RI's 2005 tobacco demand to rise: USDA

RI's 2005 tobacco demand to rise: USDA

Claire Leow, Bloomberg/Jakarta

Indonesia's tobacco imports may rise by 9.5 percent this year because of increased demand and smaller acreage planted with tobacco, a report by the U.S. Department of Agriculture's foreign agricultural service said.

Indonesia's domestic consumption is forecast to rise by 0.52 percent to 151,450 metric tons of the leaf used to make cigarettes, from 150,663 tons last year, the annual report said.

With the 5 percent reduction in the area planted with tobacco in Indonesia, the country will need to import 37,131 tons this year from 33,919 tons in 2004, the report said.

Indonesia doesn't have age restrictions on the sale of cigarettes and allows smoking in restaurants and bars. More than 69 percent of Indonesian men older than 20 smoke regularly, the World Health Organization estimates.

Clove cigarettes account for about 90 percent of sticks sold each year in Indonesia, according to industry association Gappri, which estimates 141 million of the country's 238 million people are smokers.

Taxes on cigarettes are important to the cash-strapped government's national budget. The government sets the minimum price at which cigarette makers can sell and uses the price as a benchmark to levy excise duties.

In March, New York-based Altria Group Inc., owner of the world's biggest tobacco company, Philip Morris International, completed its purchase of 40 percent of Indonesia's third-largest cigarette maker PT HM Sampoerna.