Tobacco Products Industry Still Contracts, Ministry Of Industry Reveals The Cause

Tobacco (photo: dock. intermediate)

JAKARTA - The Ministry of Industry (Kemenperin) said that the tobacco products industry (IHT) is still experiencing contraction.

"So, if we look at this tobacco, it is a bit significant contraction, because there is a discussion related to the laws and regulations that are still in process," said Director General of Agro Industry at the Ministry of Industry Putu Juli Ardika at the Ministry of Industry Building, Jakarta, quoted Wednesday, November 1.

The legislation in question is a Draft Government Regulation (RPP) as the implementing rule of the Health Law which is still under discussion.

Putu hopes that when the regulation is completed, it can provide business certainty in the future.

"Hopefully (when the rules are completed) it will provide business certainty and also in terms of purchasing power," he said.

On the same occasion, the Director of the Beverage Industry, Tobacco Products and Budgeting Materials of the Ministry of Industry, Edy Sutopo, said that the IHT had indeed received a number of pressures ranging from an increase in excise from 2020 to the discussion of the Health RPP.

Edy emphasized that this is what makes IHT still unable to experience expansion and continue to contract.

"For the tobacco products industry, there is an increase in excise prices, so from 2020 to 2022, excise duty will continue to rise, then retail selling prices (HJE) will also increase," he said.

It is known, the government has decided to increase the excise tariff on tobacco products (CHT) for cigarettes by 10 percent in 2023 and 2024.

Edy assessed that the cigarette company initially did not want to increase prices to keep consumers. However, in the end, the tobacco products industry was forced to increase cigarette prices considering the profit margin was running low.

"Since the middle of this year, the tobacco products industry has slowly started to increase the price of cigarettes. This affects people's purchasing power of cigarettes, so that new orders will decrease towards the end of this year," he said.

The decline in new orders also caused a decline in production. This condition was made worse by the discussion of the Health RPP, especially in the additive safety section, which was considered to have the potential to kill the IHT.

"This also makes several producers in meeting demand tend to spend their existing supplies rather than increase production. Business actors are also waiting and seeing the development of this RPP discussion. We continue to oversee the discussion of the RPP Health to keep the IHT business climate conducive," he said.

For your information, the Ministry of Industry noted that IKI October 2023 reached 50.70 or continued expansion despite slowing down 1.81 points compared to September 2023 which was 52.51.

Spokesperson for the Ministry of Industry (Kemenperin) Febri Hendri Antoni Arif said, although it was slowing down by 1.81 points, IKI in October was still in an esppansive phase.

"IKI in October 2023 is still at the expansion level, which is 50.70 and that means it will slow down by 1.81 points compared to September 2023, which is a value of 52.51," Febri said in a October IKI assessment release at the Ministry of Industry, Jakarta, Tuesday, October 31.

A total of 16 sub-sectors that experienced a decrease in the value of IKI, with three sub-sectors experiencing the highest decline in IKI values were the Machinery Industry and YTdl Equipment, Tobacco Processing Industry, and the Computer Industry, Electronic Goods and Opticals.

The three sub-sectors that experienced an increase in the value of IKI, namely the Kayu, Goods from Kayu and Gabus, the Non-Mealth Galiran Goods Industry, and the Repair and Equipment Installation Services, which rose to expansion levels after three months of contraction.