The Indonesian Cigarette Manufacturers Association (Gappri) has said that tobacco excise hikes during the past three years have resulted in an increase in illegal cigarette trade in Indonesia, according to a tempo.co story.
Gappri’s chairman Ismanu Soemiran was quoted as saying that licit cigarette production had declined in the years following the hikes. “In the past three years, it declined one percent per year,” he said.
“If tobacco excise duty increases next year by 10.04 percent, cigarette production will drop by two to three percent. It would open up even more avenues for illegal cigarette trade.”
In 2010, the illegal cigarette trade was said to have accounted for 6.2 percent of the Indonesian market. That figure rose to 8.4 percent in 2012, 11.7 percent in 2014 and 12.1 percent in 2016.
Ismanu said that another cigarette excise duty increase would make more smokers seek cheaper, illicit cigarettes.
But he said he expected the government to review its plan to increase tobacco excise duty next year.