New firm 'controls' clove supply<\/p>\n
JAKARTA (JP): The nation's cigarette manufacturers are still
\nunder an unofficial obligation to buy their cloves from one
\nsupplier, PT Kembang Cengkeh Nasional (KCN), the chairman of the
\nAssociation of Indonesian Cigarette Companies said yesterday.<\/p>\n
Ismanoe Soemiran confirmed that the association's members
\nwere unofficially required to buy cloves from the firm --
\ncontrolled by President Soeharto's youngest son Hutomo Mandala
\nPutra -- as a prerequisite to purchase excise stamps from the
\nDirectorate General of Customs and Excise.<\/p>\n
Under an agreement for a bailout arranged with the
\nInternational Monetary Fund to salvage the country's ravaged
\neconomy, the clove-trading monopoly must be ended by June.<\/p>\n
\"That's all right, we are still in the transition period.
\nMoreover, such an arrangement benefits small cigarette
\ncompanies,\" Ismanoe told The Jakarta Post from his home in
\nLawang, East Java, yesterday.<\/p>\n
A front-page report in the April 27 edition of Kontan business
\ntabloid, which hit newsstands yesterday, said most cigarette
\ncompanies were bound by one-year or longer purchase contracts
\nwith KCN.<\/p>\n
If cigarette companies do not buy cloves from KCN, they are
\nreportedly unable to purchase excise stamps from the customs and
\nexcise office.<\/p>\n
A cigarette businessman told the tabloid that the new clove
\ntrading arrangement was no different from the period when the
\nClove Marketing and Buffer Stock Agency (BPPC), defunct under the
\nagreement with the IMF, monopolized the clove trade.<\/p>\n
BPPC was also controlled by Hutomo Mandala Putra.<\/p>\n
\"Before, in the era of BPPC, clove purchase receipts (from the
\nagency) had to be enclosed. Now, excise officials confirm it by
\ntelephoning KCN whether I bought cloves from that company,\" the
\nbusinessman said.<\/p>\n
\"The rules of the game are exactly the same. The people and
\nthe contact telephone numbers to buy cloves from KCN are exactly
\nthe same.<\/p>\n
\"Only the name now is not BPPC anymore.\"<\/p>\n
This trading arrangement, Kontan said, was designed to keep
\nKCN -- currently with about 167,000 tons of clove stocks,
\ninherited from BPPC -- in business.<\/p>\n
Director General of Customs and Excise Soehardjo Soebardi
\ndenied, however, that his office operated under such an
\narrangement.<\/p>\n
\"That's totally untrue. Nevertheless, I will check it in the
\nfield,\" Soehardjo told the Post yesterday.<\/p>\n
Ismanu said the new clove trading arrangement with KCN
\nbenefited around 380 small cigarette companies, including his
\nRetjo Pentung in Tulung Agung, East Java, because they did not
\nhave ready stocks of cloves and were therefore heavily dependent
\non KCN's supply.<\/p>\n
The 380 small companies consumed about 10,000 tons of cloves
\nper annum, compared to 90,000 tons of cloves consumed by three
\nlarge and five medium cigarette companies annually.<\/p>\n
The three large cigarette companies are Gudang Garam,
\nSampoerna and Djarum Kudus; the five medium firms are Noroyono,
\nSukun, Grendel, Filasta and Bentoel.<\/p>\n
\"We have got used to the trading system under BPPC. Therefore
\nwe need a transition period toward a free market. Otherwise, many
\nof us, especially the small ones, would die,\" he said.<\/p>\n
BPPC was granted the clove-trading monopoly in early 1991.
\nFarmers were then required to sell their cloves to the agency
\nthrough primary cooperatives, Puskud and Inkud, and producers of
\nclove-blended cigarettes had to buy their cloves from the agency.<\/p>\n
In compliance with the IMF agreement, President Soeharto
\nliberalized clove trading through Presidential Decree No.
\n21\/1998.<\/p>\n
Minister of Cooperatives and State Enterprises Subiakto
\nTjakrawerdaya subsequently said the government would help
\nmaintain the clove-trading system by requiring farmers to sell
\ntheir cloves to primary cooperatives.<\/p>\n
Primary cooperatives would then sell the commodity to the
\nAssociation of Primary Cooperatives (Puskud), which would in turn
\nsell the cloves to the Confederation of Primary Cooperative
\nAssociations (Inkud). Inkud would be responsible for selling the
\nproduct to customers, including cigarette manufacturers.<\/p>\n
This arrangement has been widely criticized as an effort to
\nmaintain the clove trading monopoly. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/new-firm-controls-clove-supply-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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