Tobacco firms told to restructure<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government repeated on Tuesday its pledge not to raise
\nexcise rates on cigarettes and alcoholic drinks next year to
\nallow the industries to recover from a slump.<\/p>\n
Director general of customs and excise Eddy Abdurrahman called
\non the industries, particularly the tobacco industry, to
\nrestructure their businesses throughout next year and prepare
\nthemselves for an increase the following year.<\/p>\n
\"We know that cigarette companies have been having
\ndifficulties in the past couple of years, thus we give them a
\nchance to undergo business restructuring next year in order for
\nthem to cope with a possible rise in excise rates in the
\nfollowing years,\" Eddy said.<\/p>\n
However, Eddy did not elaborate the kind of restructuring the
\nindustry had to embark on.<\/p>\n
Under the state budget, the government has set a Rp 27.7
\ntrillion (US$3.25 billion) excise revenue target for 2004, up
\nfrom an estimated Rp 26.3 trillion for this year.<\/p>\n
As the excise rate will be frozen next year, the government
\ncan only expect an increase in excise revenue from the rise in
\nthe number of smokers and drinkers.<\/p>\n
Initially, the government targeted Rp 27.9 trillion in excise
\nrevenue from cigarettes this year, but it later revised down the
\ntarget in view of declining sales.<\/p>\n
Cigarette producers blamed the declining sales on the public's
\nweakening purchasing power and the huge rise in retail prices of
\ncigarettes, which was caused by the increase in the excise rate.<\/p>\n
The government has raised excise rates for cigarettes five
\ntimes since 1999. For example, the prices of machine-made clove
\ncigarettes now cost three times more than in 1999.<\/p>\n
Industry players predicted cigarette sales to drop to 186
\nbillion sticks this year, from 204 billion in 2002.<\/p>\n
Some 90 percent of the government's excise revenue comes from
\ncigarette, with the liquor industry contributing the remainder.<\/p>",
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