Purbaya Develops Excise Scheme to Regulate Illegal Cigarettes

JAKARTA - Finance Minister Purbaya Yudhi Sadewa has opened the option of legalising illegal cigarettes via an excise duty scheme, as an effort to attract state revenue potential while regulating the market. Purbaya stated that the government is currently preparing discussions with the DPR regarding the policy. The policy proposal is said to be complete and is awaiting approval. Purbaya emphasised that this policy does not mean legitimising the circulation of illegal cigarettes as part of the economy, but rather encouraging business actors to enter the official channel by paying excise duties. “It’s not (legitimising). They (illegal cigarettes) must enter the legal route by paying certain excise duties,” said Purbaya. According to this state treasurer, the potential state revenue from the policy cannot yet be calculated. “If it’s really as large as claimed, its contribution could be significant, but we’ll see later. I don’t want to guess first before we see one or two months how it’s implemented,” he explained. Purbaya targets the policy to be implemented at the latest in May 2026. With this scheme, the government hopes that illegal cigarette actors will switch to the official system, allowing for tighter supervision. The government is also providing a transitional space for illegal cigarette business actors to enter the legal system. However, if they do not take advantage of this opportunity, strict enforcement will be carried out.