Revocation of cigarette bank guarantee urged

Revocation of cigarette bank guarantee urged

JAKARTA (JP): The Indonesian Association of Cigarette
Manufacturers (Gappri) yesterday urged that the government to
revoke a requirement on the banking guarantee for the procurement
of excise stamps.

The association's spokesman, Djuffan, said in a hearing with
the House of Representatives' Commission VII that the banking
guarantee requirement is burdensome for small cigarette
producers.

He said that most of the association's 114 members are small
producers.

Furthermore, there are about 700 small cigarette producers
which are not registered as association members, he added.

Cigarette producers have to provide funds at banks as a
guarantee for any order for excise stamps and the order for the
excise stamps is addressed to the Directorate General of Customs
and Excise by enclosing a document of the banking guarantee.

He said that the guarantee funds could otherwise be used to
strengthen capital structures, particularly those of small
producers.

"The guarantee costs cigarette producers about 2 percent of
the total order of the excise stamps," Djuffan told the
commission for finance, trade, cooperatives and logistics.

An association report showed that the production of the
association's members increased steadily to 156 billion
cigarettes in 1994 from 83 billion in 1985, while their expenses
for excise stamps increased to Rp 2.7 trillion ($1.2 billion)
from Rp 768 billion.(kod)