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Indonesia Report Card:

Status of Tobacco Use and


Its Control

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Key organization

Tobacco Control in Indonesia

Government Organizations

1. Coordinating Ministry of Social


Welfare
2. Ministry of Health
3. Ministry of Education
4. Ministry of Religious Affairs
5. Ministry of Internal Affairs Non-Governmental Organization
6. Ministry of Foreign Affairs
7. Ministry of Environment 1. National Committee for Tobacco
8. Ministry of Communication and Control (KOMNAS PT)
Information 2. Indonesia Tobacco Control
9. Ministry of Sports Network (ITCN)
10. Coordinating Ministry for
Economics and Industry
11. Ministry of Manpower
12. Ministry of Agriculture
13. Ministry of Trade
14. Ministry of Industry
15. State Ministry of Women
Empowerment
16. Ministry of Law and Human Rights

Abbreviations and Acronyms used in this report:

ASEAN
FCTC Framework Convention On Tobacco Control
GYTS Global Youth Tobacco Survey
HJE Effective retail price (Harga jual eceran)
PP Government Decree (Peraturan Pemerintah)
SKT Hand-rolled clove cigarette
SKM Machine-rolled clove cigarette
SPM Machine-rolled white cigarette
VAT Value added tax

Acknowledgements: This project was supported by The Rockefeller Foundation and


Southeast Asia Tobacco Control Alliance (SEATCA).

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WHO FRAMEWORK CONVENTION ON TOBACCO CONTROL (FCTC):
WHERE INDONESIA CURRENTLY STANDS
Article Indonesia’s current status
6 Price and tax • No price or tax regulation
measures to
reduce the (Note price and tax are covered in Law 39/2007 (amendment of Law 11 on
demand for excise tax) under the Ministry of Finance line authority)
tobacco
8 Protection from • Public places, health facilities, work places, places for teaching process,
exposure to child activity arena, worship places and public transport are declared non
tobacco smoke smoking areas.
• Authorities of public and work places who designate a special smoking room
should provide air ventilation to avoid health hazards to non smokers.
• Public transport may provide a special place for smoking that is physically
separated and is equipped by air ventilation which complies with
requirements stipulated by Ministry of transport.
9 Regulation of the • Do not need to disclose ingredients and emission of tobacco products to
contents of government authorities,
tobacco products • Industry has to provide clear and readable information on nicotine and tar
levels on every cigarette pack
11 Packaging and • Textual health warning must be written: “Smoking can cause cancer, heart
labelling of attack, impotence, and harms pregnancy and foetal development.”
tobacco product • Textual health warning is printed on the back panel of each cigarette pack
with about 1 mm border with contrasting color between the front and base
color, with minimum size of 3 mm.
• No regulation on misleading terms such as low tar, light, ultra light, mild.
13 Tobacco • Cigarette can be advertised and promoted by those who produce and/or
advertising, import it.
promotion and • The advertisement can be in electronic, printed or outdoor media.
sponsorship • All advertisements must include health warning.
• Advertisement in the electronic media is prohibited during the day from
05.00hrs – 21.30hrs.
• The advertisement must not show cigarette pack, someone smoking, with
picture or words associated with children, teenagers and pregnant women
and display the product brand.
• Sponsorship is allowed by those who produce and/or import cigarette in
accordance with advertising and promotion regulations
• Free samples or gifts in the form of cigarettes or other products that carry
cigarette brand names are prohibited.

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Tobacco Use
70 63.1 40
Tobacco use in Indonesia has grown over the last four 62.2
34.4 35
60
decades. From 1960 - 2004, cigarette consumption had

% of adults that sm oke regularly


53.4
31.5
30
50
increased 6.2 folds from 35 billion to 217 billion sticks 27
25

per annum1. Based on National Socio-economic Survey 40


20
Male
Female

2004, the smoking prevalence among adults 15 years and 30


15
All

older increased from 31.5% in 2001 to 34.4% in 2004 (or 20


10

more than 50 million adults are smokers)2. Adult male 10


4.5 5
1.7
smoking prevalence was 63.1%, a 1.4% increase from the 0
1.3
0

year 2001. There was a three fold increase in adult female 1995 2001
Year
2004

smoking from 1.3% in 2001 to 4.5% in 2004. Smoking


prevalence is higher in rural (36.5%) than urban (31.7%) Smoking Prevalence among adults
15 years and older by gender
population. Indonesia, 1995, 2001 and 20043

North Maluku reported the highest smoking prevalence (42%), far exceeding the national
figure (34.4%) in 2004. Three in four (76.6%) male smoke and 4.3% females smoke. The
highest prevalence of female smoking (10%) was reported in Papua4. The smoking rate is
lower among the older age group and among those with a higher education (university
graduate)5.

