The earnings of Indonesia’s listed cigarette producers are expected to remain under pressure for the remainder of this year, according to a story in Indonesia Investments.
The companies, the story said, would face big challenges this year from fierce competition for market share, from rising taxes and from anti-tobacco regulations.
Of the four publicly-listed cigarette manufacturers in Indonesia, only Gudang Garam had reported growing net sales and profit during the first half of the year. HM Sampoerna and Wismilak Inti Makmur had seen their sales and net profits decline, while Bentoel was yet to release its results.
A finance ministry regulation from January 1 pushed the value-added tax on cigarettes up to 9.1 percent. And later that month cigarette excise tax was increased by an average of 10.54 percent.
Two vocational high school students in Indonesia were expelled after a photo in which the students appear to be smoking in a classroom in Kelapa Gading, North Jakarta, was uploaded on Instagram, according to a story in The Jakarta Post.
The students’ Jakarta Smart Cards (KJP), previously issued as part of an educational assistance program, were revoked.
North Jakarta Education agency head Khairul confirmed yesterday that the students were expelled. “The school has expelled both students and the North Jakarta administration will also revoke their KJPs,” Khairul was reported to have said on Thursday.
On Monday, an Instagram account uploaded a picture of the two students wearing their white and grey high school uniforms and appearing to smoke a cigarette in the presence of a teacher standing with his back to them in a classroom.
The government of Indonesia wants to require tobacco companies to use domestic tobacco before they can import leaf from other countries, according to an Antara report.
The measure is intended to help offset a decline in leaf prices in the domestic market
While welcoming the government’s plan to protect growers’ interest, Budidoyo, chairman of the Indonesian Tobacco Society Alliance, said cited poor quality as reason for the low absorption of the leaf.
The report said Indonesia produces 200 million kg of tobacco annually, while the demand has risen to 300 million kg.
The Indonesian government is expected to require local tobacco manufacturers to buy domestic leaf tobacco as a prerequisite for importing tobacco, according to an Antara News Agency story.
The Trade Ministry’s Director General for International Trade Oke Nurwan said in Jakarta yesterday that the government was acting in the light of a decline in farmer selling prices on the domestic market.
“[Importers] must use domestic tobacco, Oke said. “If they fail to buy even a single leaf of tobacco, then they cannot import.”
The Antara story said the ministry had prepared a ministerial regulation as the legal basis for controlling the import of tobacco, and that the regulation was expected to be ‘completed’ this year.
“We already finished it, and we will discuss it with other stakeholders,” Oke was quoted as saying.
Meanwhile, the chairman of the Indonesian Tobacco Society Alliance Budidoyo told Antara that he welcomed the government’s plan to protect tobacco growers’ interests.
“It is the manufacturers who know the amount of raw materials they need; thus, local tobacco should be absorbed first before they import it to cover the shortage,” Budidoyo said.
He added that quality had become one reason for the low demand for local tobacco, but that this problem should be overcome through a ‘partnership’ between farmers and cigarette producers.
In an effort to reduce tobacco consumption in Jakarta, Indonesia, the National Commission on Tobacco Control (Komnas PT) has teamed up with the city-owned bus operator PT Transjakarta to inform the public about the cost and dangers of smoking cigarettes, according to a story in The Jakarta Post quoting the Antara News Agency.
The bodies of some Transjakarta buses will display a message that reads ‘Smoking cigarettes is burning money’.
“The campaign is meant to remind society that smoking cigarettes is a waste [of money],” said Komnas PT chairman Prijo Sidipratomo.
He said that members of the public should instead save their money for more important needs, such as their children’s education and nutrition.
The campaign, he added, was in line with President Joko “Jokowi” Widodo’s order to prioritize the improvement of children’s nutrition over the consumption of cigarettes.
The Transjakarta president director Budi Kaliwono said that the message would be displayed on 21 buses operating in Corridor 9, which runs between Pinang Ranti and Pluit.
“Indonesians, particularly Jakartans, should get above the poverty line,” Budi was quoted as saying. “Why would we smoke if it only makes us poorer?”
Indonesia’s Health Ministry is calling for tobacco tax increases on the grounds that cigarette consumption is a health hazard that causes trillions of rupiah in losses to the state, according to a story in The Jakarta Post quoting kompas.com.
The ministry’s Research and Development Agency is said to have found that Indonesia suffers annual losses of Rp500 trillion (US$37.5 billion) from the negative impacts of smoking, an amount that represents a quarter of the state budget.
“Smoking brings negative impacts, both directly and indirectly,” the agency’s chairman, Siswanto, was reported to have said on Tuesday.
One direct impact was that many smokers suffered smoking-related illnesses and had to spend a lot of money on medical treatment: expenditure that become the responsibility of the Health Care and Social Security Agency.
One indirect impact was caused when the heads of families died prematurely due to smoking, leaving their families in poverty. “When a husband dies at the age of 50, 20 years are lost,” Siswanto said. “If we multiply that with the minimum wage, it can reach Rp500 trillion.”
Therefore, Siswanto said, his ministry was pushing for an increase in cigarette tax as part of efforts to reduce consumption.
