RI Needs To Encourage More Rational Regulation Innovation And Tax Policy

Senior Partner of Roland Berger Ashok Kaul (second from the left). (Photo: Aris Nurjani/VOI)

JAKARTA - Senior Partner of Roland Berger Ashok Kaul praised the Indonesian government's move to encourage innovation in a number of industrial sectors, especially electric vehicles to other nicotine products.

Ashok also appreciated the Indonesian government in a policy that allows the use of tobacco and other nicotine products, in contrast to Singapore which prohibits it.

However, he also highlighted the need for an evaluation of the tax policy which still equates this product with conventional cigarettes.

"For example, regulations related to tobacco and nicotine. On the positive side, Indonesia allows nicotine bag products (nicotine pinches), in contrast to Singapore which prohibits it. However, there is also a negative side, namely the tax rate for these products is still the same as cigarettes," he explained at the 2025 Asia Southeast Summit (ISSA) press conference, Tuesday, May 6.

Ashok said that innovation in the electric vehicle industry sector puts Indonesia on the right track with progressive regulations that encourage sustainable industrial transformation.

"Government regulations are very proactive in encouraging the adoption of electric vehicles. Although on the consumer side it has not fully developed as expected, there is a positive upward trend," he said.

He also highlighted personal experience when offered premium electric vehicle services at a better price than ordinary taxis, this is a clear proof of policy effectiveness

"When I arrived at the airport, I saw a big ad and was even offered electric vehicles as an alternative taxi. Electric vehicle drivers offer the same or better rates than regular taxis, with premium vehicles. This is one of the best examples of progressive regulations in driving the electric vehicle market I've ever seen," he said.

Ashok said that other sectors that have great potential are mining where this industry is very important for the Indonesian economy and requires transformation towards more sustainable practice.

"Another example is the palm oil industry. As someone from Europe, I know that palm oil is an important export commodity from Indonesia to Europe," he added.

While there are still concerns in Europe about the environmental impact of palm oil, he sees that proper regulations can play an important role in encouraging more environmentally friendly production and distribution.

Overall, he considered that Indonesia was on a fairly good track in terms of industrial development.

However, Ashok expressed his disagreement with the long-term implementation of policies such as local content obligations, because this kind of policy can be effective in protecting certain sectors, such as mining, in the short term and in the long term, free market-based approaches are the most optimal.

"If protection or local content policies are needed, it should be implemented within a limited period of time, then stopped along with the development of the industry," he said.

Meanwhile, Former Director, Research Policy & Cooperation, WHO Geneva Tikki Pang said that in industrial transformation to improve health, Indonesia can learn from various regulatory models in other countries, especially related to tobacco bad impact reduction products (THR).

"There is a broad spectrum in this regulatory approach. At one end, there are countries that do not have any regulations at all. The advantage of this approach is open access and healthy market competition, so prices can be more affordable. However, the absence of regulations also risks producing low-quality products," he explained.

Tikki said that countries such as Indonesia and the Philippines that implement progressive and proportional regulations on risks and approaches are important because they allow supervision of the access of minors, while maintaining product quality and safety.

"The Philippines, for example, has a special law on vapes that regulate the user's age limit as well as product quality and safety standards," he said.

Meanwhile, he said there were countries that implemented a total ban on Tobacco harm reduction products, such as Singapore, Thailand, and Australia.

According to him, this ban often grows a dark market that is difficult to control, such as in Singapore, for example, cases of vape smuggling are quite common, and it is likely that many perpetrators have not been detected, while in Australia, even pharmacies selling vape according to a doctor's prescription have been targeted for attacks due to pressure from illegal markets.

"Of all these approaches, I personally prefer a moderate and risk proportionality approach," he added.

Tikki said that Indonesia is currently still facing challenges, one of which is about taxes, so a more rational and balanced policy is needed in regulating this.

"Most importantly, regulations must ensure accessibility and affordability of products for those most in need," he concluded.