JAKARTA - The government has ratified Government Regulation Number 28 of 2024 (PP 28/2024) as the implementation regulation of Law Number 17 of 2023 (UU 17/2023) concerning Health since the middle of last year. However, several articles in the regulation cause confusion and uncertainty, especially regarding the prohibition of selling cigarettes within a 200-meter radius of the education and children's play units.
Chairman of the Indonesian Retail Entrepreneurs Association (APRINDO), Solihin, expressed his support for the government's campaign on the dangers of smoking for people under 21 years old. Although retailers have implemented the rules by not selling cigarettes to people under 21, the policy of banning the sale of cigarettes within a radius of 200 meters from educational units and children's playgrounds is considered confusing to the business world.
"A big question mark for us, as the General Chair of APRINDO and APINDO DKI, we regret the PP without involving stakeholders, especially APRINDO," said Solihin in Jakarta, Monday, April 21.
This rule makes the business world confused and creates selective logging in its implementation. Several modern retailers have been visited by uniformed officers who are feared to only look for mistakes that are made up. In addition, there has been no clear education from the relevant Ministry in its implementation in the field. Responding to this uncertainty, APRINDO plans to submit a judicial review of the article.
Until now there has been no dialogue about it, suddenly (the rules) have come out. One of our steps is a judicial review, but we'll see if there are adjustments in the implementing regulations that come from input from entrepreneurs, especially retailers," added Solihin.
On another occasion, the General Chairperson of the Indonesian Shopping Center Retailers and Tenants Association (HIPPINDO), Budihardjo Iduansjah, said that business actors had implemented regulations for tightening cigarette sales for minors, such as laying cigarettes behind cashiers. However, the 200-meter ban on sales is feared to fertilize illegal cigarettes.
"If legal cigarettes are not within a 200 meter radius of school, illegal cigarettes can be sold in illegal ways, selling secretly, there will be people who do not pay taxes. Who can control this?" said Budihardjo.
This policy can cause new problems, such as reducing turnover to excise revenues. In 2024, excise revenues will reach IDR 226.4 trillion. Cigarette sales are also one of the main sources of income for business actors. This can eliminate sales of tens of trillions, it's not a joke, the economy is also in a deposit," added Budihardjo.
Similarly, the Deputy Chairperson of the DPP Association of Indonesian Retail Cooperatives (AKRINDO), Anang Zunaedi, estimates that this policy will drastically reduce retail turnover and cooperatives, especially in MSMEs such as grocery stalls.
"For MSME players, especially retailers, be it cooperatives and MSMEs, (sales) cigarettes can have a contribution of 20-40% to sales. Even in ultra-micro merchant groups in retail, cigarettes can be a driving sector, become the main stock, the contribution can even be more than 40%. So if applied it can decrease to 50% of the total turnover," said Anang.
Therefore, the implementation of policies should not make MSMEs squeezed and even die, especially since the implementation is difficult and the socialization of the relevant Ministries is unclear.
"If (the rules) are indeed implemented, of course it will be difficult, like cooperatives, there are also those that are close to educational facilities, including those within the scope of education. For example, such as cooperative Islamic boarding schools, it is in the educational environment of Islamic boarding schools. Then, market cooperatives, shops that have been around for a long time and before there were educational facilities, it also becomes impossible to implement. " said Anang.
Due to the unclear education from this regulation, the business world has requested that the ban and restrictions on the sale of cigarettes be reviewed. There are concerns that if it is implemented without careful preparation, it will actually create a commotion and conflict in the community.
"In the lowest realm, coercion and intimidation can arise, for example traders cannot sell, goods are confiscated or sealed. Is there no conflict with the community? Can there be friction, can the Police or Satpol PP act? This will add to more severe problems," said Anang.
In line with the retail business world, cigarette manufacturers also admit that they have not received clear socialization from this regulation. The main concern if the policy is implemented in the field is the reduction of hundreds of thousands and even millions of workers.
Chairman of the Association of Indonesian White Cigarette Producers (Gaprindo), Benny Wachjudi, is also worried that President Prabowo Subianto's economic growth target will not succeed.
"The rules need to consider hundreds of thousands of workers involved, including farmers, laborers and so on. Then don't forget the contribution of Tobacco Product Excise of more than Rp200 trillion per year," said Benny.
Benny added that Indonesia has a difference with other countries because it has gardens, industries, and governments that still need the tobacco industry.
"Rp 200 trillion is not a small amount. If the tobacco industry is eliminated just like that, the economy will also decline. We want to pursue 8 percent growth, how can we achieve this target?
"I am afraid that with regulations like this, 50 percent of the economic growth target will also not be achieved if the tobacco industry is removed at this time," he explained.
The pressure on the tobacco industry has begun to be felt, it is feared that the 8% economic growth target will not be achieved. Even though President Prabowo has echoed the need for deregulation so that economic growth targets can be achieved. Regulations on the prohibition of selling cigarettes within a radius of 200 meters from educational units and children's playgrounds create legal uncertainty for business actors.
"The provisions removed will be more certain. The current problem has no legal certainty. The law is there but it cannot be applied. Judicial review is the right step. Gaprindo supports the judicial review plan because the direct impact is felt on traders. If traders are disturbed, the industry will also be disrupted," said Benny.
Meanwhile, the General Chairperson of GAPPRI, Henry Najoan, criticized PP 28/2024 for adopting foreign policies without considering the local context in Indonesia. According to him, this policy can eliminate the local culture history of kretek in Indonesia.
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"By adopting global regulations, the history of the existence of local culture of kretek is threatened to disappear from our country," Henry said some time ago.
Studies from the Institute for Development of Economics and Finance (INDEF) show that the tobacco industry is under pressure with several scenarios discussed by the relevant Ministries, such as a ban on the sale of cigarettes within a 200 meter radius of educational units and children's playgrounds, a ban on the imposition of cigarette advertisements on outdoor media within a 500 meter radius of education units and children's playgrounds, as well as a discourse on uniforming cigarette packaging without brand identity. If all three scenarios are implemented, the potential impact is 2.3 million people losing their jobs, or about 1.6 percent of the total working population.
Especially for the ban on cigarette sales within a radius of 200 meters, the impact will be felt by 33.08% of the total retail, or around 734,799 workers. In addition, government revenues, both central and regional, will also decrease.
"Retails in this area pay taxes and levies. Small retailers can benefit from selling cigarettes by 30% of the total profit earned by these retailers. So, if retail performance decreases, taxes and levies given to the regions will also definitely decrease. This will certainly reduce Regional Original Income (PAD) from the area," said Head of the Center of Industry, Trade and Investment, INDEF, Andry Satrio Nugroho.
Decreased income not only has an impact on reducing production, but also the potential for increasing the circulation of illegal cigarettes. The government must think about ways to make illegal cigarettes that do not provide excise income for the state more suppressed.
"Of course, illegal cigarettes will certainly grow. In addition to the ban on retail sales, the ban on advertising will also definitely reduce PAD. Local governments must be prepared to face these consequences if these regulations are ratified or applicable," concluded Andry.
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