Risks of Plain Cigarette Packaging Rules: Farmers and the State Could Both Lose
The House of Representatives (DPR) Commission XI has highlighted a number of potential economic risks that would arise if plain packaging regulations for tobacco products, including cigarettes, are enforced.
Commission XI Chairman Mukhamad Misbakhun explained that the cigarette industry plays a significant role in Indonesia’s economy and fiscal structure. He noted that state revenue from tobacco excise reaches Rp 221 trillion. Furthermore, approximately 6 million people are involved in the entire ecosystem of the tobacco industry, from agriculture to trade, spanning upstream to downstream sectors.
He estimated that the economic chain of this industry could be worth Rp 300 trillion. Unfortunately, he said, the industry is often treated unfairly.
“There is an economic chain worth Rp 300 trillion. And the industry that is treated most unfairly is the tobacco industry. Cigarette factories, to this day, are excluded from the imposition of cost structures in their tax arrangements,” Misbakhun said during a CNBC Indonesia Coffee Morning event on Thursday (9/7/2026).
Assessing the vast economic chain of the tobacco industry, Misbakhun stated that the planned implementation of standardised packaging must not harm cigarette companies.
He outlined several risks that would emerge if all cigarette packaging were made plain white. The first risk is the violation of intellectual property rights.
“People create products with intellectual property rights, so there will inevitably be clashes in supervision, technicalities, and other aspects. Because of these intellectual property rights, there will be legal cases as brand owners will sue if a product is deemed exactly identical,” Misbakhun explained.
He added that if plain packaging is implemented without strict supervision, more counterfeit products will emerge, harming cigarette companies that have registered and obtained brand rights.
“Especially if this is made plain, who will carry out the supervision if violations occur, if the cigarette packaging is all white? Who will carry out the supervision?” Misbakhun questioned.
The second risk is a shift in consumption patterns, where the public will tend to switch to plain-packaged cigarettes, ultimately impacting tobacco farmers who could lose their livelihoods.
“Then the market shifts, and people will no longer distinguish between premium and low-class cigarettes. There will be a shock, no one will want to invest in the cigarette sector anymore, and the worst part is that tobacco farmers will lose their livelihoods,” Misbakhun clarified.
The third risk is that state revenue from cigarette excise will be eroded because the domestic cigarette industry fails to develop, losing competitiveness to illegal cigarettes.
“Don’t blame the government later if excise revenue plummets, and we end up in more debt. Because the deficit will certainly widen,” Misbakhun stated.
According to him, plain packaging would allow illegal cigarette producers or foreign products to flood the market more aggressively, causing the domestic cigarette industry to lose its competitive edge.
“These are the risks we must consider together. Don’t let it be just because of one interest—the desire of anti-tobacco groups to force their will. What could happen? A black market in the industry will emerge, and the potential loss to the state could be enormous,” he concluded.