Regarding Nicotine and Tar Regulations, Coordinating Ministry for Economic Affairs: This Policy is Important, But Must Be Handled Carefully
The Coordinating Ministry for Economic Affairs has requested that the drafting of regulations concerning the Tobacco Product Industry (IHT), specifically the limitation of nicotine and tar levels, be conducted with caution. The government assesses that this sector makes a substantial contribution to the national economy, state revenue, and labour absorption; therefore, any implemented policies must consider various aspects comprehensively.
Eripson M.H. Sinaga, Assistant Deputy for Agro, Chemical, Pharmaceutical, and Textile Industry Development at the Coordinating Ministry for Economic Affairs, stated that while health policies remain essential to implement, their execution should be gradual, data-driven, and mindful of the economic impact. “We view this policy as important for safeguarding public health, but its implementation may need to be carried out carefully, based on data, and perhaps in stages,” said Eripson.
He noted that the formulation of regulations cannot focus on a single aspect alone. The government needs to involve various stakeholders, ranging from relevant ministries and agencies to academics and industry players, to ensure the resulting policy is comprehensive.
Eripson explained that the tobacco product industry plays a vital role in the national economy. According to data from the Coordinating Ministry for Economic Affairs, there are currently approximately 1,700 active tobacco product business units that directly employ over 140,000 workers.
Furthermore, this industry is linked to various supporting sectors, including the plastics, filter, printing, distribution, and trade industries, as well as MSMEs that form part of the tobacco industry supply chain.
Nevertheless, the tobacco industry is reportedly facing various pressures. Production of tobacco products has decreased from 338 billion sticks in 2017 to approximately 307 billion sticks for the 2024–2026 period.
This decline is accompanied by the phenomenon of ‘down-trading’—where consumers switch to cheaper products—as well as increasing indications of illegal cigarette consumption in the domestic market.
Eripson also revealed that the tobacco sector’s contribution to state revenue has declined in recent years, dropping from 5.5 per cent in 2019 to 3.38 per cent projected for 2026.
Under these circumstances, the government has decided not to increase tobacco excise tariffs in 2026 as part of an effort to maintain industry stability and employment.
According to Eripson, the characteristics of Indonesian tobacco must also be considered in the regulatory drafting process. He explained that local tobacco naturally possesses relatively higher nicotine levels due to influences from soil, climate, and the environment. Additionally, the domestic market is still dominated by ‘kretek’ cigarette products, which utilise cloves at a proportion of up to 93 per cent.