Tag: Indonesia

  • Sampoerna Suspends Operations After Covid Deaths

    Sampoerna Suspends Operations After Covid Deaths

    Photo: Taco Tuinstra

    Indonesian cigarette manufacturer Sampoerna temporarily closed a cigarette factory in East Java after two workers died of the coronavirus, reports The Straits Times, citing local authorities in Jakarta.

    Two of the company’s laborers who worked in Surabaya, Indonesia’s second largest city, died on April 14 and tested positive for Covid-19. Nine fellow workers who showed symptoms later were sent to a hospital for treatment, local media reported.

    As many as 323 workers who did not show symptoms underwent rapid tests and 63 of them had positive results, state news agency Antara reported.

    With some 26,000 workers, Sampoerna is the biggest cigarette producer in Indonesia, where about 60 percent of the male population are smokers. The company is 92.5 percent owned by Philip Morris International.

    The factory’s closure is unlikely to affect the company’s total production as Sampoerna has cigarette factories in several other locations.

    Indonesia has 10,100 Covid-19 confirmed cases, with 792 deaths as of April 30—the highest number of coronavirus fatalities in South-east Asia.

  • Taxing balancing act

    Taxing balancing act

    Indonesia is to follow a policy of foreshadowing cigarette excise increases in such a way as to limit smoking while lessening the impact of any cigarette-sales reduction on tobacco-industry jobs, according to a story at en.tempo.co.

    Finance Minister Sri Mulyani Indrawati said the Government had to address two concerns before issuing a regulation on cigarette excise: its impacts on health and the industry.

    Sri Mulyani said that the use of tobacco by smokers, especially children, would badly affect their health in the future; so the Government imposed excise on tobacco products in a bid to lessen its consumption.

    However, on the other side of the coin, the tobacco industry employed a large number of workers, including tobacco and clove farmers.

    Speaking before millennials at a Youth Engagement event at Balai Sarbini, Jakarta, Sri Mulyani implied that, given these circumstances, it was difficult for the Government to decide whether to prioritize individual physical health or economic health.

    Therefore, she said, the Government planned to gradually increase taxes based on the roadmap of tobacco excise, which would provide “a signal to the tobacco industry and regional administrations”.

    At the same time, Sri Mulyani said, the Finance Ministry, through the Customs and Excise Directorate General, would strive to reduce the illegal trade in cigarettes.

    In 2017, the illegal trade was said to have accounted for 10.9 percent of the cigarette market, a figure that fell in 2018 to 7.03 percent.

  • Swings and roundabouts

    Swings and roundabouts

    Indonesia is trying to find a balance whereby it can benefit from tobacco’s huge economic contributions while reducing its toll on the nation’s health, according to a story in The Jakarta Post.

    In a statement issued during the weekend, Industry Minister Airlangga Hartanto said cigarette excise had reached Rp153 trillion last year, up by 3.9 percent from Rp147 trillion in 2017.

    “Cigarette excise tax revenue contributed 95.8 percent of the national excise tax revenue,” he said.

    At the same time, Airlangga said Indonesia exported cigarettes worth US$931.6 million last year, up by 2.98 percent from $904.7 million in 2017.

    Because the cigarette industry mostly used domestic raw materials, including tobacco and cloves, it was able to compete on the global market.

    Speaking about the health issues created by tobacco products, Airlangga said: “We will take employment and people’s health into consideration”.

    The Government, he added, had been trying to create policies that would be acceptable to all parties in the tobacco industrial sector (IHT).

    It had to ensure business certainty among IHT players.

    For that, he said, the Government had issued a number of regulations – Government Regulation (PP) No. 109/2012 on security for materials of addictive ingredients, and Presidential Regulation No. 44/2016 on the negative investment list, which was supported by Industry Ministry Regulation No. 64/2014 on cigarette industry control.

  • Tax hike sought in Indonesia

    Tax hike sought in Indonesia

    Policy makers in Indonesia are reluctant to address the smoking issue to the point where they are defending the cigarette business, according to a story in The Jakarta Post quoting the chairman of the Indonesian Consumers’ Foundation (YLKI), Tulus Abadi.

