Indonesia unveils big tobacco excise increases

The Indonesian government has said that it will impose an average 11 percent excise increase on tobacco products next year, according to a story in The Jakarta Post.

Indonesia has seen annual tobacco excise increases of about 11 percent since 2010, but the administration of President Joko Widodo had considered imposing a 23 percent increase next year, in part at least to bolster its flagging income.

But in announcing on Tuesday the 2016 increase, Heru Pambudi, the Finance Ministry’s director general of customs and excise, said tobacco excise was imposed not only for the sake of revenue, but also to control its consumption.

The government has opted not to increase the excise on hand-rolled cigarettes produced by small companies, saying it wants to support labor-intensive industries. And while machine-rolled ‘white’ cigarettes, defined as those not containing cloves in the tobacco mix, will be subjected to the highest excise increase, that rise will not reach 20 percent, according to Heru.

The Post reported that the excise announcements had been made just over a week after President Joko oversaw the signing of a $2 billion investment deal by Philip Morris International, which has a 98 percent stake in H.M. Sampoerna, Indonesia’s biggest cigarette company.