Smoking

Indonesia accused of favouring big tobacco as vaping industry faces giant tax increase

The government is proposing a 57 per cent duty on e-cigarettes in the hope that it will stop younger people from using them

PUBLISHED : Wednesday, 24 January, 2018, 2:23pm
UPDATED : Wednesday, 24 January, 2018, 11:10pm

Chain-smoking Indonesia is moving to stub out its booming e-cigarette sector, sparking criticism that the government is siding with giant tobacco firms at the expense of public health.

The Southeast Asian nation has one of the world’s highest smoking rates – some 65 per cent of adult men smoke – with a pack costing just US$2.

Cigarette advertising is everywhere across the vast archipelago which once had the dubious distinction of being home to one of the world’s youngest nicotine addicts – a chain-smoking toddler who made global headlines in 2010.

Smoking cessation products are tough to find and Indonesia stands out as a key growth market for global tobacco firms increasingly shut out of countries with tough antismoking legislation.

Despite its tobacco-haven status, e-cigarette cafes have been popping up across Indonesia in recent years amid debate over their safety.

In response, Jakarta said it will impose a whopping 57 per cent tax on non-tobacco alternatives starting this summer.

Hasbullah Thabrany, health expert and adviser for the National Commission on Tobacco Control, warned that while customs and excise law required the government to set taxes for such products, it was possible that authorities were using the levy to take sides.

He added: “I do believe that the policy sides with the [tobacco] industry.”

Rhomedal Aquino, spokesman for the Association of Indonesian Personal Vaporizers, agreed with a tax plan to control consumption, but said a 57 per cent duty “will kill a growing industry”.

“It will make us look like a killing machine when we’re not,” he added.

Indonesia’s trade minister Enggartiasto Lukita was criticised by antismoking groups in November when he suggested tobacco farmers would be hurt by the fledgling vaping industry, and that those turning to e-cigarettes should smoke regular cigarettes instead.

“We should turn vapers into conventional cigarette smokers,” he said at the time.

IT worker Roy Iskandar, a heavy smoker who now vapes after numerous failed attempts to quit altogether, is worried about looming price increase.

This is going out of the frying pan into the fire
Hasbullah Thabrany

“If they impose such high taxes, people who feel healthier after quitting conventional cigarettes like me could relapse,” the 38-year-old said.

Indonesia’s customs office said it hopes the plan will make e-cigarettes unaffordable for children, while the health ministry said it is not sold on the argument that vaping is safe.

“E-cigarettes are just as dangerous and can be even more carcinogenic” than regular cigarettes, said senior ministry official Muhammad Subuh.

“We reject both conventional and electronic cigarettes – it’s better to quit smoking altogether. There is no such thing as ‘less dangerous’ when it comes to smoking.”

Jakarta has also disputed claims the new policy puts economics ahead of public health.

But tobacco is big business, contributing some US$10.5 billion in taxes annually, while the vaping industry kicks in just US$7.5 million, mostly through sales taxes.

Local brand Gudang Garam, which makes ubiquitous clove-infused cigarettes, is one of the country’s biggest employers and the two brothers who own rival Djarum top the list of wealthiest Indonesians.

“This is not about siding with one business,” said Deni Sirjantoro, spokesman for the Indonesian Customs and Excise office.

“State income from the vaping sector is not as big as tobacco duties.”

Cigarette duties vary with a top rate of 54 per cent. But activists say some of the most popular brands are taxed at rates around 35-40 per cent – far less than the proposed 57 per cent vaping duty.

Meanwhile, health experts continue to call for higher taxes on cigarettes, but do not endorse switching to non-tobacco products.

“It is still an addictive substance,” said Hasbullah Thabrany, a public health analyst at the University of Indonesia. “This is going out of the frying pan into the fire.

“Imposing higher duties is the most effective method to control consumption – people care more about losing money than losing their health.”