Indonesia's Tobacco Industry Faces Mass Layoffs Amidst New Regulation Backlash

The Indonesian tobacco industry (Industri Hasil Tembakau - IHT) is facing the threat of mass layoffs due to new government health regulations outlined in Government Regulation (PP) Number 28 of 2024. The Indonesian Employers Association (Apindo) and related IHT associations have urged President Prabowo Subianto to review these regulations, arguing they could severely damage the national tobacco ecosystem and lead to widespread unemployment. Sutrisno Iwantono, Head of Public Policy at Apindo, highlighted three key provisions in the regulation that he believes will harm the domestic tobacco industry. These include the mandate for plain packaging with uniform colors and designs, the establishment of maximum limits for nicotine and tar content, and the prohibition of additives in tobacco products. He contends that these rules could effectively shut down legal industries, fuel the growth of illegal cigarettes, and reduce government revenue from excise taxes, without demonstrably improving public health. "The standardization of packaging, tar-nicotine limits, and the ban on additives will de facto close down legal industries, and the impact will certainly be on the workforce, and it will actually foster illegal cigarettes without proven health benefits," Sutrisno stated during a press conference in South Jakarta. "The legal ones, those who comply, will have to bear a high burden, but it also cannot solve the main problem regarding health because illegal industries will grow. This means that people will continue to smoke, but the government will suffer losses because excise revenue will definitely decrease." Sutrisno added that these concerns have been repeatedly communicated to the government, particularly the Ministry of Health, but the IHT sector has yet to see a resolution. He emphasized that their appeal is now directed at President Prabowo. Apindo and the tobacco industry do agree on certain points, such as prohibiting minors from purchasing or using tobacco products and raising the age limit to 21, as well as the implementation of 50% graphic and textual health warnings on packaging. Edy Sutopo, Chairman of the Indonesian Tobacco Community Alliance (AMTI), echoed these concerns, stating that the problematic three points are not aligned with efforts to control cigarette consumption for public health but rather aim to kill the IHT industry. He specifically pointed to the nicotine (1mg) and tar (10mg) limits, arguing that most local Indonesian tobacco and clove products exceed these levels. Enforcing such limits would force the national industry to rely on foreign tobacco, severely impacting local farmers. Furthermore, Sutopo stated that banning additives is also unfeasible, as many products rely on them. For instance, cooling agents like menthol, used in both kretek and white cigarettes, and even small amounts of sugar for moisture regulation in local tobacco, as well as fruit and vegetable extracts, would be prohibited, affecting even e-cigarettes.