Ministry Of Industry: Not Rising Cigarette Excise Tariffs Are Incentive For Industry Players

JAKARTA - The Ministry of Industry (Kemenperin) revealed that the increase in cigarette excise rates next year is an incentive for industry players.

Previously, the Minister of Finance (Menkeu) Purbaya Yudhi Sadive had received a lot of input from cigarette industry players, especially regarding the tobacco products industry (IHT). From the input obtained, he decided not to change the rate.

Spokesperson for the Ministry of Industry Febri Hendri Antoni Arif said that the increase in cigarette excise in 2026 would increase demand in the IHT sector.

"That alone is already an incentive. Not increasing the excise tax has increased demand," Febri told reporters at the Ministry of Industry's office, Jakarta, Tuesday, September 30.

According to Febri, the increase in cigarette excise has not been able to have a direct impact on IHT. The reason, he said, is that IHT still faces the challenges of the rampant circulation of illegal cigarettes.

"It has an impact, but there are also other factors, especially regarding illegal cigarettes. The impact of excise duty will not increase to utilization. For example, utilization should increase by a certain percentage, but because there are still illegal cigarettes circulating, it doesn't increase that much," he added.

Previously, the Association of Indonesian White Cigarette Manufacturers (Gaprindo) appreciated the government's plan not to increase cigarette excise rates in 2026.

General Chairperson of Gaprindo Benny Wachjudi said that the no increase in cigarette excise rates next year is expected to have a positive impact on the sustainability of the tobacco products industry (IHT).

"Yes, we really appreciate what was conveyed by the Minister of Finance, Mr. Purbaya, discussing that there should be no increase in excise and maybe HJE is very important," said Benny, written Tuesday, September 30.

"Hopefully, by not increasing this (smoking excise rate), the tobacco products industry can breathe slightly, towards recovery," he continued.

Benny explained, production from machine kretek cigarettes (SKM) continues to decline.

He said SKM production reached IDR 15 billion in 2019 and then decreased to IDR 10 billion in 2024.

"Because the tobacco products industry, especially SKM, right, from 2019 the products are still above Rp. 15 billion, in 2024 it has decreased to Rp. 10 billion," he said.

In addition, said Benny, cigarette sales have also decreased by 9 percent per year.

For this reason, Benny hopes that the increase in excise rates in 2026 will help restore the performance of the tobacco products industry in the future.