Plain Packaging Policy for Cigarettes Threatens Millions of Jobs and State Revenue

The government’s plan to implement a standardised cigarette packaging policy through a draft Health Minister Regulation on health warnings and information on tobacco and electronic cigarette products continues to draw rejection. Labour unions believe the policy could have far greater economic consequences than the benefits claimed by the government in its efforts to control tobacco consumption. Waljid Budi Lestarianto, Regional Head of the Federation of Cigarette, Tobacco, Food and Beverage Workers Union in Yogyakarta, said one of the most highlighted substances in the draft regulation is the plain packaging plan. According to him, although the government argues the policy aims to reduce the visual appeal of tobacco products, the impact cannot be viewed solely from the packaging design aspect. He stressed that the tobacco industry is a large ecosystem involving millions of people across various economic sectors. Therefore, any regulation that has the potential to suppress the legal industry will trigger a chain effect on employment, investment, and state revenue. He explained that the tobacco industry chain does not only consist of cigarette companies but also includes tobacco farmers, clove farmers, hand-rolled cigarette workers who are mostly women, factory workers, packaging printing industries, distribution and logistics sectors, as well as small traders and street stalls that depend on the circulation of legal products. Citing data from the Ministry of Industry, the tobacco industry ecosystem absorbs around six million workers from upstream to downstream. This large workforce absorption makes the sector a labour-intensive industry with a significant contribution to regional and national economic stability. “The tobacco industry is one of the largest contributors to state revenue through excise. If this policy is implemented, the potential state loss could reach tens of trillions of rupiah per year due to the rampant circulation of illegal cigarettes,” he said. In addition to absorbing millions of workers, the sector is a major pillar of state revenue. In 2025, tobacco excise revenue was recorded at more than Rp230 trillion, after contributing around Rp216 trillion in 2024. Waljid believes that any policy that could weaken the legal industry must be carefully considered because the impact will be felt in the fiscal sector. He argued that plain packaging would weaken the identity of legal products and reduce the function of packaging as a brand differentiator. When all packaging is made uniform, consumers will find it increasingly difficult to distinguish official products from illegal or counterfeit ones. This condition is feared to open greater space for the circulation of illegal cigarettes, which remains a challenge for the government. He reminded that the issue of illegal cigarettes is not a hypothetical threat. As of the end of September 2025, the Directorate General of Customs and Excise had reportedly seized around 8.16 million illegal cigarette sticks in various enforcement operations. If the circulation of illegal cigarettes increases, the pressure on the legal industry will intensify because illegal products do not bear excise duties or other obligations that compliant businesses must fulfil. This situation will trigger a domino effect on the sustainability of the industry. When legal products are increasingly pressured, production volumes have the potential to decline. A decrease in production will subsequently impact state excise revenue, while companies may take efficiency measures to reduce operational costs. Apart from the issue of state revenue, Waljid also highlighted the threat to the investment climate and job sustainability. Regulatory uncertainty could reduce investor interest in investing capital in the tobacco sector, while existing companies might implement efficiency measures if the competitiveness of their products continues to decline. The worker group considered most vulnerable to the impact is the hand-rolled kretek cigarette sector. As a labour-intensive industry that still relies on human skills in the production process, a decline in demand will directly affect the need for labour. Therefore, Waljid reminded that the risk of mass layoffs cannot be ignored if pressure on the legal industry continues to increase. “If all packaging is made uniform, illegal products will find it even easier to enter the market. This is not a solution, but a new problem,” he asserted. Waljid understands that the government bases the policy on efforts to reduce the prevalence of novice smokers and strengthen public health campaigns. However, he believes this approach has not fully considered the various social, economic, and employment consequences that could arise if the regulation is enforced. He argued that public policy formulation should be carried out comprehensively by involving all stakeholders, including worker representatives, farmers, industry players, academics, and local governments, so that every decision can produce a balance between health interests and national economic sustainability. “We firmly reject the plan to implement standardised packaging that will be regulated in the draft ministerial regulation,” he said.