Indonesia To Raise Cigarette Excise By 15 Percent On Jan 1, 2012

The Indonesian government will increase its tobacco excise by 15 percent starting on Jan 1 next year, as an effort to reduce consumption that can help protect people health, according to China’s Xinhua news agency, citing local media reports on Wednesday.

Cigarette Excise

Indonesia will raise cigarette excise on January 1, 2012.

Indonesian Finance Minister Agus Martowardojo said that new excise would be higher than inflation as the ministry wanted to make sure that the excise can protect people’s health.

“We have involved many parties, including the stakeholders and we also have consulted with the House about increasing the excise,” the Jakarta Post quoted him as saying to the lawmakers at the Parliament building.

While, Corporate communications officer for The Indonesian Cigarette Producers Association (Gappri) Hasan Aoni Azis said that the excise would be able to reduce cigarette consumption because it was related to people’s purchasing power.

“When the excise goes up then cigarette price per pack will increase as well. People will only have two choices: quit smoking or shift their choices to a lower-priced brand,” he said.

Hasan said that according to data from WHO and FAO, every 10 percent of excise increase in developed countries would reduce consumption between 4 percent and 5 percent, while in developing countries the reduction would be in the range from 8 percent to 13 percent.

Furthermore, he added that the excise would also reduce the number of small companies due to a “swinging” consumption.

He explained that since 2003, the number of firms continues to decrease. In early 2003, the number was 5,000. In 2010, the number was reduced to 1,917 firms and he predicted by the end of this year it would reach 1,300.

“In 2012, there would be a 10-15 percent decrease from the 1, 300 companies,”he said.

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