Tag: Indonesia

  • Hand-rolled production down

    Hand-rolled production down

    Indonesia’s labor-intensive kretek manufacturing industry is said to employ millions

    Production of hand-rolled kreteks in Indonesia fell by 30 percent year-on-year in 2016 due to stricter smoking regulations and the nature of these particular products, according to a story in Indonesia Investments.

    About 55 million Indonesians consume tobacco products and it is estimated that 85 percent of all smokers in the country prefer kreteks to ‘white cigarettes’.

    Djoko Wahyudi, chairman of the cigarette manufacturing association (MPSI), said that the density of the tobacco in hand-rolled kreteks was greater than it was in machine-manufactured kreteks, which meant that it took longer to consume the former than the latter.

    Because of this and because increasing numbers of smokers were having to go outside to have a cigarette, people were tending to buy the product that took a shorter time to finish.

    The hand-rolled cigarette industry in Indonesia has been under pressure for several years anyway because it cannot compete with machine-rolled cigarettes.

    Many jobs have been lost already in this sector and more are likely to follow.

    The government has been trying to lend a helping hand by implementing lower excise rates on hand-rolled clove cigarettes than on machine-manufactured cigarettes, but, this month alone, cigarette excise tax is being increased by an average of 10.54 percent while value-added tax on cigarettes has been raised from 8.7 percent to 9.1 percent.

    Meanwhile, the government’s tobacco roadmap, which included 5-7 percent year-on-year cigarette-production growth rates between 2015-2020 was annulled by Indonesia’s Supreme Court in December on the grounds that the roadmap was not considered to be compatible with the nation’s health targets.

    Tobacco is the largest excise contributor in Indonesia, providing in 2016, for instance, an estimated Rp132 trillion (US$ $9.9 billion).

  • New taxes being taxed

    New taxes being taxed

    The Association of Indonesian Light Cigarette Producers (Gaprindo) has protested to the government about the country’s latest tobacco-product tax increase, according to a story in The Jakarta Post.

    From January 1, the government raised the value-added tax (PPN) on cigarettes from 8.7 percent to 9.1 percent.

    The increase was a step along the road intended to raise the cigarette PPN to 10 percent, which is the level that applies to other consumer goods.

    But Gaprindo has protested that the new measure breaches the government’s agreement with industry players.

    Gaprindo’s chairman Muhaimin Moefti was quoted by the business publication Kontan on Friday as saying that, ‘earlier’, both the industry and the government had agreed on a rate of 8.9 percent for this year and 9.1 percent for next year.

    The government, in this case, had shown its inconsistency in making its policy.

    The group’s members had had no choice but to comply with the rules, though they might have further discussions on the issue, Muhaimin added.

    The Post said that a 10.54 percent increase in the average excise tax on cigarettes was also coming into force early this month.

  • Cigarette production down

    Cigarette production down

    The production of cigarettes in Indonesia dropped by about 1.7 percent between 2015 and 2016, according to a story in Tempo

    The director general of Customs and Excise Heru Pambudi said that the production of cigarettes in 2016, at 342 billion, had been down by six billion on that of 2015, 348 billion.

    Heru said the reduction was in accordance with the government’s plan to reduce cigarette production and consumption.

    For example, he said, the Health Ministry had attempted to limit cigarette consumption by restricting smoking in public places, such as offices and hospitals, to special smoking areas.

    But while the consumption of duty-paid cigarettes has fallen, it seems as though the consumption of illicit cigarettes might have been on the rise.

    The Directorate General of Customs and Excise recorded 1,474 cases involving illicit cigarettes in 2015, a figure that rose to 2,259 cases during 2016.

    The Finance Minister Sri Mulyani was quoted as saying that the increasing level of illicit cigarette distribution was caused by the rise in cigarette excise tariffs and, therefore, retail prices.

  • Jakarta to remove cigarette billboards

    Officers from the public order agency of Jakarta, Indonesia, on Nov. 18 removed several cigarette billboards in the Mampang Prapatan district in South Jakarta whose permits had expired.

    The billboard removal operation was lead by district head Asril Rizal, who said the removal preceded the final banning of all cigarette billboards in December as decreed by Gubernatorial Regulation No. 1/2015.

    “In December, all tobacco billboards will be removed because the gubernatorial regulation will come into effect as of January next year,” Asril said as quoted by kompas.com, on Wednesday.

    Earlier this year, Gamal Sinurat, assistant to the city secretary for city development, said the city would issue a gubernatorial regulation on the placement of billboards, according to a story in The Jakarta Post. Sinurat said the administration had disseminated the planned regulation to all property owners.

    “We will reregister and redefine the locations that are totally free from billboards and the places that have strict or light controls on the placement of billboards,” he added.

  • Tobacco taxes to rise 11 percent in Indonesia

    The Indonesian government has announced an average increase in tobacco excise taxes of 11.19 percent, which will take effect on Jan. 1, 2016.

    “The highest tax increase of 12.96 to 16.47 percent will be applicable to machine-rolled cigarettes, and the lowest increase of 0 to 12 percent will apply to hand-rolled cigarettes,” said the Finance Ministry’s director general of taxation, Heru Pambudi.

    Heru said the government would not increase taxes on hand-rolled cigarettes in the III B group because of their slower production rate in comparison to machine-made cigarettes, according to a story in The Jakarta Post.

    This year the Indonesian government set a target of Rp 139.12 trillion (US$10.29 billion) for tobacco tax revenue. In total, the excise revenue target listed in the 2016 state budget is Rp 155.52 trillion, which includes Rp 148.86 trillion from tobacco taxes and Rp 171.2 million from alcohol taxes.

