3,300 Tobacco Factories in Indonesia Reported to Have Disappeared
Jakarta, CNBC Indonesia - Tobacco industry stakeholders have requested that the government postpone the implementation of new regulations derived from Government Regulation No. 28 of 2024. One key proposal is to set a maximum limit of 1 milligram (mg) of nicotine and 10 mg of tar per cigarette stick.
Industry players believe this policy could undermine a sector that has been a major contributor to state revenues. The Indonesian Tobacco Community Alliance (AMTI) contends that overly stringent policies could trigger widespread economic consequences, as the tobacco industry employs millions of workers and business operators.
AMTI General Chairman Edy Sutopo stated that the tobacco products ecosystem makes a significant contribution to the national economy.
“The tobacco products industry ecosystem absorbs millions of workers and contributes approximately Rp710 trillion to GDP,” Edy said during a press conference in Jakarta on Tuesday (10/3/2026).
He also noted that the sector makes a substantial contribution to state revenues through excise and tax collection.
“In 2024 alone, revenues from tobacco excise reached approximately Rp216.9 trillion. When combined with other taxes, the figure could reach around Rp300 trillion,” he stated.
Although the government is focused on controlling cigarette consumption, overly restrictive policies could threaten the viability of the tobacco industry ecosystem.
He argued that regulations based on foreign standards are difficult to apply to kretek products, which have different characteristics.
“The nicotine content of our tobacco can naturally reach 2 per cent to 8 per cent, whilst foreign tobacco contains only about 1 per cent to 1.5 per cent,” he said.
Additionally, the industry is concerned that the policy will result in a decline in the number of cigarette companies operating domestically.
Data presented by AMTI showed that the number of cigarette companies in Indonesia has declined sharply in recent years.
“We once had nearly 5,000 cigarette companies, now we have only around 1,700 companies, and most of them are small-scale industries,” Edy said.
The government needs to consider a balance between health interests and economic concerns when formulating policy.
“We hope the government can view this issue more in a balanced manner because the tobacco products industry has a very significant economic impact on society,” he said.
He also hoped the government would consider existing national standards when determining regulations related to tobacco products.
“We hope the government will use the existing SNI standards because the process of developing them involves various stakeholders and considers the capabilities of the national industry,” he said.