Decree on cigarette price hike revised

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)