Indonesia’s Tobacco Policy: Shocking Impact on 2.3 Million Workers and IDR 308 Trillion Loss
Recently, the Institute for Economic and Financial Development (Indef) released a significant study focusing on the effects of Government Regulation No. 28 of 2024 (PP Kesehatan) and the accompanying Minister of Health Draft Regulation (RPMK) on the tobacco and e-cigarette industries. The research indicates that the related policies could impact approximately 2.3 million workers, which accounts for about 1.6% of the national labor force.
Policy Impact Analysis
1. Effects of the No-Packaged Sales Policy
According to Indef economist Taufik Ahmad, the implementation of the new no-packaged cigarette sales proposal is expected to result in a 42.09% decline in demand for legal tobacco products. This means over 1.22 million workers from various sectors will be affected. This decrease in demand will not only directly impact the tobacco industry but will also have ripple effects throughout the entire supply chain.
2. Impact of the Sale Ban Near Schools
Taufik mentioned that the policy banning cigarette sales near schools will significantly impact 730,000 vendors. While the intent of this regulation is commendable in limiting tobacco access to students and minors, its potential economic ramifications cannot be overlooked.
3. Impact of Cigarette Advertising Restrictions
Restrictions on cigarette advertising are expected to affect around 337,000 workers. Advertising is an essential tool for brand promotion and sales, and limiting it may lead to decreased sales, consequently adversely impacting the income of related workers.
Economic Loss Forecast
Taufik pointed out that the implementation of the no-packaged cigarette policy is projected to result in an economic loss of approximately IDR 182.2 trillion. The ban on sales within 200 meters of schools is estimated to incur a loss of IDR 84 trillion, while the advertising restrictions may lead to a loss of IDR 41.8 trillion.
Overall, the combined implementation of these three proposals will lead to a total economic loss of up to IDR 308 trillion, a staggering figure that strongly suggests policymakers should thoroughly consider the economic consequences before proceeding.
Impact on Tax Revenue
Beyond economic losses, Taufik emphasized the potential impact of these policies on tax revenue. It is estimated that the no-packaged cigarette policy will lead to a tax loss of IDR 95.6 trillion, while the sales ban could result in a tax loss of IDR 43.5 trillion, and the advertising restrictions might incur a loss of IDR 21.5 trillion. In total, the cumulative tax losses could amount to IDR 160 trillion.
Profound Effects on Related Industries
Taufik further indicated that the implementation of these policies will not only directly affect the tobacco industry but will also influence the paper, tobacco, clove, and other related sectors, potentially accelerating the circulation of illegal cigarettes. Such a scenario poses new challenges for the country’s health regulatory framework.
Policy Recommendations
In light of the findings, Indef urges the government to revise Government Regulation No. 28 and the Minister of Health Draft Regulation, asserting that these regulations could cause up to IDR 308 trillion in economic and tax losses. Taufik recommends a careful review and amendment of these policies based on comprehensive quantitative data.
He concluded by stressing that failing to implement necessary revisions and adjustments could lead to increasingly severe challenges for the Indonesian economy, especially if improvements are not witnessed.
This study reveals the far-reaching impacts of new tobacco policies on Indonesia’s economy and labor market. Stakeholders in the tobacco industry emphasize the importance of carefully evaluating each regulation to ensure that public health is protected while also promoting economic prosperity.vapen
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