The percentage of current smoker that reported to have started smoking before the age of
19 years increased from 68% in 2001 to 78% in 2004. It was noted that the highest
increase occurring in 5-9 years age group from 0.4% to 1.8%3.

The smoking trend was reported to be higher among the poor as compared to the rich.
The poorest households spent about 11% of their monthly expenditures on cigarette and
betel nut, while the richest spent 9.7%6. The average cigarette consumption among
smokers was 28 packs of 12 sticks per month and it is higher among the adult male
smokers5.

According to the Indonesia-national Global Youth


Tobacco Survey (GYTS) 20067, one in three (37.3%)
youth had ever smoked cigarettes and 30.9% had smoked
their first cigarette before they reach the age of 10. About
12.6% of youth are current smoker; that is 24.5% among
boys which is significantly higher than girls (2.3%).
Among the current smokers, 3.2% reported that they were
addicted to cigarette because it is the first thing they
Youth take up smoking before consume in the morning.
the age of 19.
Inevitably tobacco is the most common risk factor for
various illness (chronic respiratory, cardiovascular, cancer, reproductivity and
impotency) and deaths. In 2005, it was estimated about 400 thousand or 23.7% of the
total death in Indonesia (1.7 million) caused by tobacco related diseases. In view of this,
the economic loss due to premature mortality, morbidity and disability was estimated to
be at least US$ 13.84 billion (Rp 125 trillion), much larger than the tobacco tax revenues
of US$ 2.94 billion (Rp 32,65 trillion) or about 4.7 times more. The health care cost of
smokers with tobacco attributed diseases was US$ 221 million8.

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Tobacco Industry Cigarette Market Share by Companies, July 2006
National Market Share by Industry, July 20069

In January 2003, the market share for cigarettes 22.3


31.7
in Indonesia was dominated by three large 3.1
companies: Gudang Garam (32%), Djarum
(23%) and HM Sampoerna (19%). After Phillip
17.2
Morris’s acquisition of Sampoerna in mid 2005, 25.9
its market share increased to 26% by July 2006,
taking over Djarum as the second biggest Gudang Garam HM Sampoerna Djarum
Philip Morris Bentoel Other
tobacco industry in the country. Recently, its
market share continues to increase to 28.2% (in October 2007), taking over Gudang
Garam (23.6%). With this, Sampoerna become the biggest tobacco industry player in the
country.

In 1960-2005, cigarette production increased by 6.3 fold from 35 billion to 220 billion
sticks10. The most popular type of cigarette, clove cigarette (kretek) has increased its
production ten-fold between 14.3 billions sticks in 1969 to 156 billion sticks in 1994. The
white cigarette production also doubled from 11.0 billion to 21.2 billion sticks. As the
demand increased year by year, the cigarette production of machine and hand made clove
as well as white cigarettes reached 197.7 billion sticks in 200211.

There are 225 large (28%) and 585 medium (72%) tobacco related industries in 2004. Of
these, 60.9% were involved in drying and processing tobacco leaf, 29% engaged in
producing clove (kretek) cigarettes and 1.2% manufacturing of white cigarettes. About
258,678 workers are employed in tobacco manufacturing, accounting for 6% of the total
industry workers in 200412. The Excise Bureau reported that 6 million sticks or less hand-
rolled cigarettes are produced annually. The demand for hand-rolled cigarettes has
resulted in an additional 155 very small companies since 200213. There are 684 000
tobacco farmers in 2005 or 1.6% of total agriculture labour force who worked seasonal in
4 months a year14.

Proportion of arable land devoted to tobacco cultivation relatively stable at 1.2% for 40
years (1961-2001)15. However, since 2002 the proportion tends to decrease from 1.16%
(260,738 hectares) to 0.86% (198,212 hectares) in 200516. It was observe that there was a
sharp decreased from 224 thousand hectares in 1961 to 198 thousand hectares in 2005.
However, the cigarette production was increased from 35.5 billion sticks in 1961 to 220
billion sticks in 2005 resulting from imported tobacco leaf10.

Majority (96%) of tobacco production comes from three provinces including East Java
(56%), Central Java (23%) and West Nusa Tenggara (17%). Other provinces such as
Yogyakarta, North Sumatra, West Java and Bali also contributed 4% of total tobacco
production17.

