TEMPO.CO, Jakarta - The government is asked to consider about labor factors before closing down cigarette factories that are negligent to pay their tobacco excise duty. The excise duty is indeed an obligation that every cigarette company must comply to, but law enforcement methods taken by the government should consider the industry's future.

"The significantly high excise rate is causing mass layoffs tobacco industry centers," House of Representatives' (DPR) Commission XI member M. Misbakhun said in a statement, Wednesday, Setember 28, Bisnis Indonesia reported.

According to data from the Finance Ministry's Customs Directorate General, the government has shut down 3,915 cigarette factories from 2007 to 2016. The shut-downs were done after the authorities conducted physical and administrative supervisions.

Isbakhun said the government must exempt certain industries from being levied with the excise, particularly the hand-roll cigarette business. This industry, he said, is very burdened by the excise rate increase of 12-16 percent last year.

"I hope the government could empathize with our tobacco industry's conditions today. The 2017 State Budget is targeting a tobacco tax increase to Rp149.8 trillion, and this is a tough condition for the industry," he said.

The Golkar Party politician argued that high excise could lead to the illegal cigarettes distribution, which could incur a state loss of up to Rp9 trillion.

According to the government's data, the circulation of illegal cigarettes remains widespread in 2016. The Customs DG recorded to have cracked down 1,300 cases of illegal distribution of cigarettes.

"The higher the excise duty, the greater the potential for factories to die—starting from the bottom up. The higher the excise duty, the greater the potential for cigarettes smuggling," he said.

BISNIS.COM