April 9, 2010 / 11:23 AM / 9 years ago

Indonesia to raise 2010 cigarette excise revenue target

JAKARTA, April 9 (Reuters) - Indonesia plans to lift its 2010 revenue target from cigarette excise to 58.3 trillion rupiah ($6.44 billion), a finance ministry official said on Friday, up about 7 percent from last year, to offset lower production.

The finance ministry had set an initial target of 57.3 trillion rupiah, up from a target of 54.5 trillion rupiah in 2009.

“Finance Minister Sri Mulyani (Indrawati) has asked to increase cigarette excise to 58.3 trillion rupiah, from an initial target set in the 2010 state budget of 57.3 trillion rupiah,” Bachtiar, excise director at the finance ministry, told reporters.

The increase in cigarette excise is in line with the government’s aim of controlling cigarette output for health reasons, Bachtiar said. The measures include limiting production to a maximum of 260 billion sticks by 2015. Indonesia produced 245 billion sticks in 2009.

The tobacco industry plays an important role in Southeast Asia’s biggest economy, as it provides millions of jobs while excise taxes on cigarettes account for about 10 percent of government revenue.

Analysts have said that higher excise and lower cigarette output would probably reduce sales and profits for cigarette companies which include PT Hanjaya Mandala Sampoerna (HMSP.JK) and PT Gudang Garam (GGRM.JK).

Indonesian cigarettes are among the cheapest in the world, priced at around $1 a pack.

Some cities in Indonesia, including Jakarta, have banned smoking in public places, but the rules are widely ignored. ($1 = 9,055 Rupiah) (Reporting by Yayat Supriatna; Writing by Fitri Wulandari; Editing by Sara Webb)

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