The Indonesian Employers Association (Apindo) and industry representatives warned the government against raising tobacco excise duties next year, citing risks to competitiveness, jobs, and supply chains in the country’s labor-intensive cigarette sector. Apindo chairwoman Shinta Kamdani said further hikes would add pressure on producers already hit by higher excise this year. “If a higher excise is implemented without considering the real conditions of the [tobacco] industry, risks of weakening competitiveness and eroding job opportunities will only grow,” she said.
Tobacco manufacturers and unions echoed the concerns, noting that higher duties would further squeeze margins, reduce farmer tobacco purchases, and accelerate the shift toward untaxed illegal cigarettes, which already make up nearly half of consumption. With the sector employing millions and contributing heavily to state revenue, they urged the government to balance fiscal goals with economic stability.
The warning comes as the government targets a 10% increase in state revenue in 2025 to Rp 2.86 quadrillion ($174.9 billion). Finance Minister Sri Mulyani Indrawati has set a 13.5% rise in tax collection as the benchmark, though she admitted the goal was “ambitious” amid weak revenue performance this year.