Indonesia: Small Cigarette Factories Facing Bankruptcy

Source from:  Tempo Magazine (id)  01/08/2013

Small cigarette factories are overwhelmed by the increase in clove prices, which have reached Rp120,000 per kilogram. Small cigarette factories are incurring losses and some are facing bankruptcy, said Indonesian Cigarette Industries Society Forum (Formasi) executive director Heri Susianto on Monday, January 7.

Heri added the increase in clove prices has been occurring since August 2012, while demands from cigarette producers remain between Rp60,000 and Rp80,000 per kilogram. On the other hand, small-scale cigarette factories can only afford to buy cloves for Rp70,000 per kilogram.

The increase in clove prices has been caused by heavy rain in regions where clove plantations are located, leading to a drop in clove production. Meanwhile, demand for cloves as a raw commodity by cigarette factories is stable. Enditem