Impact of Increased Tobacco Tax on Smoking Rates in Indonesia

Regulations by 2FIRSTS.ai
May.16.2024
Impact of Increased Tobacco Tax on Smoking Rates in Indonesia
Despite Indonesia's efforts to reduce smoking rates by raising tobacco taxes, statistics show a stagnant 28% of smokers.

According to a report by Bisnis on May 15th, despite the Indonesian government's policy of increasing tobacco taxes aimed at reducing smokers, statistics show that the current proportion of smokers remains stagnant at 28%. Heri Susianto, the chairman of the Indonesian Tobacco Industry Forum (Formasi), stated that despite the increase in tobacco tax rates, it has not effectively reduced the number of smokers in Indonesia.

 

According to Heri, based on the National Mid-Term Development Plan 2020-2024, the government's goal is to reduce the smoking rate among children aged 10-18 from 9.1% to 8.7% by 2024. However, achieving this goal is influenced by various factors.

 

Raising tobacco taxes has not effectively lowered smoking rates to meet the goals of the national mid-term development plan," said Harry.

 

The Minister of Finance has clearly stated that despite increasing tobacco taxes to raise prices, the number of smokers in Indonesia remains high, with a rising trend. Even with continuous implementation of policies to raise tobacco tax rates and retail prices, Indonesia's smoking rate remains stagnant at around 28%.

 

The proportion of smokers in the early age group in 2013 was around 7.2%, in 2016 it was around 8.8%, and in 2018 it was around 9.1%. This clearly indicates that raising tobacco taxes did not effectively reduce the proportion of smokers in the early age group.

 

The government needs to take additional non-financial measures to reduce the proportion of smokers, such as implementing large-scale supervision and education. The main factors affecting smoking rates include environmental factors such as family, school, and peer environments, as well as social culture, psychological education, cognitive factors, and economic factors. All of these factors are interconnected, so the government should start changing its beliefs and methods to reduce the smoking rates among 10-18 year old children.

 

Helen believes that the tobacco industry should not be responsible for reducing smoking rates, as it already bears a significant financial burden and must comply with other regulations. The tobacco industry indirectly contributes to reducing smoking rates through taxes paid, such as tobacco tax, value-added tax, local tobacco tax, and corporate income tax.

 

It must be remembered that the tobacco industry is the largest contributor to tax revenue, accounting for 96% of total tax revenue," he said. Therefore, the Treasury Department is adjusting fund allocation to facilitate the implementation of regulations called DBH CHT.

 

According to Regulation 206 of 2020, 25% of DBH CHT funding will be used for healthcare, including reducing the rate of stunting. He stated that the establishment of a country is to manage the distribution of power. Considering that the tobacco industry has already contributed significantly to the fiscal economy and has complied with relevant regulations, such as placing health warnings and information on tobacco packaging, it should no longer be required to bear the responsibility of reducing smoking rates.

 

We welcome news tips, article submissions, interview requests, or comments on this piece.

Please contact us at info@2firsts.com, or reach out to Alan Zhao, CEO of 2Firsts, on LinkedIn


Notice

1.  This article is intended solely for professional research purposes related to industry, technology, and policy. Any references to brands or products are made purely for objective description and do not constitute any form of endorsement, recommendation, or promotion by 2Firsts.

2.  The use of nicotine-containing products — including, but not limited to, cigarettes, e-cigarettes, nicotine pouchand heated tobacco products — carries significant health risks. Users are responsible for complying with all applicable laws and regulations in their respective jurisdictions.

3.  This article is not intended to serve as the basis for any investment decisions or financial advice. 2Firsts assumes no direct or indirect liability for any inaccuracies or errors in the content.

4.  Access to this article is strictly prohibited for individuals below the legal age in their jurisdiction.

 

Copyright

 

This article is either an original work created by 2Firsts or a reproduction from third-party sources with proper attribution. All copyrights and usage rights belong to 2Firsts or the original content provider. Unauthorized reproduction, distribution, or any other form of unauthorized use by any individual or organization is strictly prohibited. Violators will be held legally accountable.

For copyright-related inquiries, please contact: info@2firsts.com

 

AI Assistance Disclaimer

 

This article may have been enhanced using AI tools to improve translation and editorial efficiency. However, due to technical limitations, inaccuracies may occur. Readers are encouraged to refer to the cited sources for the most accurate information.

