Business Response to the Proposal on Limiting Tar and Nicotine Levels

Deputy General Secretary of the National Leadership Council of the Indonesian Employers Association (DPN APINDO), Anggana Bunawan, stated that his organisation respects the discussion forum held by the Coordinating Ministry for Human Development and Culture (Kemenko PMK) on limiting tar and nicotine levels, although from the business perspective, they have raised several objections regarding this restrictive policy proposal.

APINDO views the tobacco products industry (IHT) as a labour-intensive sector that needs protection as part of efforts to support the national economic growth target of 8% set by President Prabowo Subianto.

The IHT is also a strategic labour-intensive sector in Indonesia, capable of absorbing around 6 million workers, from farmers and factory workers to those in logistics and distribution.

In addition, the IHT significantly contributes to the state budget through tobacco excise duties (CHT), accounting for about 10-30% of total state revenues. Considering the strategic importance of the IHT sector, various policies that could impose pressure need to be examined more comprehensively.

Anggana believes that the current economic situation is challenging, compounded by various global risks, making industries require more accommodative policies rather than ones that pressure them. Moreover, he said, the policy transition process must consider natural factors inherent in local raw materials in Indonesia.

“We need to consider unavoidable factors, one of which is the characteristics of Indonesian tobacco, which naturally has higher nicotine levels compared to some other countries,” he said on Thursday (26/3).

He provided a comparison with Brazil, which is often used as a reference for certain standards in the tobacco sector. However, the tobacco leaves from that country naturally have much lower nicotine levels, so they cannot be equated with conditions in Indonesia.

He acknowledged that many domestic producers have now entered global markets. However, short- and medium-term risks must still be considered if this new policy is enforced in a short timeframe.

The five-year transition period planned by the government is deemed far from realistic for the national industry’s readiness. Deeper coordination is needed among ministries and agencies, especially those handling the industrial sector, so that policies are not born solely from a health perspective.

In addition, APINDO hopes for a clear transition process and constructive dialogue to avoid harmful polarisation. Anggana also requested that the next process involve comprehensive economic considerations so that the industry and all stakeholders can adapt well to the regulations.

On the other hand, labour unions have shown a stronger reaction to the determination of maximum nicotine and tar limits as one of the mandates in Government Regulation 28/2024, initiated by the Ministry of Health (Kemenkes).

Chairman of the DIY Tobacco, Cigarette, Food, and Beverage Workers Union (RTMM), Waljid Budi Lestarianto, called the regulatory proposal a nightmare for workers.

He stated that threats regarding tobacco diversification, packaging standardisation, and restrictions on additives including cloves will directly impact the competitiveness of domestic products. Ultimately, all these rules will affect job sustainability.

Waljid revealed that there are currently around 158,000 members of FSP RTMM-SPSI, most of whom work in the Hand-Rolled Kretek Cigarette (SKT) sector. This labour-intensive sector is the most vulnerable if the maximum nicotine and tar level restrictions are implemented.

The nicotine limit of 1 milligram and tar of 10 milligrams is seen as a standard that is utterly impossible for authentic Indonesian kretek cigarette products to meet. “This is already unreasonable for us because even for Machine-Rolled Kretek Cigarettes (SKM) it’s difficult to meet the tar and nicotine levels, let alone for us who mostly work in the SKT sector, filterless kretek cigarettes. Those have high tar and nicotine levels, and that’s Indonesian tobacco after all,” explained Waljid.

Furthermore, he emphasised that this policy is not merely an effort to control consumption. The new regulation proposal is a systematic effort to destroy the industry, which will ultimately lead to the loss of livelihoods for hundreds of thousands of workers.

Waljid criticised the government’s stance, which seems to provide no room for negotiation or bargaining value for workers in policy formulation. He likened the regulation to the end marker for the tobacco products industry (IHT) in Indonesia due to the lack of balance between health interests and the economic sustainability of the small people.

The labour union side has also sent an aspiration letter to the President and the House of Representatives (DPR RI) to request protection for their rights as workers. “The loss of our livelihoods, the destruction of fields and plantations where we work—that the government must take responsibility for! And we will certainly demand accountability through protests to the government,” he concluded.

Regulations that are not implementable instead become a red carpet for certain individuals, potentially shifting to illegal products.

If implemented without supporting ecosystem readiness, tobacco farmers will face serious economic pressure.

Deputy Chairman of the Indonesian Clove Farmers Association (APCI), Heru D Wardhana, explained that the average nicotine content in Indonesian tobacco is above 3-5 percent, and some even higher.

The recommendation for Maximum Limits on Tar and Nicotine Levels is currently being drafted by the Compiling Team of the Coordinating Ministry for Human Development and Culture (KemenkoPMK).

The policy formulation process still lacks transparency and public participation, thus requiring a regulatory impact assessment.