Indonesia’s Association of Cigarette Producers and the Industry Ministry have rejected a proposed plan by the Finance Ministry to raise the retail price of cigarettes from March, and to impose a new tax on cigarettes in July.

The move was also rejected by the Indonesian Chamber of Commerce and Industry, the Workers' Association, the House of Representatives and the regional administrations of East Java and Central Java, which are the nation’s largest cigarette producing provinces.
The finance ministry is reported to have said that the retail price of cigarettes will be raised by 7 per cent on 1 March 2007 and that a special tax will imposed in July. It aims to generate Rp 42.03 trillion ($4.6billion) in revenue from tobacco taxes this year, a 10 percent year-on-year increase.
The industry minister Fahmi Idris said last week that Indonesia is reluctant to sign the Framework Convention on Tobacco Control  (FCTC), which is aimed at cutting cigarette consumption, amid concerns about the impact on the developing country's economy. Indonesia's $8 billion tobacco industry supports about 7 million people and accounts for about 10 per cent of the country's tax revenue. (pi)