To date, tobacco industries in Indonesia have an almost absolute freedom to advertise


their products in any form and through almost all communication channels18. The
marketing strategies transcend direct advertisement, promotion and sponsorships and
resulting in creating smoking as a social norm to children and adolescents. The tobacco
industry also promotes their good image through the corporate social responsibility
activities.

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Advertising ban

Under the existing PP19/2003


government regulation, anybody who
manufactures or import tobacco
products are able to advertise their
products. These advertisements can
be in the form of electronic, printed or
outdoor media and health warning
must be incorporated. They are also
permitted to sponsor events but are
subjected to the advertising and
Direct advertisement of A promotion regulations. Free samples or Advertising that appeals to
Mild and Marlboro cigarettes gifts in the form of cigarettes or other youth sponsored by DJARUM
with gigantic billboards. COKLAT.
products that carry cigarette brand
names are prohibited.

Prior to 1990, Indonesia banned all TV advertisements. It was lifted in 1990 and as the
current regulation permits, almost no restriction exists on tobacco advertising. However
there are some restrictions. Images of cigarette packs, someone smoking, pictures or
words associated with children, teenagers and pregnant women and display of the product
brand are banned in the advertisements. TV tobacco advertising is
prohibited from 5.00a.m to 9.30p.m, but proven to be ineffective.

The tobacco industry contributed only 7% of the estimated Rp 21


trillion spent on TV advertisement from the top 10 advertisers19. In
1996, the revenue of cigarette advertisements in outdoor media
was 6.9% of the total advertisement income20. Revenue from
cigarette advertising increased after decentralization laws were
implemented in 2001 as taxes on billboards became a significant
part of local government revenues.
Television is still a breeding ground
Children are very much influenced for the industry in the guise of talk
by advertisements that associate shows and reality games
tobacco use to success and being
trendy. The GYTS 20067 revealed that over 9 in 10
students aged 13 to 15 years old were exposed to cigarette
advertisements. Although the distribution of free samples
of tobacco products is banned by the existing regulation,
14.4% of the respondents had been offered free cigarettes
by tobacco company representatives. The
A free exposure to cigarette advertisements has
cigarette is influenced youth smoking uptake. This is
given away
indicated by the decreasing age in smoking
in a free
concert initiation over the period 1995 to 2004. The
sponsored average age of first cigarette uptake declined
by the from average 18.8 years of age in 1995 to 18.3
industry. years in 2001 and became 17.4 years in 20045.
It is obvious that over the years, the industry

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has been blatantly violating government regulations because promoters have been giving
out free cigarettes to attendees of concerts or events sponsored by the industry.
The industry has been aggressively using all available
channels to advertise including billboards, banners,
posters, and lampposts. Apparently youth was one of its
target groups because direct advertisements can be found
near schools, malls, sport arenas, and places where youth
usually hangout.

Slogans were also used as part of advertising and these


were changed once every three
to four months. Children are
exposed to many indirect
advertising in the form of public A giant billboard of Raflesia Park is
service announcements on events sponsored by DJARUM SUPER.
sponsored by the industry. This is
despite a ban on direct advertising on
television daily until 9.30pm.

Sponsoring youth events is a dominant


strategy where the industry usually
distributes free cigarette
Captivating slogans are
samples and gives discount
used by the industry to
appeal to youth lifestyle prices. The industry also
sponsored music, sports,
movies and cultural events, starting from the
community to national levels. The industry capitalises
to sponsor significant events: Indonesia Independence
Day and religious holidays (Idul Fitri, Ramadhan, Isra
Mi’raj (The Ascension of Prophet Muhammad), and
Maulid Nabi (The Birth of Prophet Muhammad).
Movie, music and
Corporate Social Responsibility (CSR) programmes sport events
are conducted under both brand and company names. sponsored by the
These CSR activities are aimed to build good industry.
corporate image and to enhance their network with
government officials and public. Low income groups
are the industry’s
primary targets as they
are given educational,
emergency response (for
national disasters) and
environmental
programmes.

Aid was given to earthquake and Sampoerna sponsored entrepreneur


tsunami victims by the industry. excellence for university students.

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Health Warning

PP 19/2003 government regulation stipulates a health warning to be placed on and


comprises at least 15% size of the outdoor advertising
media.

