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.