We welcome any corrections or feedback. Please contact us at: info@2firsts.com

Product | PMI Launches Airport-Exclusive IQOS Skylens Limited Edition, Expanding From Japan’s Narita to Travel Retail Markets in 13 Countries Summary
Product | PMI Launches Airport-Exclusive IQOS Skylens Limited Edition, Expanding From Japan’s Narita to Travel Retail Markets in 13 Countries Summary
Philip Morris International (PMI) has introduced the airport-exclusive limited-edition IQOS ILUMA i PRIME Skylens, the company’s first device created specifically for airport travel retail. Inspired by the world of flight and finished in metallic blue, Skylens debuted at Narita International Airport in Japan before expanding into selected airport duty-free and travel-retail channels across 13 countries in Europe, Asia, the Middle East and Africa. The product retains the existing IQOS ILUMA i PRIME platform, with differentiation centered on airport exclusivity, design and travel-retail execution rather than a new heating architecture.
PMI
Aug.19
Sesh touts independence, 8VC backing and retail reach as it challenges tobacco-owned pouch brands
Sesh touts independence, 8VC backing and retail reach as it challenges tobacco-owned pouch brands
U.S. nicotine pouch brand Sesh has emphasized its independence from Altria, Philip Morris International and British American Tobacco, along with backing from investors including 8VC, celebrity supporters and a retail footprint of more than 7,500 stores, as it seeks to differentiate itself in a market where major pouch brands are owned by large tobacco companies.
Regulations
Jul.07 by 2Firsts Perspectives
Product | PMI Pilots bonds by IQOS and blends in Japan, Testing a New Heated Tobacco Platform
Product | PMI Pilots bonds by IQOS and blends in Japan, Testing a New Heated Tobacco Platform
Philip Morris International (PMI) has launched a regional pilot of bonds by IQOS and dedicated blends tobacco sticks in Japan, introducing a new heated tobacco platform separate from the IQOS ILUMA ecosystem. The system uses Round Heat Technology with an external heating architecture, differentiating it from IQOS ILUMA’s induction-based platform. The pilot began on July 6, 2026, across three Japanese prefectures: Fukuoka, Saga and Nagasaki.
Jul.30
China’s Zhengzhou Tobacco Research Institute develops end-to-end heated tobacco analysis to trace aerosol compound origins
China’s Zhengzhou Tobacco Research Institute develops end-to-end heated tobacco analysis to trace aerosol compound origins
The Zhengzhou Tobacco Research Institute of China National Tobacco Corporation has filed a patent application for an end-to-end method to analyze the migration and transformation of chemical compounds in heated tobacco products. Using GC-Orbitrap/MS non-targeted analysis, the method compares tobacco substrate and aerosol samples to distinguish compounds transferred directly from the substrate from those newly formed during heating, while also calculating transfer rates. In an example involving nine heated tobacco products, the patent identified 17 newly formed thermal decomposition compounds and 38 transferred compounds.
Aug.13
FDA Tobacco Proposal Signals Full-Chain Compliance Test for Global E-Cigarette Supply Chains
FDA Tobacco Proposal Signals Full-Chain Compliance Test for Global E-Cigarette Supply Chains
FDA’s proposed foreign tobacco establishment registration and product listing rule remains unfinished, but Accorto told 2Firsts it reflects a shift toward structured oversight similar to medical device and pharmaceutical compliance frameworks. For Chinese and global e-cigarette suppliers, U.S. market access is moving beyond product authorization toward full-chain compliance covering manufacturing, documentation, import control, distribution, retail and marketing discipline.
Special Report
Jul.09
Product | KT&G Brings LOOP Nicotine Pouches to South Africa, Supporting ASF’s Expansion Across Africa
Product | KT&G Brings LOOP Nicotine Pouches to South Africa, Supporting ASF’s Expansion Across Africa
KT&G has introduced nicotine pouch brand LOOP in South Africa, expanding its modern oral nicotine portfolio. Developed by Swedish company Another Snus Factory (ASF), LOOP is a tobacco-free nicotine pouch brand. KT&G and U.S. tobacco company Altria previously participated in ASF’s strategic development, and the South Africa launch represents a further step in LOOP’s international expansion.
Aug.06