Plain Packaging Policy Triggers Trillion-Rupiah Losses in Australia, Sparks Illegal Cigarette Fears in Indonesia
The Indonesian Ministry of Health is pushing for the implementation of standardised packaging for tobacco products, but evidence from other countries suggests the policy can lead to a surge in illegal cigarettes and significant state revenue losses. The requirement for plain packaging, adopted from the Framework Convention on Tobacco Control (FCTC), mandates that cigarette packs and rolling tobacco appear uniform, stripped of logos, brand colours, and promotional designs.
Recent investigations in Australia, which implemented plain packaging, have revealed that criminal syndicates are exploiting the policy. Authorities discovered that syndicates are mass-producing counterfeit plain packaging in Chinese factories. These fake packs are designed to look identical to the legal, standardised Australian packaging, complete with strict health warning labels, graphic images of smoking-related diseases, and the mandated drab brown colour.
This illicit trade has severely undermined the legal market. The counterfeit products are sold cheaply, eroding the market share of legitimate, tax-paid tobacco. As a result, Australia is reportedly losing up to AU$1.6 billion annually in potential tax revenue.
During a CNBC Indonesia Coffee Morning discussion, Commission XI member of the Indonesian House of Representatives, Mukhamad Misbakhun, cautioned that Indonesia must carefully consider the broader consequences of adopting a similar plain packaging rule. He highlighted that the policy in Australia has led to a situation where the official cigarette industry’s contribution to state revenue has drastically declined, overshadowed by the dominance of illegal cigarettes.
Misbakhun stressed that the tobacco ecosystem is not solely a health issue. He urged the government to consider the economic impact, particularly on tobacco farmers and factory workers, before proceeding with the regulation. ‘Please discuss the health aspects, but also pay attention to other aspects, such as the welfare of tobacco farmers and cigarette factory workers,’ he stated.