 previously.<\/p>\n
Price increases for companies which produce more than two
\nbillion cigarettes a year are set at above 100 percent.<\/p>\n
Ismanu said the country's cigarette production would decline
\ndue to the increase in production costs and the high excise
\nimposed by the government which have forced cigarette makers to
\ncut production.<\/p>\n
\"The increase in production costs is because we use imported
\nmaterials such as cigarette paper,\" he said.<\/p>\n
The excise on cigarettes ranges from 2 percent to 36 percent
\ndepending on the size of each cigarette manufacturer's
\nproduction. Cigarette companies which produce above five billion
\ncigarettes a year have to pay excise of 35 percent of the retail
\nprice. Small-scale cigarette makers, producing less than 150
\nmillion cigarettes a year, pay 2 percent excise.<\/p>\n
Ismanu added that Indonesian cigarette makers would face a
\nscarcity of cloves this year due to bad harvests in the country.<\/p>\n
He said this years' clove harvest was expected to reach only
\n80,000 metric tons, down from about 150,000 tons last year.<\/p>\n
This year, Ismanu added, Indonesian cigarette makers would
\nconsume 113,000 tons of cloves, 90 percent of which would be
\nconsumed by three large and five medium-scale cigarette
\ncompanies. The remaining 10 percent would be consumed by over 300
\nsmall-scale companies. (gis)<\/p>",
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"sponsor": "Okusi Associates",
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