"We plan to propose a judicial review with the Constitutional Court on the planned implementation of the 2009 Finance Ministry regulation on tobacco product excise," Formasi secretary Johanes Paulus Suhardjo told The Jakarta Post on Tuesday.

The plan to take legal action was made after forum members walked out of a meeting with the Customs and Excise Directorate General in Jakarta on Monday, which was intended to familiarize the sector with the new regulation, Paulus said.

The regulation, issued Nov. 16, 2009 also regulates retail prices of cigarettes, a change which the forum says will burden small-scaled cigarette producers.

The forum will also call for a judicial review of the 2008 Finance Ministry regulation on cigarette excise, which was issued in December 2008 and came into effect in February 2009, he said.

Formasi had also chosen to take legal action after learning that the proposal to increase cigarette excise in 2010 had not been made with approval from either the association of Indonesian cigarette factories (Gappri) or the association of Indonesian light cigarette producers (Gaprindo), but from large-scale tobacco industries, Paulus said.

"The Gappri chairman corrected the Customs and Excise director general's statement yesterday, explaining that his organization had never proposed an increase in the cigarette excise in 2010. The government must change the decision," he said.

Formasi's 512 members, Paulus said, would face bankruptcy if the excise was increased next year, resulting in possible mass layoffs of more than 35,000 workers in the sector.

In 2009 the excise increased 30 percent on 2008 levels, and the government plans to increase 2009 excise levels 62.5 percent next year, he said.

Separately, Malang Industry and Trade Agency head Sjakur Kullu said his office could do nothing to help the 300 cigarette factories in the region, arguing that the regency administration was in no position to change state fiscal and financial policies.

The regency administration also had no plan to anticipate possible impacts of the implementation of the 2010 excise hike.

"We will just direct them to convey their arguments to the Finance Ministry, the House of Representatives and other competent parties," Sjakur said.

"It is completely up to the central government. We don't want to be involved," he said.

However, Sjakur said he hoped the central government would listen to the small-scale cigarette industries, adding that they would be the hardest hit by the new excise.

Sjakur acknowleged that there could be possible layoffs following the increase of the excise next year.

"Just wait and see what happens after the regulation is introduced," he said.

Small-scale tobacco industries in the regency need to improve their management to prepare themselves for competition with larger producers, Sjakur added.

The statements raised concerns among cigarette producers in the region, since the regency administration was seen to be washing their hands of the case, despite it receiving Rp 26.3 billion from tobacco excise annually, some of which was contributed by small industries.

Malang regency is home to 374 small, medium and large cigarette companies, which employ around 32,000 workers.

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