No more obligations on clove purchases: Official

JAKARTA (JP): Cigarettemakers are no longer required to buy cloves from PT Kembang Cengkeh Nasional (KCN) in order to be able to purchase excise stamps from the customs and excise office, a key government official said yesterday.

Director General of Customs and Excise Soehardjo said that as an implication of the government's agreement with the International Monetary Fund (IMF), the purchase of excise stamps is no longer related to the purchase of cloves.

"There hasn't been any pressure from me to link the purchase of the excise stamps and the purchase of the cloves," he told reporters when announcing a new directive to reaffirm the January 1998 Presidential Decree, and a decree issued by his office in February, which liberalized the purchase of excise stamps.

"So we're back to the mechanism (excise purchase) when BPPC had not been introduced," Soehardjo said. BPPC is the former clove monopoly, the Clove Marketing and Buffer Stock Agency.

Cloves are a major ingredient of Indonesia's aromatic clove- blended cigarettes and the excise stamp is needed to sell the cigarettes.

Under the IMF-sponsored multibillion dollar reform package, Indonesia must dissolve the clove trading monopoly given to BPPC by June.

The government, however, ended BPPC's monopoly status in February as a commitment to accelerate the implementation of the reform package.

But cigarettemakers said that they were still obliged to buy cloves from KCN to enable them to buy excise stamps from the custom and excise office.

Both BPPC and KCN are controlled by Hutomo Mandala Putra, President Soeharto's youngest son.

BPPC was introduced in early 1991, and reportedly enjoyed large profits from monopolizing the clove trade.

In a May 1 directive, Soehardjo ordered all customs and excise offices throughout the country to supply the excise stamps demanded by cigarettemakers and importers of tobacco end-products without associating it to the source of clove purchases.

Soehardjo also denied media reports that he had been told in no uncertain terms by the minister of finance to strictly follow the government's decision to commit to the IMF-sponsored reform package.

"The news is not true. I know that we have to follow the reforms, that's why we've done the right thing," he said, pointing to the decree he issued in February.

He said that the directive was needed so that cigarettemakers outside the capital were well-informed about the new excise stamp purchase mechanism, and to prevent rumors spreading.

"We will send this directive to all cigarettemakers," he said.

He also said that the current 1998/1999 fiscal budget targets Rp 8.7 trillion (US$1.1 billion) in excise revenue.

During the previous fiscal year the excise revenue was Rp 5.3 trillion, higher than the target of Rp 4.8 trillion. (rei)