At the same time, the additional tax funds could help increase the budget for health care programs, he said.
The Association of Indonesian Light Cigarette Producers (Gaprindo) has said that the excise increase for light – also known as white or non-kretek – cigarettes should not be more than five percent because of an ongoing economic slowdown in the country, according to a story in The Jakarta Post citing a report at kontan.co.id.
“Customs and excise is quite burdensome for industry players,” Gaprindo’s chairman Muhaimin Moefti was quoted as saying.
“This year, it rose by 10 percent, and even last year it rose by 15 percent.”
The association had asked the government to review customs and excise rates every three to five years, instead of every year as was done currently, said Muhaimin.
Separately, the Finance Ministry’s customs and excise director general, Heru Pambudi, said the government was not planning for a tobacco-products revenue increase.
He projected that there would be a decrease in production of two percent this year.
As of April, he added, his directorate had recorded a decrease in customs and excise revenue when compared with the revenue of the same period of last year.
Leaders of the Farm Labor Organizing Committee (FLOC) reportedly challenged British American Tobacco during its Annual General Meeting (AGM) in London last week over what FLOC described as human rights abuses on BAT contract farms.
In a note on its website, FLOC said that BAT, which was planning to pay US$49 billion to acquire the rest of Reynolds American, was asked about its failure ‘to be transparent and take concrete action despite numerous reports detailing human rights abuses’ on its contract farms.
This year was said to have marked the seventh year that FLOC had attended the shareholders meeting.
‘During the 2014 AGM, BAT chairman Richard Burrows claimed that there were no labor or human rights violations in the BAT supply chain,’ the note said.
‘Since then, independent research groups including SwedWatch and Human Rights Watch have published reports detailing serious human rights abuses on BAT contract farms in Bangladesh and Indonesia respectively, echoing what FLOC has been reporting for years from the fields of North Carolina.
‘In BAT’s own corporate audit report, they admitted instances of worker death by heat stroke, workers being sprayed by pesticides, and poor housing conditions, among other issues.’
After the meeting, FLOC leaders were said to have met directly with BAT executives to discuss the issues and ‘real solutions’ in more depth.
But FLOC said that while BAT had stated that it had wanted to work with FLOC to resolve issues in the BAT supply chain, human rights violations would continue until BAT agreed ‘to guarantee freedom of association and implement a practical mechanism that allows farmworkers to denounce abuses and act as their own auditors!’
In an about face that demonstrated support for the country’s public health, Indonesia’s government said on Wednesday that it had refused to deliberate on a tobacco bill that sought to boost cigarette production, according to a story in The Jakarta Post.
This is the second time the government has rejected such a proposal from the House of Representatives. The bill was voided last year following opposition from the Health Ministry.
Ending his ambivalence to tobacco, President Joko “Jokowi” Widodo, whose administration had earlier issued a road map for the industry that sought to triple cigarette production to 524 billion by 2020, was described as having made a bold move that has put him at odds with one of the country’s oldest industries; one that employs millions of workers.
Cabinet Secretary Pramono Anung was quoted as saying that Jokowi would not issue a presidential letter to approve the House proposal to start discussion of the bill.
Without the letter, the House cannot begin deliberations; so if the House does not receive a letter from the government by the given deadline of March 19, the bill will be voided.
Cigarette companies in Indonesia are targeting schoolchildren by spending massively on advertising that is placed ‘in and around school areas’, according to a story in The Jakarta Globe quoting the non-profit child advocacy organization, Lentera Anak Indonesia.
After monitoring 90 schools in Padang (West Sumatra), Mataram (West Nusa Tenggara), Tangerang Selatan (Banten), Bogor and Bekasi (West Java), the group said conspicuous cigarette advertising was nearly “everywhere” around the schools.
Lentera Anak chairwoman Lisda Sundari said the Education Ministry had issued a regulation in 2015 banning smoking cigarettes inside school grounds, but that the regulation was powerless when it came to protecting students from exposure to massive cigarette advertising.
Food stalls and small kiosks near schools were ‘best agents’ for cigarette companies targeting these students, Lisda said. The owners were paid between $45 and $300 a year to install a 2 meter-square banner at their stalls and kiosks.
“The cigarette companies want to ‘normalize’ these massive advertising,” Lisda said. “They want schoolchildren to think there’s nothing wrong with smoking cigarettes and forget the health problems it could create.”
Meanwhile, after being briefed about the threat posed by the cigarette advertisements, students at the 90 schools that Lentera Anak studied during its four-month monitoring and guidance program banded together online to create an anti-cigarette advertisement campaign using the hashtag #TolakJadiTarget (Refuse to be a target).
In Mataram, students collected money to compensate kiosk owners who were willing to pull down their cigarette advertisement banners and replace them with a banner from the #TolakJadiTarget campaign.
And in Bekasi, schools worked with the district’s public order agency to raid kiosk owners who installed cigarette advertisements.
“We’re trying to persuade the district administration to issue a regional regulation banning cigarette ads around school,” Uchi, a teacher in a state junior high school in Bekasi, said.
