New Regulation Deemed at Risk of Opening Loopholes for Illegal Products
Plans to tighten limits on certain substance levels in tobacco products have sparked concern among industry players. The Indonesian Tobacco Community Alliance (AMTI) considers the proposed regulation potentially damaging to the legal industry’s sustainability whilst simultaneously opening the door to the circulation of illegal products.
AMTI Chairman Edi Sutopo revealed that the regulation proposes a nicotine limit of 1 milligram and a tar limit of 10 milligrams per stick, based on European Union practices. He argued that such standards are not relevant for application in Indonesia owing to differences in raw material characteristics. He believes the policy could deal a blow to the kretek industry, which commands approximately 97 per cent of the national market share.
Edi explained that local raw materials tend to have higher nicotine content, at around 2 to 8 per cent, compared with imported materials which range from only 1 to 1.5 per cent.
“Reducing nicotine content from 2–8 per cent to 1 per cent is certainly no easy task,” he said in a written statement quoted on Wednesday, 18 February 2026.
Moreover, kretek products also use cloves, which contribute to higher tar content. Given this composition, the national industry is considered likely to struggle to meet the thresholds proposed in the new regulation.
According to Edi, should restrictive policies continue to be imposed, the impact would not only suppress the sustainability of the legal industry but also risk destabilising the market. He emphasised that the majority of domestic consumption comes from the kretek segment, meaning excessive pressure on this sector would have wide-ranging effects across the industry supply chain.
He also cautioned that excessive tightening could expand black market practices. Products unable to meet the new standards are feared to shift to illegal channels.
“The state would end up gaining nothing, despite the tobacco products industry having contributed enormously to excise and tax revenues,” Edi said.
Furthermore, AMTI highlighted the potential for regulatory overlap. To date, substance content limits have been governed through Indonesian National Standards (SNI) established by the National Standardisation Agency (BSN). These standards are drawn up by cross-sector technical committees involving the government, experts, and industry players.
Edi assessed that SNI has taken into account empirical data as well as the capabilities of industries of various scales. He therefore suggested that the government simply refer to existing standards to avoid regulatory dualism and business uncertainty. “In our view, the regulation of tar and nicotine limits should simply refer to the existing SNI, so as to prevent regulatory dualism,” he concluded.