14 June 2022 (closed)
Jakarta Composite Index (7,049.88) +54.44 +0.78%
USD/IDR (14,146) -6.00 -0.04%
EUR/IDR (17,335) +57.05 +0.33%
The tobacco and cigarette business in Indonesia is big business. Two tobacco companies are positioned within the top ten of largest companies listed on the Indonesia Stock Exchange (in terms of market capitalization) as there exists a huge market for cigarettes in Indonesia with some 65 percent of Indonesian men being smokers (due to Indonesia's socio-cultural context few Indonesian women smoke). Moreover, the Indonesian government seems unwilling to limit cigarette consumption (both active and passive smoking) among the population.
The greatest example of Indonesia's lack of eagerness to combat smoking is the government's decision not to ratify the World Health Organization (WHO)’s Framework Convention on Tobacco Control (FCTC). In fact, Indonesia is one of the few countries - worldwide - that has not ratified this treaty. The FCTC mandates strict limits on tobacco advertising, sponsorship, production, sale, distribution and taxation in order to protect citizens from the negative health, social, environmental and economic consequences of cigarette consumption or exposure to cigarette smoke.
There are several reasons why the Indonesian government could be reluctant to ratify the FCTC:
- there are millions of Indonesian farmers and workers in the cigarette industry who make a living through society's cigarette consumption
- a significant portion of government revenue (approx. 5 percent) originates from cigarette tax and customs (for imported cigarettes)
- the Indonesian government may have close-knit relationships with major cigarette companies in the country; a relationship that involves sponsorship and donations.
It is not entirely true to claim that the Indonesian government has done few-to-nothing to curb cigarette consumption among the population. Over the past years, we have seen the tax on cigarette sales rising, while the physical act of smoking is not allowed to be displayed in advertisement anymore (however tobacco and cigarette companies are still allowed to advertise; they simply don't show the act of smoking in the adds). Furthermore, it has been made mandatory to put graphic warning pictures on cigarette packages, while the government has set a maximum allowed production figure for cigarettes. However, these measures are not as far-reaching as those mandated by the FCTC and therefore tobacco consumption continues to grow in Indonesia. Alarmingly, the WHO says the country's youth starts smoking younger and younger.
Indonesian daily newspaper Bisnis Indonesia published an interesting interview on Tuesday (02/08) with Matthew Myers. For the past 25 years Myers, President of the Campaign for Tobacco-Free Kids, has been one of the leading figures in the battle against tobacco use in the United States and abroad. His activities are supported by Bloomberg Philanthropies and the Bill and Melinda Gates Foundation.
Question: On several occasions the Indonesian government indicated that - although it has not ratified the FCTC treaty - it implemented measures that are in line with the policies set out in the FCTC. What is your opinion about this?
Myers: It is not accurate if the government claims that it already implemented policies that are in line with the content of the FCTC. There are actually various key points mandated by the FCTC that have not been implemented by the Indonesian government. Firstly, there are no national laws in Indonesia that ban the act of consuming cigarettes/tobacco in indoor spaces. This implies that many Indonesians remain exposed to cigarette smoke (both active and passive) indoors.
Secondly, the local tax and excise tariffs that are stipulated by the government for tobacco-related products are far from the tariffs that are mandated by the FCTC. The FCTC recommends a tax tariff at around 67 percent of the retail price of cigarettes.
Thirdly, the government of Indonesia continues to allow tobacco companies to advertise and/or sponsor events, such as sports and music events.
Question: The government of Indonesia did put a limit on the production of cigarettes and allowed a larger production figure for light cigarettes. Are these good moves?
Myers: Cigarette packages that carry labels such as 'light' or 'low-tar' are actually particularly dangerous because they are part of one big lie as consumers are encouraged to believe that the negative health effects of consuming 'light' tobacco products are less severe. In fact, Indonesia is one of the few countries that still allows sales of 'light' tobacco products. The FCTC bans sales of light products as it has been proven scientifically that the term 'light' misleads consumers. These light tobacco products are just a strategy of tobacco companies to keep people smoking under the false assumption that they are doing something not as unhealthy compared to consuming regular tobacco products.
Question: It is often stated that several events (including sports or music events) cannot be organized in case tobacco companies will be banned from sponsoring events or advertising at these events. What is your opinion about this matter?
Myers: I have often heard this reasoning, all around the world, where-ever I go. However, I have never heard of an event being cancelled due to the lack of funds after the implementation of the ban [on tobacco companies' sponsorship or advertisement activities]. Involvement of tobacco companies in such events (through sponsoring or advertisement) simply gives the false impression that smoking is cool for the younger generation and therefore it should be disallowed.
Question: Does that mean that there exists a very strong relation between cigarette advertisement and cigarette consumption?
Myers: Yes, of course, there is a big relation between both. Advertisement has a big influence on consumers and that is why tobacco companies are eager to advertise. Through advertisement these companies can make the false impression that smoking is cool, sexy and pretend that smoking is all about being free, independent and adventurous.