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Sampoerna invest in new kretek cigarette factories for economic growth

Sampoerna is committed to long-term investment, industrial downstreaming, innovation and employment through economic and social multiplier effects to support Indonesia's economic growth target of 8 percent.

Front Row (The Jakarta Post)
Jakarta
Tue, December 17, 2024

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Sampoerna invest in new kretek cigarette factories for economic growth Investment and Downstream Industry Minister/head of the Investment Coordinating Board Rosan Perkasa Roeslani, greets thousands of employees of PT HM Sampoerna in Surabaya, East Java, during the inauguration of the hand-rolled kretek cigarette (SKT) production facilities of Sampoerna in Blitar and Tegal on Dec. 13.

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T HM Sampoerna (Sampoerna/IDX: HMSP) has inaugurated two new hand-rolled kretek cigarette (SKT) manufacturing facilities in Blitar, East Java, and Tegal, Central Java. The inauguration of the two factories is part of Sampoerna's investment in 2024, which previously also included expanding partnerships with five third-party operators (TPOs) owned by local entrpreneurs and/or cooperatives in East Java and Central Java. With the additional investment, Sampoerna currently has nine factories, including six SKT factories, partners with 43 MPS in various cities/regencies across Java, and overall employs more than 90,000 workers, both directly and indirectly, throughout Indonesia.

Investment and Downstream Industry Minister/chairman of the Investment Coordinating Board Rosan Perkasa Roeslani simultaneously inaugurated Sampoerna’s SKT factories located in Blitar and Tegal online from the Sampoerna SKT factory in Surabaya. He expressed his appreciation for Sampoerna's investment, which has also succeeded in employing thousands of additional workers. "Creating quality jobs is the government's top priority. Sampoerna's role has been extraordinary and in line with our program. One thing I see and feel today is the enthusiasm, passion and happiness of the workers, especially the female hand-rollers. This means that Sampoerna has done something right in improving the welfare of its employees," he said at the inauguration ceremony held in Surabaya on Dec. 13.

"In accordance with President Prabowo Subianto's message, our most important task is to maintain existing investments that employ a large number of workers. Therefore, we will continue to provide support and facilities so that long-term investors such as Sampoerna can continue to invest and develop their businesses sustainably in Indonesia, especially since Sampoerna exports its products to 30 export destinations in Asia Pacific," added Rosan.

"Sampoerna's presence has produced an extraordinary multiplier effect, from farmers, micro, small and medium enterprises [MSMEs] to local suppliers. I am sure that there are hundreds of thousands of people involved in Sampoerna's business chain, both directly and indirectly. Thus, Sampoerna contributes to economic growth, not only in East Java and Central Java, but also nationally," he said.

On the same occasion, acting governor of East Java Adhy Karyono also expressed his appreciation for Sampoerna's series of investments in 2024. "Congratulations and success to Sampoerna on the opening of two new SKT manufacturing facilities in Blitar and Tegal. This investment will increase employment while improving other economic sectors around the factories. East Java's unemployment rate is at a lower level than nationally. A major contribution is thanks to Sampoerna’s SKT sector. I would like to express my gratitude because Sampoerna has contributed to the East Java provincial administration and is always ready if we need support so that they can also help reduce poverty," he said in his speech.

He specifically appreciated the role of thousands of female workers in the SKT sector. "East Java contributes 60 perecent of the country's total tobacco excise revenue. Every year we contribute Rp 129 trillion. This is all thanks to the hard work of all the female workers here," said Adhy Karyono.

"As a company that has been operating for more than 111 years in Indonesia, we are committed to growing together with Indonesia and contributing to the achievement of the 8 percent economic growth target through sustainable investment, innovation, downstreaming and workforce employment. Our investment in the labor-intensive SKT sector is one of our efforts to realize this vision," said president director of Sampoerna Ivan Cahyadi.

Investment and Downstream Industry Minister/head of the Investment Coordinating Board Rosan Perkasa Roeslani signs the inauguration plaque for two new hand-rolled kretek cigarette (SKT) production facilities owned by PT HM Sampoerna in Blitar city, East Java, and Tegal regency, Central Java. The signing was witnessed by the acting governor of East Java, Adhy Karyono (right), and the president director of Sampoerna (left).
Investment and Downstream Industry Minister/head of the Investment Coordinating Board Rosan Perkasa Roeslani signs the inauguration plaque for two new hand-rolled kretek cigarette (SKT) production facilities owned by PT HM Sampoerna in Blitar city, East Java, and Tegal regency, Central Java. The signing was witnessed by the acting governor of East Java, Adhy Karyono (right), and the president director of Sampoerna (left)

The opening of the two SKT factories and the expansion of partnerships with five new TPOs in 2024 are the realization of Sampoerna's investment plan to increase employment. "Our new SKT factories in Blitar and Tegal will employ more than 3,500 new workers, of whom 2,000 have started working now. Among Sampoerna's 90,000 workers, the majority are SKT employees and are dominated by great women," said Ivan.

As a company that started from the SKT sector in 1913, Sampoerna hopes that this investment can strengthen the company's portfolio in this sector. "In our operations, Sampoerna always prioritizes innovation in all lines to maintain business continuity and competitiveness, including in the SKT sector," said Ivan.

The SKT production facilities in Blitar and Tegal complement Sampoerna's four existing SKT factories in Surabaya, Malang and Probolinggo in East Java. Like those four factories, Ivan said the existence of the Blitar and Tegal SKT factories will create a multiplier effect that can be felt by the surrounding community. This is evidenced by the many businesses that have emerged around the factory, ranging from grocery stores, food and beverages stalls and transportation services, to rooming houses.

"In addition, we believe this investment will also continue to maintain the production of tobacco and cloves by Indonesian farmers. Hand-rolled cigarettes require twice as much tobacco and cloves as machine-made cigarettes. The factory inaugurated today is expected to have a positive impact on the progress of national downstreaming through the absorption of local raw materials to produce value-added products," said Ivan.

Ivan appreciated the government's efforts to maintain a conducive and predictable business and investment climate in Indonesia, including policies that encourage the performance of the labor-intensive SKT sector. According to him, these efforts have a direct positive impact on job creation in the formal sector and local economic turnover, which in turn helps improve the national economy.

"We are committed to actively playing a role in strengthening the pillars of the national economy. In the future, we hope to continue to grow together with Indonesia and contribute to economic development through sustainable investment, downstreaming, innovation, employment and added value creation for the society at large," Ivan concluded.

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