Currently, there is only one authorized textual health


warning that states “Smoking can cause cancer, heart
attack, impotence and harms pregnancy and foetal
development”. It is printed on the back of each cigarette
pack with about 1 mm border with contrasting colour
between the front and base colour, with minimum size of 3
mm. The same health warning also applies to any forms of
advertisements including billboards.
Textual health warning
The government regulation does not include a ban on placed at the back
misleading descriptors such as ‘mild’ or ‘light’. This has panel of the pack
created an increasing number of brand names using ‘mild’ and
‘light’ over recent years. A report indicated a 20 per cent increase in the domestic sale of
“Sampoerna A Mild” in the first quarter of 2004, the highest among hand-rolled and
machine-made brands compared with the same quarter in 200321. The increase is believed
to be related to consumers’ perception that ‘light’ or ‘mild’ cigarettes are safer products.

A recent study showed that a higher percentage (76.3%) of respondents chose both
graphic and text health warning to be incorporated on a cigarette pack. About 9% prefer
only textual health warning and 15.3% prefer only graphic health warning. A large
majority (78.2%) indicated that the health warning should cover 50% of the cigarette
pack. About two in three (68%) respondents stated that the graphic health warning should
use horror and specific pictures22.

Even with the textual health warning, the cigarette pack is still not considered a means of
advertising. As a result the pack is used by the industry as their marketing tool by
continually introducing new creative pack designs and promotional text to distract
smokers from the health warning and to make them appealing to the youth.

AESTHETIC DESIGN PROMOTIONAL TEXT

8 Tobacco industry reduces the impact of the health warning by distracting smokers with either
aesthetic designs or promotional texts. The aesthetic designs are used to cover 85% of the pack.
Smoke-free Environment

In 2005, the Governor of Metropolitan Jakarta issued a Local Act on Air Pollution
Control No 2/2005 on outdoor pollution with one article on Smoke Free Area (article 13)
among 45 other articles. The law was further elaborated in the subsequent Governor
Decree No 75/2005 on Smoking Ban. The smoking ban includes public places, health
facilities, work places, educational institutions, children playground, places of worship
and public transport. This current regulation is under the responsibility of local
government.

The clean air law has the least resistance as it provides a room for smokers in indoor
public and workplaces as long as the room has air ventilation. Authorities of public and
work places who designate a special smoking room should ensure that the smoking room
is equipped with air ventilator to protect non-smokers from secondhand smoke. Public
transport may provide a place for smoking, which is physically separated and is equipped
by air ventilator, complying with Ministry of Transport’s requirements.

Localities that recently passed regulations on Smoke Free Policy are Bogor and Cirebon
Municipalities and there are others that have not publicly announced.

Despite existing regulation that has, since 1999, banned smoking in some places,
enforcement is still lax. Based on the GYTS 20067, more than 80% of students aged 13-
15 years were exposed to secondhand smoke in public places as well as 64% were
exposed in their homes.

According to the National Socio-Economic Survey 2004, about 31% or more than 45
million people were exposed to secondhand smoke at home. More than 80% of adult
smokers (15 years and above) reported they smoked inside their homes with other family
members present. Women were accounted for 36.7 million or 4 times higher than men
have been exposed to secondhand smoke.

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Taxation

According to the Ministry of Finance Decision No. 118/PMK.04/2006 and No.


406/KMK.04/2000, three types of taxes are imposed on tobacco products: value added
tax (VAT), advalorem excise tax and specific tax. The value added tax is 8.4% of the
effective retail price (HJE-Harga jual eceran). It is a flat rate tax that does not depend on
the size of the industry and the type of tobacco product.

The advalorem excise tax is imposed on each stick of cigarette produced whose rate
depends on the type of tobacco product and scale of production. This tax rate varies from
3 percent to 40 percent. In the existing tobacco taxation policy the excise tax rate ranges
between 26% and 40% for machine-made clove (kreteks) and white cigarettes. As for
hand-made kreteks, it ranges from 4% to 22%. The variation in rates depends on the type
of cigarette (machine or hand-rolled) and the production scale.

While specific tax is a flat rate imposed on each stick of cigarette and on cigarettes only.
Non-cigarette tobacco products are excluded. The amount of tax imposed varies with the
size of the industry. The tax rates range from Rp 3/stick for small size industry
(producing less than 500 million sticks), Rp 5/stick for medium size industry (producing
between 500 million and 2 billion sticks) and Rp 7/stick for large industry (producing
more than 2 billion sticks)23. A same amount is imposed on all three types of cigarettes:
hand-rolled clove cigarettes (SKT), machine-rolled clove cigarettes (SKM) and machine-
rolled white cigarettes (SPM). This is the newest type of cigarette tax and was
implemented effective July 1, 2007.

