Excise duty rise urged to strengthen antitobacco campaign
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.