    Tulus said that President Joko ‘Jokowi’ Widodo’s decision not to increase cigarette excise in 2019 betrayed his development agenda in which he and vice president Jusuf Kalla had vowed to double the tax between 2015 and 2019.

    “This decision is a terrible setback on excise policies,” Tulus told reporters at a press conference on the weekend, adding that the revenue from the excise was not comparable to the financial losses caused by smoking. “The state has failed to understand the true [point] of the excise.”

    The lack of tobacco control, Tulus said, was a major contributor to noncontagious diseases covered by the Health Care and Social Security Agency (BPJS Kesehatan), with the prevalence increasing to 1.8 percent in 2018 from 1.4 percent in 2014, according to the Basic Health Survey.

    The decision to keep the excise unchanged was ironic, he said, because the government had allocated 50 percent of the regional excise revenue to cover expenses incurred by BPJS Kesehatan, which was running at a deficit of Rp16.5 trillion (US$1.17 billion).

    That said, Jokowi has a consistent record of increasing cigarette excise, which has risen every year since he assumed office: by 8.7 percent in 2015, 11.3 percent in 2016, 10.5 percent in 2017, and 10.4 percent in 2018, according to Statistic Indonesia data compiled by the Institute for Development of Economics and Finance.

    Nevertheless, Tulus urged the government to increase the excise tax by 57 percent, because, he said, the accumulated increase since 2015 had reached only about 40 percent.

    Cigarette excise had contributed Rp153 trillion to state revenue in 2018, he said, but it could reach Rp350 trillion if the Government had a ‘firmer stance on its regulation’.

  • Healthy tobacco taxes

    Healthy tobacco taxes

    All residents of Kediri City, East Java, Indonesia, are due to be registered into a healthcare and social security (BPJS) system that will be funded entirely by excise taxes paid by the local cigarette manufacturer Gudang Garam, according to a Tempo story.

    “Every resident will own healthcare insurance by 2020,” Kediri City Healthcare Agency head Fauzan Adima was reported to have said.

    The Finance Ministry’s Decree No.222/PMK.07/2017 mandates that 30 percent of the excise income is to be allocated to the national health insurance (JKN) program.

    The Kediri City BPJS marketing assistant manager Budi Wusono Adi said the strategy taken by the city administration would fulfil the people’s need for affordable healthcare insurance.

  • U-turn on tax increases

    U-turn on tax increases

    The Indonesian government has canceled its plan to increase excise taxes on tobacco and tobacco products in 2019, according to a story in the Jakarta Post.
    In addition, the government has postponed its plan to simplify excise tax.
    The cancellation and postponement mean that the 2019 cigarette excise tax will remain similar to that of this year.
    The government made the decision on Friday during a cabinet meeting attended by President Joko “Jokowi” Widodo.
    The National Kretek Preservation Committee (KNPK) was said to have welcomed the government’s move for accommodating the aspirations of stakeholders in the tobacco industry.
    “The industry has been under pressure because of increases in the tobacco excise tax over the last few years,” said KNPK co-ordinator Azami Mohammad on Monday, as reported at kontan.co.id.
    But the Indonesian Consumers Foundation (YLKI) chairman Tulus Abadi criticized the government’s decision to cancel the cigarette tax hike, saying that Jokowi had no vision on public health.
    “This means that the government continues to allow people to be dependent on cigarettes,” he was quoted as saying in a story at tempo.co.
    The government had initially planned to increase tobacco excise tax by about 10 percent and to simplify taxes, which are set at different levels for the various categories of cigarettes available on the Indonesian market.

  • Sales down in Indonesia

    Sales down in Indonesia

    Cigarette sales in Indonesia fell by 5.5 percent during the first half of this year, according to an Antara News Agency story quoting the Customs and Excise Directorate General’s acting technical director Nugroho Wahyu Widodo.
    As at the end of June, 272 billion cigarettes had been sold during 2018, down from the 288 billion sold during the six months to the end of June 2017.
    Nugraha said these figures had come from the national health survey, but that AC Nielsen’s research had shown similar results.
    Speaking in Nusa Dua on Friday, he said that the decline in sales was proof that the number of smokers had ‘also tumbled’.
    Nugroho said also that while cigarette duty contributed greatly to the state’s revenue, the government was committed to controlling the number of smokers.

