Indef: Proposed Plain Cigarette Packaging Without Brands Potentially Eliminates Economic Impact Of IDR 182.2 Trillion

JAKARTA - The Institute for Development of Economics and Finance (Indef) estimates that the proposed packaging of plain cigarettes without brands has a lost economic impact of around Rp. 182.2 trillion.

The proposal is contained in the Draft Regulation of the Minister of Health (RPMK) on Tobacco Products and Electronic Cigarettes.

"The economic impact of plain packaging is of course not only for the cigarette industry, but also the packaging industry for paper, then tobacco, cloves, including others, which are also affected. This will have an economic impact of approximately minus Rp. 182.2 trillion," said Executive Director of Indef Tauhid Ahmad in Indef Public Discussion: Suram Tobacco Industry, Revenue of Muram Country which was monitored virtually, Jakarta, quoted from Antara, Monday, September 23.

His party assesses that plain packaging will encourage downtrading (the phenomenon when consumers switch to cheaper cigarette products) to switching to illegal cigarettes faster than it does, and has the potential to reduce demand for legal products by 42.09 percent. The implication of this plain packaging policy is predicted to reduce state revenue by around Rp95.6 trillion.

The existence of estimates of weakening economic impacts and decreasing state revenues due to plain packaging regulations makes there no difference between one brand and another because what stands out is the warning image of the dangers of smoking.

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“Implikasinya apa? Bagi para konsumen dengan situasi ini, yang dilihat hanyalah soal price atau harga, sehingga implikasinya persaingan akan semakin ketat, yang terjadi ini juga memunculkan downtrading secara normal 2-5 persen, tapi yang ini kemungkinan bisa lebih besar lagi karena perbedaannya hanyalah soal harga. Di sisi rokok ilegal, juga bisa meningkat 2-3 kali lipat, karena apa? Ya sangat mudah untuk ditiru begitu dengan gambar yang sama, model yang sama, dan ini yang kemudian memunculkan implikasi yang sangat besar,” ungkapnya.

He also stated that the rules related to plain packaging with the legal product demand scenario decreased by 42.09 percent will have an impact on 1.22 million workers in all sectors. "Open only the IHT ( Tobacco Products Industry), but other sectors are also affected," said Tauhid.

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Tag: ekonomi rokok indef ekonom indef tauhid ahmad