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

More Than 500 Stores in Russia’s Nizhny Novgorod Region Voluntarily Stop Selling Vapes
More Than 500 Stores in Russia’s Nizhny Novgorod Region Voluntarily Stop Selling Vapes
According to the Nizhny Novgorod regional government, 550 stores in the region have voluntarily removed vapes and e-liquids from their product assortments. Regional officials said a public offer encouraging businesses to self-restrict vape sales has been in place since September 2025, and that a large retail chain with more than 40 outlets in Nizhny Novgorod joined the initiative. The regional government also said a federal ban on vape sales is expected in the near future.
Apr.15 by 2FIRSTS.ai
South Korea Moves Against Synthetic Nicotine Regulatory Gap as Three Companies Face Tobacco Business Act Probe
South Korea Moves Against Synthetic Nicotine Regulatory Gap as Three Companies Face Tobacco Business Act Probe
South Korea’s Ministry of Finance and Economy said on May 4 that it requested the Daejeon Metropolitan Police Agency and Gyeonggi Nambu Provincial Police Agency to investigate three sales companies on suspicion of violating the Tobacco Business Act.
May.06 by 2FIRSTS.ai
Philip Morris Japan Unveils TEREA “Blossom Pearl” for IQOS ILUMA
Philip Morris Japan Unveils TEREA “Blossom Pearl” for IQOS ILUMA
Philip Morris Japan announced that it will launch “TEREA Blossom Pearl,” a new tobacco stick for IQOS ILUMA, on May 11. The new product will expand the TEREA lineup to 27 variants. It features a capsule menthol flavor with strawberry and subtle herbal notes and is priced at JPY 620, or about USD 4.14 based on an assumed rate of 1 JPY = 0.00668 USD. The exchange-rate source should be verified and added.
Apr.28 by 2FIRSTS.ai
West Virginia Bill Would Direct USD 2.9 Million of Juul Settlement to Youth Tobacco and Vaping Prevention
West Virginia Bill Would Direct USD 2.9 Million of Juul Settlement to Youth Tobacco and Vaping Prevention
A bill completed during West Virginia’s 2026 regular legislative session would make a one-time allocation of USD 2.9 million from the state’s USD 7.9 million settlement with Juul to youth tobacco prevention and cessation programs.
Mar.19 by 2FIRSTS.ai
KT&G to Cancel All 10.87 Million Treasury Shares on April 23
KT&G to Cancel All 10.87 Million Treasury Shares on April 23
KT&G disclosed on April 16 that it will cancel all 10.87 million treasury shares it currently holds, with the planned cancellation amounting to about KRW 1.85 trillion,(USD 1.26 billion). The cancellation date is scheduled for April 23.
Apr.17 by 2FIRSTS.ai
Special Report | Tax Veteran Takes Helm at China’s Tobacco Regulator, Leadership Change Fuels Reform Watch
Special Report | Tax Veteran Takes Helm at China’s Tobacco Regulator, Leadership Change Fuels Reform Watch
China’s tobacco system has appointed a new top internal leader with a long background in public finance and taxation, drawing renewed attention to whether the country’s tobacco monopoly may enter a new phase of reform debate. The appointment itself does not signal a defined policy shift.But it places a veteran fiscal official at the center of a key state sector amid unresolved questions on tax reform, structure, and emerging tobacco products.
Mar.20