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Jakarta Post

Towns struggling to recover from cigarette, tobacco addiction

No other city has as much pride as Kediri, East Java, the home to the country’s largest cigarette manufacturer, and mushrooming tobacco home industries

Hans David Tampubolon (The Jakarta Post)
Wed, October 20, 2010 Published on Oct. 20, 2010 Published on 2010-10-20T09:23:25+07:00

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N

o other city has as much pride as Kediri, East Java, the home to the country’s largest cigarette manufacturer, and mushrooming tobacco home industries.

Walking through the streets, Kediri is literally a smoker’s paradise where people are easily spotted in every corner enjoying a puff of either branded or non-branded clove cigarettes, known as kretek.

Since 1958, the livelihood of the city’s 250,000 people has depended mostly on PT Gudang Garam — and its trickle-down effect on the local economy — founded by Chinese-Indonesian entrepreneur Surya Wonowidjojo.

Initially employing only 50 people and producing 50 million cigarettes a year in its early days, Gudang Garam now employs almost 40,000 workers and produces more than 70 billion sticks a year at its 514-hectare facility.

Iconic images of the Gudang Garam brand litter the city, ranging from street-side banners, street lighting and a recreational plaza for people to relax in during weekends.


But the hallmark edifice is none other than the Gudang Garam-sponsored sports and event dome Sasana Kridha Surya Kencana, built to commemorate Gudang Garam’s 50th anniversary in 2008.

With a capacity to hold 20,000 people, the dome includes comprehensive sports facilities, including a soccer pitch.

For most residents, Kediri would not be a prosperous and bustling city if not for Gudang Garam.

“Gudang Garam contributes around 70 percent to Kediri’s economy,” Kediri mayor Samsul Ashar said. Samsul is also the city’s senior physician.

But as more restrictions are introduced to reduce the nation’s cigarette consumption, Kediri is becoming increasingly insecure of its economic fate.

Samsul said the town’s dependence on Gudang Garam’s was a warning bell that prompted the administration to move to develop other sustainable industries in preparation for a decline in the cigarette business.

“We have to create a better balance between the cigarette industry and other industries that are now being developed,” Samsul said. “We realize there is always the possibility that Gudang Garam may leave, and we have to be prepared for that.”

One of the alternatives being prepared, he said, was the health and education industries. However, the efforts remain at a conception stage and have not taken off.

Samsul urged the central government and legislators to study the potential fallout in more depth before deciding to slap more restrictions on the cigarette industry, including in the deliberation of the tobacco control bill.

“Such deliberations affect the cigarette industry that Kediri is still heavily dependent upon.”

“As a doctor, I agree there should be regulations on controlling tobacco consumption. However, it must be made in the most appropriate manner,” he said.

Despite Gudang Garam’s influence, Samsul denied allegations that the company was a major donor to his election campaign and that of local councilors.

While Kediri is the hub of the cigarette industry in East Java, Kudus is a major cigarette-producing town in Central Java that is home to PT Djarum and PT Nojorono, the nation’s third- and fifth-largest producers, respectively.

Similar to Gudang Garam in Kediri, Djarum banners also fill up the streets of Kudus, home to 1.7 million people.

Before Djarum, the cigarette and tobacco industry in Kudus was already established as the city’s backbone since 1870 when Kudus native Haji Djamari invented a cigarette using a mixture of tobacco and cloves as a medication for his chest ailment.

The cigarette, branded Djamari, apparently worked like a charm. He then spread the word that ignited the cigarette industry in the city.

Djarum, which would go on to be the hallmark of the industry, was founded by local Chinese-Indonesian entrepreneur Oei Wie Gwan in 1951.

The head of the Kudus regency data and statistics agency, Dewi Aminah, said the city did not depend on Djarum as much as Kediri depended on Gudang Garam.

“Djarum contributes around 50 percent to Kudus’ economy. However, in the broader scale, the town is extremely dependent on the tobacco industry because we are also home to countless small- and medium-scale manufacturers,” Dewi said.

Dewi also said the city was also looking into alternative businesses to lessen its dependency on the cigarette industry.

“We have rolled out training seminars to develop other industries, such as sewing, textiles and electronics, using part of the cigarette excise proceeds provided by the central government,” she said.

The city has also appealed to the central government and legislators to temporarily halt further restrictions on the cigarette industry, saying it could lead to the city’s economic decline.

“As of June 2010, there were around 150 cigarette manufacturers registered in Kudus. Any policy that could negatively affect them could lead to economic collapse for the town,” Dewi said.

While cigarette-producing cities are gearing up to end their status of being economic hostages to the business, tobacco-growing cities are finding it harder to kick the habit.

Temanggung regency in Central Java has become synonymous with the tobacco plant.

The government’s plan to regulate tobacco usage has raised worries among farmers there.

This is because geographically, Temanggung’s mountainous profile is highly suited to growing tobacco.

Temanggung regency counselor Mukhamdi said there were around 60,000 tobacco farmers living in the regency, and that up to Rp 1 trillion (US$111 million) could exchange hands after each harvest.

But the average tobacco farmer here lives a humble life.

Nasrin, a young farmer whose family has been working in the same profession for decades in Jragan village, said there was no way for him to plant other crops because the returns on other plants were too low.

“I cannot imagine no longer growing tobacco,” Nasrin said. “My family have been tobacco farmers for generations.”

He said his income from tobacco farming was “not much” but was enough to make ends meet for him and his four siblings.

Most farmers in Nasrin’s village live close together in humble medium-sized brick houses with patchy paintwork.

Only a few manage to reap large profits out of the tobacco farming. One of them is Nurohman, the village head.

His house stands out compared to the others, with lavish furniture, well-painted walls and highly polished doors, handles and ornaments.

His house would blend in quite well in Jakarta’s upscale Pondok Indah residential neighborhood.

Like most people in the village, Nurohman’s family have always been tobacco farmers.

“I have been growing tobacco since the late 1980s,” he said.

Nurohman said his success depended heavily on his willingness to invest in modern farming methods rather than traditional ones, and his wise use of the profits.

“I always invest a portion of my profits to buy new land for farming,” he said.

Nurohman said that in a good season, he could produce up to 240 tons of tobacco, which he would sell for between Rp 60,000 and Rp 70,000 per kilogram, generating a profit of around Rp 1 billion per month.

“In a normal or even a bad harvest, the profit could drop by up to 50 percent.”

Nurohman urged the government to ensure that any regulations on tobacco control would not jeopardize farmers.

“We make money by growing and selling tobacco during the first half of the year or in the dry season, after that we don’t have other sources of income because the quality of other crops from Temanggung is not as good as from other regions,” he said.

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