16 January 2022 (closed)
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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.
Based on data from research firm AdsTensity, Indonesia's tobacco industry spent a total of IDR 6.3 trillion (approx. USD $474 million) on television advertisement in 2016; the biggest spenders in this industry being Djarum (IDR 1.91 trillion), Gudang Garam (IDR 1.32 trillion), and HM Sampoerna (IDR 1.25 trillion).
Elvira Lianita, Head of Fiscal Affairs and Communication at HM Sampoerna, said the government needs to re-think whether a full ban would be appropriate as there already exists Law No. 109/2012 that limits tobacco-related adds in Indonesian media (there is a limit to the timing and content of the add, for example the cigarette itself is not allowed to be visible anymore). Lianita added that it would have far-reaching effects if the government bans tobacco-related adds on television and radio because not only earnings of the tobacco industry are to decline but also government revenue, revenue of media institutions, and the welfare of many small Indonesian tobacco farmers as well as workers in the country's cigarette plants.
Budi Darmawan, Corporate Communications Manager at Djarum, said the ban would have a big impact on the tobacco industry of Indonesia because among all forms of advertisement, advertisement on television proves to be the most effective form of advertisement. That is the reason why Djarum spends a significant portion of its budget on TV adds.
Meanwhile, the Indonesian Consumers Foundation (YLKI) urges the government to completely ban tobacco-related advertisement on television. Tulus Abadi, Chairman of the YLKI, said Indonesia is currently the only country worldwide that still allows cigarette producers to advertise on television.
The DPR's proposal shows that the Indonesian government is in favor of tobacco control and the public's health protection. Earlier, there had been uncertainty about the government's stance toward the tobacco industry. It was seemingly facing a dilemma: curtail tobacco consumption in order to enhance people's health or let the tobacco industry produce, sell and advertise freely in order to safeguard government revenue from the tobacco industry. However, Indonesia is still one of the few Asian countries that is yet to ratify the World Health Organization (WHO)’s Framework Convention on Tobacco Control (FCTC).
In January 2017 the Indonesian government raised the cigarette excise tax by an average of 10.54 percent, while the value-added tax on cigarettes was pushed up 9.1 percent in the same month. These hikes pose serious challenges for Indonesia's cigarette industry but are regarded a good move for child protection and public health.
Meanwhile, the government's tobacco roadmap, which included 5 - 7 percent year-on-year (y/y) growth targets between 2015-2020 (and cigarette production to reach 524.2 billion "death-sticks" by 2020), was annulled by Indonesia's Supreme Court in December 2016 as the roadmap was not considered compatible with the nation's health targets.