Sampoerna CEO Paul Janelle: We Maintain Growth under Pressure

TEMPO.CO, Jakarta-Cigarette producer HM Sampoerna netted a profit of Rp3.1 trillion in the first quarter of this year. The figure represents a 7.6 percent year-on-year growth.

With a market share of 34.1 percent, HM Sampoerna is an issuer with the biggest market cap of Rp462 trillion. The company also tops Indonesia's list of cigarette producers that profited more than Rp10.4 trillion last year.

With these achievements, HM Sampoerna's leader Paul Janelle was named Best CEO by The Global Good Governance Awards 2016 held by consultant firm Pinnacle Group.

In an interview with journalists, including Tempo reporter Pingit Aria, Janelle talked about his vision for the company. Excerpt:

What is your strategy in addressing the government's policy to reduce the number of smokers in Indonesia?

We continue to encourage the government to be fair and balanced. We understand there are health reasons underlining this policy to reduce cigarettes. But we also want people to understand that this is an important industry for everyone involved; not just the company and the employees—but also farmers and merchants. There are three million tobacco and clove farmers, and tens of thousands factory workers. This industry is important for them and their families.

With the many challenges, including production mechanism, will Sampoerna cut down its work force?

We make two types of cigarettes, machine-rolled cloves (SKM) and hand-rolled cloves (SKT). Although SKM has the biggest segment, we try to maintain the SKT business, which absorbs more labor. SKT's portion is currently at 20 percent. That's why the government needs to be careful before raising cigarette duty, as it would affect SKT workers. I predict this segment will still be put under pressure, and we must protect our workers.

Sampoerna shut down two factories in East Java in 2014. Will a decline in the SKT segment lead to the same thing?

So far, no. Despite being put under pressure, we seek to maintain the market share by focusing on certain products—especially because the ratio between SKT and SKM workers is 400 people to 1 machine.

Janelle also talked about new products that were recently launched, and about the fact that Sampoerna still lead's the market in Indonesia with a share of 34.1 percent in the fourth quarter of 2014.

PINGIT ARIA