Excise duty rise urged to strengthen antitobacco campaign
Tony Hotland The Jakarta Post/Jakarta
Observers renewed a call on Monday for the government to strengthen the country's flaccid antitobacco campaign and to soon sign the United Nations-brokered international convention on tobacco control.
The call followed the recent acquisition of a 40 percent stake in Indonesia's second largest cigarette producer, PT HM Sampoerna, by U.S. giant PT Philip Morris, a move that some fear could further weaken the national antitobacco campaign.
It was also made in response to a recent statement by five ministries -- the Ministry of Trade, Ministry of Industry, Ministry of Finance, Ministry of Agriculture and Ministry of Manpower and Transmigration -- to the effect that Indonesia would not sign the Framework Convention on Tobacco Control (FCTC).
Indonesian Consumer Foundation (YLKI) coordinator Tulus Abadi said an effective and proven method of reducing tobacco consumption was to increase the excise duty on cigarettes, which would then lead to higher prices.
A joint study by the Ministry of Health and the World Health Organization found that a 10 percent increase in excise duty could reduce consumption by as much as 6.1 percent, and in addition could generate increased state revenue of up to 9 percent.
"This hike would affect a big proportion of smokers -- low- income people and children -- who are a very price-sensitive group of consumers," Tulus told a press conference on Monday.
Indonesia, the world's fifth largest cigarette market, sells cigarettes much more cheaply and imposes a far lower rate of excise duty compared to most other countries.
"All of these conditions, which are hard to find in most countries, even in the United States, are perhaps the reasons why Philip Morris wants to invest here. If we fail to act quickly, other foreign companies will follow suit and Indonesia will end up being the world's ashtray," said Tulus.
In response to the argument that higher prices could lead to massive layoffs by cigarette producers, Tulus said that higher cigarette prices would only alter the segmentation of the market as had been shown in other countries.
The same joint study revealed that, overall, the main factor affecting employment in the cigarette industry was the automation of production.
Tulus also questioned the government's political will to promote a healthy Indonesia, despite the fact that Indonesia had been one of the most active countries in the deliberations on the FCTC in the past.
Lawmaker Hakim Sorimuda Pohan from the House of Representatives' health commission said the House was planning to draft a bill on smoking, and would give utmost priority to the issue.
"Regarding the ratification of the FCTC, we have missed the June 29, 2004, deadline. However, we could still sign up to the pact through accession, which means direct ratification although it would still require the government's consent," he told the same event.
A total of 168 countries have signed the convention and 68 of them have ratified it. The consequences of ratifying the FCTC include the total banning of advertising and sponsorship by cigarette producers, the displaying of varied health warnings on at least 30 percent of the package area, and the enactment of a clean air law that would protect non-smokers in public places.