Commission I of Indonesia's House of Representatives (DPR) plans to revise Law No. 32/2002 on Broadcasting by adding a full ban on the advertisement of tobacco-related products on television and radio. Indonesia's tobacco industry, a massive industry in Southeast Asia's largest economy, objects to this plan. This ban would also have a big affect on government revenue (excise duties on cigarettes are a key source of government revenue) as well as on revenue generated by media institution because tobacco companies are the fifth-largest advertiser in Indonesia.

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Production of hand-rolled clove cigarettes (kretek) fell 30 percent year-on-year (y/y) in 2016 due to stricter smoking regulations in Indonesia. Kretek is a clove cigarette that consists of tobacco (70 percent), and ground cloves, clove oil as well as other additives (30 percent). These clove cigarettes are the clear favorite of Indonesia's smoker community. It is estimated that 85 percent of all smokers in Indonesia prefer kretek cigarettes over white cigarettes. In total, around 55 million Indonesians consume tobacco-related products.

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The Finance Ministry of Indonesia will study whether the price of a package of cigarettes can be raised to IDR 50,000 (approx. USD $3.8), almost twice as high as the current average price of a package of cigarettes in Indonesia. The price hike would help the government to reduce a looming tax shortfall and discourage people from consuming their death sticks. The Tobacco Atlas estimates that there are 53.7 million active adult smokers and 2.6 million active youth smokers in Indonesia. Hence, Indonesia is the third-largest cigarette consumer (after China and Russia).

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Indonesia is one of the few nations around the globe that is yet to ratify the World Health Organization (WHO)’s Framework Convention on Tobacco Control (FCTC). The FCTC mandates strict limits on tobacco advertising, sponsorship, production, sale, distribution and taxation in order to protect people from the negative health, social, environmental and economic consequences of cigarette consumption or exposure to cigarette smoke. However, it will be a cold day in hell before Indonesia ratifies the FCTC.

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In the first quarter of 2016 Indonesia's manufacturing activity declined 1.34 percent from the fourth quarter of 2015 according to data from Statistics Indonesia (BPS). This decline is primarily caused by weaker growth of the processed tobacco industry (-9.99 percent q/q), rubber & plastic industry (-7.66 percent q/q), paper & paper products industry (-5.73 percent q/q), the motor vehicles, trailers and semi-trailers industry (-4.54 percent q/q), and electrical equipment (-4.13 percent q/q). BPS Head Suryamin said the decline of the tobacco industry was caused by a weak harvest, not because of a rise in the tobacco tax rate.

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Indonesian clove farmers are optimistic that the nation's clove production in 2016 will be similar to last year's production realization in the range of 100,000 to 110,000 tons, provided that the weather is good and there will be no excessive rainfall. I Ketut Budiman, Secretary General of the Indonesian Clove Farmers Association (APCI), said Indonesia's clove farmers will not raise their production target in order to maintain clove prices at profitable levels. Currently, the clove price at the farmer level is IDR 100,000 (approx. USD $7.19) per kilogram, while farmers' production costs are estimated at IDR 75,000 per kg.

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Tahun 2015 adalah tahun yang sulit bagi industri rokok Indonesia karena terjadi kenaikan cukai sebesar 8,7% untuk produk-produk tembakau pada awal tahun 2015 dan melemahnya daya beli masyarakat akibat perlambatan ekonomi negara ini. Pada sembilan bulan pertama tahun 2015 penjualan rokok di Indonesia jatuh 1,3% pada basis year-on-year (y/y) menjadi 232 miliar rokok. Tahun depan, tantangan-tantangan akan tetap ada karena Pemerintah Indonesia mempersiapkan kenaikan pajak tembakau yang baru (23%). Kendati begitu, daya beli masyarakat diprediksi membaik karena pertumbuhan ekonomi mungkin berakselerasi.

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Indonesia's tobacco production is expected to rebound to 182,000 tons in 2016 according to the Indonesian Tobacco Farmers Association (APTI), up 7 percent from an estimated 170,000 tons this year. Higher tobacco production is needed as the country's cigarette manufacturers are producing more and more cigarettes each year. With Indonesia's tobacco industry requiring about 300,000 tons per year, the industry remains dependent on tobacco imports. Indonesia is the world’s third-largest tobacco consumer (after China and India) with about 60 million Indonesians - aged over ten years - being categorized as smoker.

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The 'Top 100 Indonesia brands' ranking, issued by UK-based brand consulting firm Brand Finance, has a new leader. On top of this year's list is majority state-owned telecommunications firm Telekomunikasi Indonesia (Telkom) with a brand value of USD $2.8 billion, replacing Indonesia's largest tobacco company HM Sampoerna (which fell to fourth position in this year's ranking). Other Indonesian top brands are tobacco producer Gudang Garam and Bank Mandiri, Indonesia's largest bank (by assets).

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Produsen rokok terbesar Indonesia, Hanjaya Mandala Sampoerna (HM Sampoerna), menyempitkan cakupan harga untuk rights issue 4-to-65 dari cakupan Rp 63.000 - Rp 77.000 ke cakupan baru pada Rp 65.000 - Rp 77.000 per saham. HM Sampoerna, unit lokal dari perusahaan raksasa tembakau global Phillip Morris International Inc., menargetkan untuk meraup 1,4 miliar dollar Amerika Serikat (AS) melalui penawaran 269,7 juta saham. Menurut laporan, perusahaan ini akan menerima pesanan dari para investor institusi dan ritel mulai dari hari Senin (21/09).

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Indonesia's largest company by market capitalization is still HM Sampoerna, the country's largest tobacco company. The company has been the top company in Indonesia since March 2013 when it replaced Astra International, Indonesia's largest diversified conglomerate, on the top spot. Astra had been Indonesia's largest company since 2010. Currently, the third-largest company in terms of market capitalization is Unilever Indonesia. Unilever, which is Indonesia’s largest consumer goods producer, jumped four places in the ranking since late 2012.

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