Tobacco Association Reveals Thousands of Cigarette Factories Shutting Down

JAKARTA — The Indonesian Tobacco Society Association (AMTI) has revealed that thousands of tobacco factories have shut down over recent years.

AMTI Chairman Edy Sutopo stated that the number of domestic cigarette factories previously approached 5,000 units.

“Currently, only 1,700 companies remain. Most of these are small-scale operations. Even several large industries are already struggling with difficulties,” Edy said during a press conference in Gambir, Jakarta, on Tuesday (10 March 2026).

Cigarette production records show an average annual decline of 2.4 per cent.

Edy stated that under Indonesian law, cigarettes remain a legal commodity subject to consumption control measures. However, tobacco farming and producer associations are complaining about government policies that could cripple the tobacco industry.

Among these policies is Government Regulation (PP) Number 28 of 2024 on the implementation of Law Number 17 of 2023 on Health, which is viewed as threatening to the Tobacco Products Industry (IHT).

The government is also preparing a Ministerial Regulation from the Coordinator Ministry for Human Development and Culture (Permenko PMK) that threatens the IHT.

This regulation would limit nicotine content in cigarettes to a maximum of 1 milligramme and tar to 10 milligrammes per stick, which does not align with the characteristics of local tobacco.

“Why? Because by nature, the nicotine content of our tobacco is between 2 to 8 per cent. Meanwhile, tobacco from abroad contains only 1 to 1.5 per cent. So it will be extremely difficult to meet these standards,” Edy explained.

Furthermore, Edy stated that the IHT’s contribution from upstream to downstream sectors to Gross Domestic Product (GDP) reaches 710.3 trillion rupiah.

AMTI noted that the IHT contributed 1.85 billion US dollars in foreign exchange in 2024 and 1.9 billion US dollars during the 11 months of 2025.

“If we look at 2024 data, this amounts to 216.9 trillion rupiah, and this does not yet include taxes. There are regional taxes, corporate income taxes, personal income taxes, and value-added taxes,” Edy said.

“So including all taxes, it could reach approximately 300 trillion rupiah,” he added.