GOVT TO LIMIT CIGARETTE PRODUCTION

Jakarta, Dec 7 (ANTARA) - The Indonesian government plans to limit domestic cigarette production as of 2015 to total only around 260 billion pieces in line with its 2007-2020 Tobacco Product Industry (IHT) roadmap, an official said.

"The growth of cigarette production will be flat or up a bit at around three to five billion cigarettes a year," the director of tobacco and beverage industries of the industry ministry, Warsono, said here on Monday.

He said cigarette production in 2008 reached 240 billion and is expected to total 245 billion cigarettes in 2009.

Based on the roadmap, he said, the industry would focus on the aspect of manpower supply and income balance the short-term (2007-2010) period.

The excise system meanwhile will be made simpler through grouping of factory categories, specific imposition of excise duty and the handling of illegal cigarettes, he said.

He said in the mid-term (2010-2015) priority will be put on income and health aspects while in the long-term more priority will be given to the health aspect than manpower and income.

"In every period the health aspect will always be included in line with the Framework Convention on Tobacco Control (FCTC)," he said.

He said the FCTC was aimed at protecting the future generation from the health threat from tobacco/cigarette consumption through the reduction of tobacco/cigarette consumption and production.

The head of the finance ministry's customs and excise II policies, Djaka Kusmartata, meanwhile said that in 2010 the target of income from cigarette excise in the national budget was set at Rp55.9 trillion, up from Rp54.4 trillion in 2009 and Rp49 trillion in 2008.

"The foreign exchange income from cigarette exports in the past five years rose an average of 24 percent," he said.

The government has set the excise duties for tobacco products at an average of 15 percent which will be effective as of January 1, 2010 while import tariff of tobacco products will be set at 40 percent with an excise duty of Rp325 per cigarette, he said.

According to records up to 6.1 million people including two million farmers are involved directly or indirectly in the tobacco/cigarette product industry.

In addition to it, there are also 1.5 million clove farmers relating to the industry and 600,00 workers in cigarette making industry, one million cigerette retailers and one million workers in cigarette-related industries such as printing, advertisement, distribution and transportation services.

Based on the industry ministry's data the number of cigarette makers in the country now reaches 3,250 units and 95 percent of them categorized under small-and medium-sized industries.

The director of seasonal crops of the directorate of plantations of the ministry of agriculture, Agus Hasanuddin, said that his office continued striving to diversify the country's tobacco plantations.

"The government will limit the land used for tobacco plantations. While the land reaches 298.78 hectares in 2009 it will be reduced to 290.6 hectares in 2010," he said.

The ministry of agriculture will conduct counseling on the importance of diversifying tobacco farms into farms of other crops such as coffee or corn.

In general the tobacco product industry roadmap is about how the government accomodates differences in the interests of stakeholders and certainty in doing business.

Agus said what was important was supervision of the allocation of cigarette excise duty for tobacco producers and cigarette makers.

The value of cigarette excise duty in 2009 reached Rp860 billion and in 2010 is expected to increase to around Rp1.1 trillion or around two percent from the target of cigarette excise revenue for 2010 set at Rp55.9 trillion.

Starting next year, the number of cigarette makers and tobacco plantation companies to receive the cigarette excise duty involves 19 regions up from five regions before.

Agus said the funds were meant for increasing campaign on awareness of tobacco farmers on health issue, diversification commodities and improvement of institutions. ***2