Kediri relies on cigarette company for progress

Kediri relies on cigarette company for progress

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The East Java town of Kediri has been named as one of the two
cities considered as the most attractive investment destinations
in the country for 2004, according to an annual survey conducted
by the Regional Autonomy Watch, a non-governmental organization
specializing in research on regional autonomy implementation.

The Jakarta Post's Indra Harsaputra went to the city to find
out more.
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Every morning at 8 a.m. Ngasiran, a sidewalk vendor at the
Ngadisimo market in Kediri, packs up his merchandise. He
carefully puts his remaining fruit and vegetables into a box and
mounts it onto his pedicab.

"I'm going home now. I'll be back this afternoon," he told The
Jakarta Post.

Samino, a janitor at the market, said vendors were normally at
their busiest at 5 a.m. and 5 p.m., the times when their main
customers, workers at the local cigarette factory, returned home
and stopped there to buy groceries.

The market, which was built by cigarette company PT Gudang
Garam Tbk. for its workers, is far from fancy. The local
supermarket in the area has a turnover of between Rp 500,000
(about US$55) and Rp 1 million a day and most of the other
traders are micro businesses from the surrounding district.

It does, however, have plenty of potential customers. The
market is located close to the cigarette plant, the biggest
business in the city, which employs around 37,000 people.

Currently the market accommodates around 100 traders and
Gudang Garam says it plans to renovate and expand it further as
part of its commitment to improving Kediri's economy, factory
spokeswoman Nita said.

Despite the market's dilapidated appearance, Kediri people
reportedly have the highest purchasing power in the country. They
are also the biggest producers, with the city having an average
GDP per capita of Rp 87.3 million.

Data from the East Java's Central Statistics Bureau (BPS)
showed Kediri's gross domestic regional product (GDRP) in 2003
reached Rp 21.62 billion, with the industrial sector listed as
the biggest contributor with Rp 15.57 billion, followed by the
trade, hotel and restaurant sectors with a combined Rp 3.38
billion.

Most of this is "clove money" -- Gudang Garam, which has been
operating for more than 40 years in Kediri, contributed more than
Rp 17 billion, about three quarters, of the GDRP.

The company was estimated to indirectly employ almost four
million people in the country and contributed Rp 27 trillion in
cigarette taxes to state coffers annually.

In 2003, Gudang Garam recorded an increase in sales of Rp 23.1
trillion or up 10.5 percent compared to the previous year's sales
of Rp 20.9 trillion. Sales volumes increased to 62.6 million
cigarettes in 2003 compared to 61.4 million in 2002.

Secretary to the Kediri municipality, Zaini, said Gudang
Garam's contribution to the city was huge and the city had become
a popular destination for migrant workers.

However, the increasing number of people moving to the city
had led to more unemployment and the city still had problems
trying to create new accommodation for its citizens.

In 2004, Kediri had 240,979 residents, an increase from 2000's
figure of 238,536.

"To overcome the problem, we have encouraged a family planning
program and we provide employment training programs," said Zaini.

The city processed investors' permits in a one-stop service in
a professional manner and also involved citizens to help form
public policies through an institution called the "City Forum",
which made the administration more transparent and accountable,
he said.

However, Kediri's geographic location, its lack of raw
materials and its inadequate transportation infrastructure still
meant it was difficult for the city to attract new investors,
especially foreign ones, he said.

Data from the East Java Capital Investment Board (BPM) showed
the total domestic investment in Kediri from January to August
last year, stood at Rp 824.9 billion, while foreign investments
accounted for only Rp 33.7 billion.