The average current cigarette tax is 31% of the total retail prices. It was perceived as the
lowest tax rates in the region next to
Tobacco Excise Tax Revenue (1999-2005)
Cambodia24. It is clear that the cigarette prices
in Indonesia have always been lower than the 35 32.65
neighbouring countries. 30 25.93
28.67

25 22.88
Trillion Rupiah

The revenue from tobacco excise tax 20 16.49


increased 11 folds from Rp. 2.65 trillion (USD 15
294 million) in 1994 to Rp. 32.65 trillion 10 7.45
10.11

(USD 3.63 billion) in 2005. It was 6.7% of 5


total domestic revenue in 200525.
0
1999 2000 2001 2002 2003 2004 2005

The excise taxes for tobacco products should not exceed 55% of the retail sales price
under the Law No 11/1995. The new draft law prepared by the Ministry of Finance
proposes to increase the tobacco excise tax to 65% was withheld at the parliament,
pending approval for further process. Similarly, the tobacco draft bill that suggested a
65% increase of cigarette tax with 10% earmarked for tobacco control related activities
failed to be included in the 2007 National legislation Agenda.

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References
1
http://www.fas.usda.gov/psd/complete files/TOB-1222000.csv in Tobacco Source Book 2004, Ministry of
Health, Republic of Indonesia.
2
National Socio-Economic Survey 2004.
3
National Socio-Economic Survey 1995, 2001, 2004. (Aceh and Maluku not included in 2001).
4
National Socio-Economic Survey 2001 and 2004.
5
National Socio Economic Survey 1995, 2001, 2004.
6
Kemiskinan, Pola Konsumsi dan Kecenderungan Merokok, Puguh Irawan, Seminar “Rokok dan
Kemiskinan” Lembaga Menanggulangi Masalah Merokok (LM3) Hotel Santika, Jakarta, 25 Mei 2004.
7
Tjandra Y.Aditama at al. Global Youth Tobacco Survey Indonesia, 2006.
8
Kosen S, 2007. Health and Economic Impact Of Tobacco Use In Indonesia. MOH, Center for Health
Services and Technological Research & Development National Institute of Health Research &
Development, Jakarta, Indonesia.
9
http://www.wartaekonomi.com/indikator.asp?aid=8208&cid=25
10
Directorate General of Agro and Chemical Industry, Ministry of Industry, July 2007
11
http://faostat.fao.org/site/408/DesktopDefault.aspx?PageID=408
12
Central Board of Statistics, Indicator of large and medium enterprise, various years (the latest publication
was in 2004)
13
Stephen Marks, July 2003. Cigarette excise taxation in Indonesia, an economic analysis. Partnership for
economic growth, Bappenas and USAID in Tobacco Source Book, 2004. MOH, Republic of Indonesia.
14
Ministry of Agriculture. Tree Crop Estate Statistic of Indonesia (Clove), 2004-2006, Jakarta, December
2006.
15
http://faostat.fao.org
16
http://faostat.fao.org and Ministry of Agriculture (various years)
17
Processed from the DG of Farming Development, Ministry of Agriculture, 2002 in Tobacco Source Book
2004, Ministry of Health, Republic of Indonesia.
18
Philip Morris Document, Smoking and Health in Indonesia, 1998.
19
AC Nielsen Media Research, 2007
20
Catherine Reynolds 1999. Tobacco Advertising in Indonesia: “the defining characteristics for success”.
Tobacco Control 8:85-88 http://tc.bmjjournals.com/cgi/content/full/8/85
21
The Sampoerna Investor’s Newsletter 26 April 2004: First Quarter Sales by Brand 2003, 2004.
22
Pusat Penelitian Kesihatan, Universiti Indonesia, Yayasan sJantung Indonesia and SEATCA, Peringatan
Bahaya Merokok Pada kemasan Rokok dalam Upaya Peningkatan Kesehatan, 2007.
23
MOF Decree No 118/PMK.04/2006, December 2006 to begin into effect 2007.
24
MOH, 2004. The Tobacco Source Book: Data to Support a National Tobacco Control Strategy. p.72.
25
The Government of Indonesia Budget for Several Years and Custom and Excise Directorate General.

Contributors:
Widyastuti Soerojo
Setyo Budiantoro

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