Cigarette factories contribute to development efforts

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.