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)