Cigarette Packaging Rules Enter Discussion
A draft Minister of Health regulation concerning the inclusion of health warnings and information on tobacco and electronic cigarette products has drawn criticism from economists and legal academics. The rule, currently being drafted by the Ministry of Health, is considered to potentially cause economic and legal impacts, as well as increase the circulation of illegal products.
The Ministry of Health previously stated that the policy is a strategic step to control tobacco consumption and protect public health. However, several parties believe the government needs to calculate the policy’s impact more thoroughly before it is ratified.
Permata Bank Chief Economist Josua Pardede said standardised packaging could eliminate a product’s visual identity, including colours and designs that have so far differentiated brands. According to him, this condition could shift competition from product quality to price wars.
“The character of Indonesian consumers is very price-sensitive. If the price of legal products remains high due to excise duties while their appearance is made uniform and quality is difficult to distinguish, consumers will tend not to quit smoking, but rather migrate to cheaper or even illegal products,” Josua said recently.
Josua believes the government needs to be careful in adopting plain packaging policies from developed countries. He said the success of such policies in several countries cannot be separated from law enforcement ecosystems, distribution, and public purchasing power that differ from Indonesia’s.
He cited Australia, which is often used as a reference in tobacco control policy. According to Josua, data from the Australian Bureau of Statistics shows that nicotine consumption from illegal sources increased from 12 percent in 2017 to 80 percent in 2025.
“This surge was triggered by the price difference, with legal products tripling in price due to high excise while illegal product prices remained stable. Indonesia could face a similar risk if the loss of visual appeal drives consumers to switch to cheaper black market products,” he said.
Besides encouraging a shift to illegal products, Josua believes uniform packaging could make counterfeiting easier. Without strong market supervision, the policy risks failing to achieve public health objectives because cheap illegal products could become more accessible, including to minors.
From an industrial perspective, Josua warned that the policy could impact the entire tobacco product supply chain. Affected sectors include manufacturers, packaging printers, distributors, retailers, and tobacco and clove farmers.
“Amid a challenging national economic situation, this regulatory uncertainty forces businesses to seek efficiency by holding back investment and reducing production. As a result, the risk of mass layoffs among the productive age workforce increases sharply,” Josua said.
He added that policies suppressing labour-intensive industries must be prepared carefully so as not to disrupt public purchasing power. According to him, workforce mitigation programmes through vocational training and apprenticeships are not yet specific enough to anticipate the direct impact on workers in the tobacco sector.
Josua urged the government not to immediately ratify the regulation before fulfilling three prerequisites. These are the issuance of a balanced regulatory impact assessment, strengthening the supervision of illegal cigarettes through a digital tracking system, and providing a sufficient transition period for the entire industrial supply chain, including small businesses.
Criticism also came from a legal perspective. The Head of the Constitutional Law Programme at UIN Sunan Kalijaga Yogyakarta, Gugun El Guyanie, assessed that the draft regulation could potentially exceed legal authority if it mandates comprehensive plain packaging.
According to Gugun, neither the Health Law nor Government Regulation Number 28 of 2024 contains an explicit order regarding packaging standardisation. He also believes the rule could conflict with Law Number 20 of 2016 on Trademarks and Geographical Indications.
“If the draft Minister of Health regulation later imposes comprehensive plain packaging rules, then its substance has exceeded the norms provided by the higher-level Government Regulation. This policy also directly collides with Law Number 20 of 2016 on Trademarks and Geographical Indications, which grants exclusive rights to trademark owners to use their visual identity,” Gugun said.
Gugun also highlighted potential legal certainty issues. He assessed that the approach to tobacco products differs from other products that also carry health risks, such as alcoholic beverages or sugar-sweetened drinks.
According to him, weak legal certainty could affect the investment climate. Furthermore, the policy is considered to potentially impact state revenue from excise duties and non-tax state revenue from trademark registrations.
Critics are asking the government to disclose the impact study and prepare a roadmap before implementing the packaging standardisation rule. Without regulatory readiness, supervision, and a transition period, the policy is deemed to risk creating new problems for industry, labour, and law enforcement against illegal cigarettes.