The Rise Of Illegal Cigarette Circulation, The Ministry Of Industry Will Prepare New Rules

Deputy Minister of Industry Faisol Riza. (Photo: Theresia Agatha/VOI)

JAKARTA - The Ministry of Industry (Kemenperin) will prepare new regulations regarding the circulation of illegal cigarettes, which has been quite rampant in the community lately.

This was conveyed by the Deputy Minister of Industry (Wamenperin) Faisol Riza when met after a media discussion entitled "Quao Vadis for Tobacco Products Industry Protection" in Jakarta, Monday, September 29.

"There are plans to make new regulations, the concept is being prepared. Later when it is ready, it will be submitted to friends (pers). The important thing is that controlling illegal cigarettes can be done," said Faisol.

Based on data from the Ministry of Industry, the circulation of illegal cigarettes in Indonesia continues to increase during the 2019-2023 period.

In 2019, the circulation of illegal cigarettes was 3.03 percent. This figure continues to grow by reaching 6.9 percent in 2023.

Faisol said the highest violation was the plain packaging without excise stamps from the Machine Kretek Cigarette (SKM) type.

According to him, the existence of illegal cigarettes interferes with the performance of the tobacco products industry, especially the decline in the production of the legal tobacco products industry (IHT).

"This will harm legal cigarette manufacturers in Indonesia. Currently, several manufacturers have been affected, including several culinary idle machines, reduced utilization until there is a reduction in labor which will ultimately affect the welfare of workers/laborers in the tobacco products industry," he said.

He also highlighted how the character of Indonesian consumers is very sensitive to prices, so consumers will choose cheaper prices.

"The conducive industrial business industry can be realized if there is cooperation between all parties between the central, regional governments, business actors and the community to eradicate the circulation of illegal cigarettes," explained Faisol.

Previously, Minister of Finance (Menkeu) Purbaya Yudhi Sadive emphasized that the government would not increase cigarette excise rates in 2026.

He conveyed this certainty after holding a meeting with the Association of Indonesian Cigarette Manufacturers (Gappri), including representatives from cigarette manufacturers, such as Djarum, Gudang Garam and Wismilak on Friday, September 26.

"I met with Gappri this morning, a combination of Indonesian cigarette entrepreneurs. There were several people there, including from Djarum, Gudang Garam, from Wismilak. We discussed various things, they gave a lot of input, it just seems that the input must be sorted again, because it is quite complicated," he said in a media briefing, Friday, September 26.

Purbaya added that it appeared that they were still not uniform about what should be proposed, so he asked them to discuss and reformulate more structured and not one-sided inputs.

"But I ask them to write down their input again, discuss between them, so that the input does not benefit one another or harm others," he said.

Dalam diskusi tersebut, Purbaya sempat menanyakan pandangan pelaku industri terkait kemungkinan perubahan tarif cukai.

Namun, para produsen justru meminta agar tidak ada perubahan.

"Tapi satu hal yang saya diskusikan dengan mereka, apakah saya perlu merubah tarif cukai, ya, 2026? Mereka bilang asal enggak diubah sudah cukup, ya sudah saya enggak ubah. Padahal, saya mikir mau turunin, dia minta asal tidak yaudah," tuturnya.

"Waktu itu minta turun, untungnya dia minta konstan saja, yaudah kami enggak naikkan. Jadi, tahun 2026 tarif cukai tidak kami naikkan," tambahnya.

In the discussion, Purbaya had asked the views of industry players regarding the possibility of changing excise rates.

However, the producers actually asked that there be no changes.

"But one thing I discussed with them, do I need to change the excise rate, yes, 2026? They said as long as it wasn't changed it was enough, so I didn't change it. In fact, I thought I wanted to take it down, he asked as long as it wasn't okay," he said.

"At that time he asked to go down, fortunately he just asked for a constant, so we didn't increase it. So, in 2026 we won't increase the excise rate," he added.