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Indonesia to raise cigarette prices by more than a third at start of 2020

Reuters | Jakarta | Updated: 13-09-2019 16:40 IST | Created: 13-09-2019 16:36 IST
Indonesia to raise cigarette prices by more than a third at start of 2020
Image Credit: Pixabay

Indonesia will raise the minimum price of cigarettes by more than a third from January next year, a finance ministry spokesman said on Friday, as part of the government's efforts to reduce smoking rates. Nearly 70% of adults smoke in Indonesia, according to the World Health Organization - one of the highest rates in the world - and tobacco kills 225,720 people each year in the country or 14.7% of all deaths, mostly through cardiovascular diseases, the WHO said in a 2018 report.

The Indonesian government has been raising taxes on tobacco products almost every year since 2014 to cut consumption, but that has not had a significant impact on smoking rates. From Jan. 1 next year, the government will raise the minimum price of cigarettes across categories by an average of 35% and increase the excise tax on tobacco products by 23%, finance ministry spokesman Nufransa Wira Sakti said.

The largest cigarette companies in Indonesia include HM Sampoerna, Gudang Garam and unlisted Djarum Group. Sampoerna, Gudang Garam and Djarum did not immediately respond to requests for comment.

Jakarta kept tobacco taxes flat this year, after raising them by 10%-11% per year in the past five years. Currently, taxes on popular machine-rolled clove cigarettes range from 370 rupiahs to 590 rupiahs a stick, while the floor retail prices range from 715 rupiahs ($0.0512) to 1,120 rupiahs a stick.

The rates for filtered cigarettes, popular among younger Indonesians who dubbed them "white cigarettes", range from 355 rupiahs to 625 rupiahs a stick, while floor retail prices range from 640 rupiahs to 1,130 rupiahs a stick. Rules on tobacco taxes are often controversial in Indonesia, where big tobacco companies often say a decline in sales hurt the livelihood of farmers.

Indonesia aims to collect 172 trillion rupiahs ($12.32 billion) of revenue from tobacco excises in 2020, according to government proposals for next year's state budget which is awaiting parliamentary approval. ($1 = 13,960.0000 rupiah) ($1 = 13,960.0000 rupiah)

Also Read: Ban manufacture and sale of e-cigarettes: National Health


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