    Heru expressed his optimism that the government would reach its targeted cigarette excise revenue due to the upcoming regional elections, stating that “consumption usually increases” at regional election time.

    Deputy Coordinating Economic Minister Edy Putra Irawady has said that in 2020, the government will no longer take tobacco taxes into account in the state budget, or the contribution of the tobacco-related industry to employment. According to Edy, by 2020 the government would have prioritized public safety over the economic impacts of the tobacco industry.

  • Billboards with cigarette ads to be dismantled in Indonesia

    Billboards that advertise cigarettes and are displayed around schools in North Jakarta, Indonesia, will be dismantled in the near future, according to a story in the daily Tempo.

    Mustafa Kemal, head of North Jakarta Education Sub-Department Regional I, stated that the existence of such billboards is unethical and could potentially influence students to smoke.

    “If there are students caught smoking, either inside or outside of schools during school hours, they will be sanctioned,” he said.

    Such sanctions would include summoning a child’s parents and revoking their Jakarta Smart Card.

  • Purwanto joins TSAL as technical sales manager

    Tobacco Solutions Asia Limited (TSAL), an engineering solutions firm that has designed and developed some of the world’s smallest tobacco processing equipment, has appointed Arif Purwanto to the newly created position of technical sales manager for the Indonesian region, effective Oct. 1. Purwanto will assist the TSAL team in marketing TSAL products and services to a target portfolio of cigarette manufacturing factories in Indonesia. He will report to group CEO Dr. Iqbal Lambat and operate out of the FELI Denpasar Bali office in Indonesia.

    Purwanto has a bachelor’s degree in mechanical engineering from Sunan Giri University Surabaya. He has over 17 years of experience in machining and engineering, including four years spent heading up G.D Italy’s QA Equipment strategy in Indonesia. Purwanto is of Indonesian nationality and fluent in both Bahasa and English.

  • Closures expected in Indonesian tobacco industry

    As much as 15 percent of the workforce at tobacco-related companies in East Java, Indonesia—or more than 23,000 workers—are at risk of being laid off this year, according to a story in the The Jakarta Post.

    Based on 2014 data, the number of people working in East Java’s tobacco and tobacco products industrial (IHT) sector was 159,117, according to East Java Chamber of Commerce and Industry (Kadin) vice chairman Dedi Suhajadi. The sector’s workforce also decreased by 21,300 workers in 2014 from 180,466 workers in 2013.

    “Many IHT entrepreneurs are affected,” Dedi said. “This is attributable to the annual increase in tobacco tax, government regulations and groups that interfere with the concentration of IHT entrepreneurs in meeting tax obligations.”

    The government raised the IHT tax target to IDR141.7 trillion in 2015 from IDR111.21 trillion in 2014. Over the past five years, the average increase in IHT tax was 16.09 percent.

    Data from the East Java Manpower and Transmigration Office indicated that 790 IHT companies were still operating in 2014, however, only about 200 were producing on a regular basis. In 2011, there were about 1,100 cigarette factories, according to Dedi.

    “Those that have gone out of business are small- and medium-scale factories. Only the large-scale companies are surviving,” said Dedi.

    Between 2009 and 2013, approximately 4,900 cigarette factories closed their doors.

  • Low compliance with health warnings requirement

    The majority of cigarette packs in Indonesia do not comply with the country’s new graphic health warning requirements, according to a report in The Jakarta Post.

    The Drug and Food Monitoring Agency (DFMA) said only 13.44 percent of cigarette packages circulating in the market bear the pictorial warnings that became mandatory on June 24.

    Under a presidential regulation on tobacco control issued last year, cigarette makers must allocate 40 percent of cigarette packaging for text and pictorial warnings about the health effects of smoking.

    The DFMA and regional food and drug offices in 31 regions monitored the implementation of the new tobacco-control rules during the two days following their enactment.

    Of the 2,270 cigarette packages monitored, only 305 or had pictorial warnings. There are 3,363 cigarette brands, produced by 672 companies, registered with Indonesia’s Customs and Excise Directorate.

    Health Minister Nafsiah Mboi said that cigarette makers should recall all products that did not display the pictorial warnings.

    The ministry said that there would be penalties for companies that failed to comply with the new policy, ranging from written warnings and reprimands to the revocation of their business licenses.

    Nafsiah said companies that missed the deadline would be issued warnings, and those that failed to comply could eventually be fined up to $42,000. Their executives could face up to five years in prison.

    The country’s biggest cigarette producer, Philip Morris-owned Sampoerna, said it began distributing products with the new warnings on June 23, but it needed more time to clear out existing stock.

    A national survey in 2012 found that 67 percent of all Indonesian males over age 15 smoked—the world’s highest rate—while 35 percent of the total population lit up; a figure surpassed only by Russia.

     

  • Deadline nears for Indonesian health warnings

    Indonesia’s Food and Drug Monitoring Agency (FDMA) has told tobacco companies to comply with a government regulation requiring pictorial health warnings on cigarette packs by June 24, reports The Jakarta Post.

    Indonesian tobacco companies produced 3,392 cigarette brands as of April, according to Indonesia’s taxation directorate general. Of those companies, only Bentoel, Sampoerna, Djarum and Gudang Garam had registered their cigarette packaging designs with pictorial health warnings, said Sri Utami Ekaningtyas, the FDMA’s addictive substances monitoring director.

    “They have sent their pictorial health warnings and shown a commitment to launch these cigarette packs on 24 June. We are optimistic that other companies will follow,” Sri added.

    According to the government regulation, tobacco companies should print five pictorial health warnings on their cigarette packs, covering at least 40 percent of a pack’s overall size.

    These warnings show scary images of tobacco-related diseases such as mouth cancer, throat cancer and lung cancer.