Wahyoe Boediwardhana, Malang – Workers at small-scale cigarette producers in Malang, East Java, Wednesday staged a rally at the Malang Customs and Excise Office to protest a ministerial ordinance increasing the basic price of tabacco starting Jan. 1.
The protesters, representatives from 194 small-scale cigarette producers, categorized as Group III, were members of the Malang branch Small Scale Cigarette Producers Association (Parpeki).
They said the regulation had severely affected many small-scale producers that were now unable to pay the wages of cigarette rollers and packaging workers due to higher overhead costs, raw materials and taxes.
The new ordinance imposes a 22 percent tax on machine-rolled kretek cigarettes, on par with filtered hand-rolled kretek cigarettes in the same group, taxes on which ranged between 8 to 16 percent previously.
The ordinance also stipulates a hike in the specific cigarette tax, which is set at Rp 35 per cigarette, compared to the previous Rp 7 for a single cigarette.
"Dozens of small-scale cigarette factories are on the brink of collapse and at risk of closing down. Many factories no longer produce and have retrenched many of their workers," said rally coordinator Widianto.
Widianto, who is also the proprietor of the Wonk Tani Mandiri cigarette factory in Donomulyo district, Malang regency, said he could no longer buy tax stamps for cigarette packs because he could not afford them at the new rate.
He said thousands of hand-rolled and machine-rolled cigarette workers in Malang had been dismissed because their employers could not afford the new tax stamps. "This is the same as killing us slowly. The regulation also will spark rampant sales of fake cigarettes," said Widianto.
Paperki chairman in Malang Muhammad Geng Wahyudi has threatened to stage a bigger rally next week if the government does not heed their complaints.
He said that his company, Ageng Jaya, had been able to buy 1,000 sheets of tax stamps for Rp 62 million, but after the issuance of the ordinance, the price for the same amount of stamps surged to Rp 98 million, excluding the specific tax of Rp 35 a cigarette.
Geng said as many as 97 of the 194 small-scale cigarette producers grouped in Paperki had dismissed a number of workers since December, despite the fact that each of them employed at least 200 workers. Widianto, who employed 50 workers before, can only pay 17 now.
A worker at the Ageng Jaya cigarette company, Purwanti, 35, said her factory had already dismissed a number of workers since December and had also cut working hours, with the factor closing at midday rather than 4 p.m. "Workers have also complained of lower earnings because the company has erased overtime," said Purwanti.
In response to the situation, the local tax and excise office has said it will convey their grievances to the central government through the Directorate General of Customs and Excise.