Indonesia's Tobacco Industry Confidence Shrinks due to Tax Increase and Regulations

Nov.01.2023
Indonesia's Tobacco Industry Confidence Shrinks due to Tax Increase and Regulations
Indonesia's tobacco industry experiences shrinking confidence due to rising cigarette taxes and disputed regulations, impacting orders and profits.

According to a report by Bisnis.com on October 31, the Indonesian Ministry of Industry has revealed that confidence in the tobacco processing industry (IHT) has begun to shrink due to the increase in cigarette taxes and the ongoing dispute over the government decree draft (RPP) regarding the industry.


Edy Sutopo, the Director of the Beverage, Tobacco, and Mint Beverage Industry at the Indonesian Ministry of Industry, has stated that cigarette taxes will increase by 10% in 2023 and 2024. In a press release from the Industrial Association (IKI) in October 2023, Edy expressed, "In the first half of this year, the cigarette industry gradually increased cigarette prices, affecting people's purchasing power and resulting in a significant decrease in new orders at the end of this year." He also mentioned that tobacco industry operators are now choosing to raise cigarette prices as profit margins are becoming lower. The increase in cigarette prices has led to a decrease in orders and a decline in demand at the end of this year.


According to reports, the Tobacco Excise Tax (CHT) is one of the largest contributors to Indonesia's national tax revenue. In 2022, the revenue from tobacco excise tax surpassed the initial target, reaching over 218.62 trillion Indonesian rupiah.


In addition, the RPP of the Health Law, which is an imperfect regulation, may suppress the tobacco industry. Eddie said, "This has also led some producers to be more inclined to empty existing stocks rather than increase production. Therefore, operators in these industries are temporarily in a wait-and-see mode, awaiting the next steps in the development of the RPP bill.


Certainly, this health measure could impact the operation of the tobacco industry. This includes equating tobacco with drugs and regulating the tobacco industry, including standardizing packaging for tobacco products and setting guidelines for advertising and promotion.


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

India Tobacco Board urges Finance Minister Nirmala Sitharaman to revisit cigarette duty hike
India Tobacco Board urges Finance Minister Nirmala Sitharaman to revisit cigarette duty hike
The Tobacco Board, under the administrative control of India’s Department of Commerce, has written to Finance Minister Nirmala Sitharaman (Nirmala Sitharaman) flagging the adverse impact of an “unprecedented” increase in cigarette excise duties on the industry and on millions of farmers and workers, and urging a revision of duty rates.
Feb.11 by 2FIRSTS.ai
FDA and IKE Tech Hold Formal Listening Session on Youth Access and Illicit ENDS Products
FDA and IKE Tech Hold Formal Listening Session on Youth Access and Illicit ENDS Products
U.S. Food and Drug Administration’s Center for Tobacco Products held a formal listening session with IKE Tech LLC to discuss youth prevention at the point of use for ENDS products, the circulation of illicit products in the supply chain, and the regulatory treatment of software in tobacco products.
Apr.10 by 2FIRSTS.ai
South Korea’s finance ministry to directly crack down on illegal high-nicotine vape liquids
South Korea’s finance ministry to directly crack down on illegal high-nicotine vape liquids
The report says South Korea’s Ministry of Economy and Finance (referred to as the finance ministry) will directly lead crackdowns on illegal distribution and “upward manipulation” of nicotine concentrations in liquid e-cigarettes, after cases of extremely high-strength nicotine liquids circulating at retail shops were highlighted.
Feb.28 by 2FIRSTS.ai
2Firsts Holds Second PMTA Compliance Training in Shenzhen, Highlighting U.S. Regulatory Framework and Corporate Compliance Capabilities
2Firsts Holds Second PMTA Compliance Training in Shenzhen, Highlighting U.S. Regulatory Framework and Corporate Compliance Capabilities
2Firsts held its second U.S. PMTA compliance training in Shenzhen, providing a systematic overview of the U.S. regulatory framework for e-cigarettes and corporate compliance strategies. Nearly 20 industry professionals from manufacturing, e-liquid and supply-chain companies attended. Participants who passed the exam received compliance certification. Registration for the third training session will open soon, alongside customized corporate training programs.
Mar.09
BAT Japan to set up a VELO special booth at an outdoor culture market, showcasing a product launched on Feb. 2
BAT Japan to set up a VELO special booth at an outdoor culture market, showcasing a product launched on Feb. 2
BAT Japan announced it will support and sponsor the outdoor culture market “DIGGIN DEEP 2026 DAIKANYAMA,” held on March 7 and 8, 2026 at Daikanyama T-SITE, and will set up a special booth for the oral tobacco brand VELO at the venue. The booth will feature product displays and trial experiences, including the new product Velo Smooth Peppermint Medium, which went on sale on Feb. 2.
Mar.05 by 2FIRSTS.ai
BAT FY2025 Results Review Series by 2Firsts
BAT FY2025 Results Review Series by 2Firsts
Feb.12