Decree on cigarette price hike revised

JAKARTA (JP): The Indonesian government has cut back price increases of cigarettes produced by small companies to give them a chance to survive in the tightening cigarette market.

The Ministry of Finance issued a newly revised decree Monday to reduce the price hike for cigarettes produced by small manufacturers to between 50 percent and 70 percent instead of the 60 percent and 90 percent announced early last month.

The government said the decision was made to protect small and very small-scale cigarette producers from being driven out of business.

The previous price increase was considered too high for small producers because it was feared their products would become too expensive.

The new decree took effect yesterday.

The newly revised decree says, for example, that companies with a production of up to 15 million cigarettes per year are required to increase their prices by 50 percent to Rp 45 from Rp 30, while those producing above 15 million to 2.5 billion a year are required to increase their prices by 50 percent to Rp 60 from Rp 40 previously.

The previous decree, issued by the government on March 9, stipulated that cigarette companies which produce up to 15 million were required to increase their price by 100 percent to Rp 60 while those with a production of above 15 million to 2.5 billion were required to raise their prices also by 100 percent to Rp 80 per cigarette.

Price increases for companies which produce more than two billion cigarettes a year, are being maintained at the previous levels of above 100 percent.

Many cigarette companies hailed the government's new decree because it allows small cigarette producers to continue operating under this worst-hit crisis situation.

The chairman of the Association of Indonesian Cigarette Producers (Gapperi) Ismanu Soemiran said that the government's new revised decree showed that the government was greatly concerned with the fate of small-scale cigarette producers in the country.

The chairman of the Gapperi chapter in Malang, Herman Surjadi, said that the government's new decree would allow small cigarette producers to survive amid the economic crisis.

"The new decree will enable small cigarette producers to maintain their market share in the country's tobacco industry," he said. (aly)