  • Looking on the bright side

    Looking on the bright side

    Indonesia’s Ministry of Finance estimates that the Government may collect up to Rp3 trillion ($207 million) in additional revenue next year from a new excise on vaping liquids, according to a story in The Jakarta Globe.
    At the beginning of this month, the Government imposed a 57 percent excise tax on e-liquids containing tobacco extracts or nicotine, a rate the Globe said was more than four times the maximum excise on ‘regular cigarettes’.
    The country’s 200 domestic producers are required to start paying excise on e-liquids by October. 31.
    Noegroho Wahyu, acting director of excise, said that so far three e-liquid producers were registered to pay excise, but that the government expected the remaining producers to register before the deadline.
    The Government is expected to collect Rp50-70 billion in additional revenue from the new excise this year, but it estimates that will rise to about Rp3 trillion per year once all manufacturers are registered.
    Aryo Andrianto, chairman of the Indonesian Personal Vaporizer Association (APVI), was quoted as saying that the excise rule meant the government had officially acknowledged the industry and provided it with legal certainty.
    Vaping liquid producers were planning to increase their prices by a maximum of 20 percent to soften the blow on consumers, Aryo said, before indicating that the producers were not opposed to the excise tax.
    Meanwhile, producers hope that, following the imposition of the excise tax, the government may be more willing to support the industry’s export efforts.
    Deni Syarifa, chairman of the E-Liquid Micro-Entrepreneurs Association, estimates that manufacturers could export up to two million bottles of vaping liquid per month.
    “There is currently demand for around 5,000 to 10,000 bottles per month from just one country,” Deni said, adding that producers planned to ship the liquid to countries in Asia, Central America and Europe.

  • Spending questioned

    Spending questioned

    The Indonesian Consumers Foundation (YLKI) has criticized the Government for ‘wasting the state budget’ on challenging Australia’s standardized-tobacco-packaging law in a recent trade dispute at the World Trade Organization (WTO), according to a story in The Jakarta Post.
    The Post story said the WTO had rejected a complaint filed by Indonesia, Cuba, Honduras and the Dominican Republic against Australia, concluding that the Australian policy did not violate fair trade rules and helped reduce tobacco consumption.
    The four countries had argued that Australia’s standardized-tobacco-packaging policy had violated tobacco companies’ trademarks and intellectual property rights.
    “The case incurred financial losses [to Indonesia] because the Government spent money from the state budget to hire an international lawyer,” YLKI chairman Tulus Abadi was quoted as saying yesterday.
    The Supreme Audit Agency and the Corruption Eradication Commission should audit the funds the Government had spent on hiring the lawyer, he added.
    Tulus said the WTO decision was foreseeable and accused the Government of not supporting international campaigns on reducing tobacco consumption.
    Standardized-tobacco-packaging was part of a global tobacco control campaign that aimed to deter smoking by cutting the positive associations linking cigarette brands and tobacco consumption.
    It required all branding to be removed from cigarette packs and mandated health warnings.

  • E-liquid tax postponed

    E-liquid tax postponed

    The Indonesian Government has delayed from July 1 to October 1 the imposition of a 57 percent tax on e-liquids manufactured before July, according to a story in The Jakarta Post.
    “We cannot implement the regulation starting on July 1 because there are many users,” the Finance Ministry’s technical and excise director, Nugroho Wahyu, was quoted as having told the tribunnews.com.
    “We told the vendors they are allowed to sell e-liquid without the additional tax until October 1.”
    The delay applies only to e-liquids produced before July – presumably, July 1.
    Liquids produced after that date will be subject to the 57 percent tax burden.
    The Finance Ministry’s Customs and Excise Directorate General has estimated that the revenue from the e-liquids tax will amount to Rp5-6 trillion annually.
    The Customs office has estimated that, this year, revenue from the e-liquids tax will reach about Rp200 billion.