Cigarette factories contribute to development efforts

By Tedy Novan, Ahmad Solikhan and Angger Jatiwijaya

KUDUS, Central Java (JP): Passing through this town, we get the sensation of entering a large area full of billboards. From the town gates and the street light poles to the town's tower and Masjid Agung, the biggest mosque in town, we see pictures advertising myriad cigarette brands.

Formal institutions like police stations, public notice boards and the calendar of the local government have also become advertising sites for cigarette factories. Ballyhoos of various sizes are everywhere in public places. It is therefore not an exaggeration to say that this historic town, which was a key witness to the spread of Islam on Java, is known as kota kretek (town of clove cigarettes).

The Association of Indonesian Cigarette Factories recorded that last year Kudus had 25 mid- and upper-sized cigarette factories and 61 small-scale (home industry) cigarette manufacturers. Some of them have operated for decades, including Bal Tiga, who has since the 1920s exported his products to 10 European countries.

Data issued by the Kudus administration shows that the total production of all the factories is more than 35.8 billion cigarettes a year, consisting of 20.901 billion manually produced clove cigarettes, 14.852 billion machine produced clove cigarettes and 47.79 million klobot (tobacco wrapped in a corn leaf) cigarettes. It is from this production that Kudus, an area of 425.15 square kilometers, the smallest regency in Central Java, is able to pay the central government more than Rp 2 billion rupiah (US$250,000) in taxes per day.

Officially though, through a ministerial level regulation, the tax on cigarette factories in the form of excise does not ever enter the local government's coffers.

However, the contribution of the cigarette factories in the development of the Kudus regency has been sizable.

"Since 1976 the cigarette factories have been involved in environmental programs in this region, such as the greening program and the planting of trees lining the streets in Kudus," said Dewi, a public relations employee at the Djarum cigarette factory.

Moreover, various regional administration-related events, like National Games (PON) and the funding of sports education, are an obligation for cigarette factories.

They also build public facilities and become permanent donors for celebrations, cultural events, the Armed Forces' civic mission in rural areas and social contributions which are given on a near-weekly basis.

The most evident contribution of the cigarette factories is the provision of jobs. According to Sigit Tejo, spokesman of the Kudus regional administration, of the 666,216 residents in the regency, 42,939 work at cigarette factories.

The role and contribution of cigarette factories to regional development can also be seen in Kediri regency in East Java, another clove cigarette-producing area.

According to Sudarno of the Kediri Cigarette Factory Association there were about 100 cigarette factories in Kediri in 1969. Now, only 11 remain in production. The biggest among them is Gudang Garam, which was established in 1958.

Gudang Garam, now seemingly the symbol of the town of Kediri, employs 30,500 female and 12.250 male workers. Its annual tax contribution amounts to Rp 1,768 billion.

"We also give contribution to the Kediri regional administration in the form of building permit tax and property tax," said Mochammad Djamal, a Gudang Garam spokesman.

Other contributions to the Kediri regional administration are not different from those of the cigarette factories of the Kudus region. Gudang Garam even asphalted the main roads to all its factory units and built Gedung Nasional, a building on Jl. Maj. Gen. Sungkono.

Both Sigit and Djamal have admitted that besides the official contributions for development programs and public facilities, there is the tradition of giving upeti (tributes) to regional administration officials. "This should not be interpreted incorrectly. It is to maintain good relations," Djamal added.

The pattern of relations between cigarette factories and the regional administration, results in the companies continuing to enjoy a good standing. They have the power to codetermine the formation of the administration's apparatus in the regency. It is thus not surprising that becoming the All Indonesia Workers Union functionary in the cigarette factories is often a closely contested struggle.

That is another aspect of the dynamics of the operation of cigarette factories in Kudus and in Kediri, and their involvement in the development process. With their substantial role, and their economic position guaranteeing the livelihood of thousands of workers, the cigarette factories exert a strong influence on the government.