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Apindo Says Cigarette Excise Hike May Spark Illegal Trade

Translator

Dewi Elvia Muthiariny

Editor

Mahinda Arkyasa

12 August 2024 20:02 WIB

TEMPO.CO, Jakarta - The Indonesian Employers Association (Apindo) raised concerns over the impact of increased tobacco excise (CHT) for cigarettes. The organization argued that the annual excise hike which exceeds inflation rates, could fuel the illegal cigarette trade.

“We can see that it has increased so high. The yearly hike is above inflation rates,” said the Head of the Micro, Small, and Medium Enterprises (MSMEs) Division of Apindo, Ronald Walla, at the MSMEs Ministry on Monday, August 12, 2024.

He added that the excise hike would also lead to potential revenue losses for the government.

In order to suppress the number of active smokers among children, President Joko Jokowi Widodo approved a 10% hike in excise tax on cigarettes in 2023-2024. Finance Minister Sri Mulyani explained that it affected the machine-made kretek cigarettes (SKM), and hand-rolled kretek cigarettes (SKT).

Despite the tax hike, the number of cigarette factories has increased significantly. Data from the Directorate General of Customs and Excise revealed a surge from 1,214 factories in early 2022 to 1,723 factories in June 2024. “There is an increase of 509 factories,” Nirwala Dwi Heryanto, Director of Communication at the Customs and Excise DG, said on Monday, August 5, 2024.

Meanwhile, Statistics Indonesia (BPS) reported a 28.62% smoking rate among Indonesians aged 15 and above in 2023. The largest number of smokers, as reported by Tempo magazine in the August 12-18, 2024 edition, was in the 35-39 age group at 35.21 percent, while the youth group (15-19 years) had a rate of 9.62%. The Health Ministry's 2023 Indonesian Health Survey found 70 million active smokers, including 7.4% aged 10-18 years.

IKHSAN RELIUBUN | KHAIRUL ANAM

Editor's Choice: Indonesia's Single Cigarette Sales Ban: Health Ministry, Customs Welcome New Regulation

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