T

he government will soon issue regulations to curb the production and sale of locally made alcoholic drinks and cigarettes amid surging demand from the domestic market.

Panggah Susanto, director general for agriculture and chemical industries at the Industry Ministry, said his office would issue a regulation primarily to control illegally made liquor.

Another regulation will be issued to manage the production of cigarettes to show the country'€™s commitment to tobacco control.

'€œUnder this rule, producers and importers of alcoholic drinks should verify their production capacities, output and sales,'€ Panggah told reporters Wednesday.

According to him, manufacturers need to secure a recommendation from the Industry Ministry when they want to expand.

The recommendation will detail the location, ownership, production capacity and types of drinks to be produced. The manufacturers must also produce details of their plan to obtain business permits from regional administrations or the Investment Coordinating Board (BKPM), Panggah said.

Nowadays, local manufacturers are able to produce various liquors containing light-content to high-content alcohol. In the past years, the demand for these beverages has surged rapidly, particularly driven by the robust growth of foreign tourist arrivals.

Meanwhile, based on the revised negative investment list (DNI), the alcoholic beverage industry is still limited to foreign direct investment (FDI), while production is subject to a quota set by the government.

The DNI, which describes industrial sectors open for investment, allows existing liquor producers to expand through joint ventures with new foreign partners instead of direct investment. The tight regulation has driven illegal sales of alcoholic drinks.

PT Multi Bintang Indonesia, maker of the well-known Bintang beer, has expressed its interest in upgrading its production capacity to cope with demand.

Aside from issuing a regulation on liquor, the government also plans to curb the production of cigarettes, including clove cigarettes, known as a unique Indonesian product.

Panggah did not give details on the regulation, saying the government also plans to increase cigarette excise and retail prices as disincentives for smokers.

'€œThe Industry Ministry is also concerned about health, thereby we are aiming to control its production,'€ Panggah said.

Indonesia, where one out of every five people smokes, has followed on the heels of many other nations to place stricter anti-tobacco laws to curb smoking, notably among young people.

At the end of last month, the government began enforcing a new rule requiring cigarette makers to
print graphic health warning on packages.

The ministry, however, will ask the Finance Ministry to reduce the excise imposed on hand-rolled clove cigarettes (kretek) to avert further factory shutdowns, according to Panggah.

The discount will help ease the burden on the hand-rolled kretek industry, which has been struggling amid dwindling domestic sales in past years.

Recently, PT HM Sampoerna, the country'€™s biggest cigarette maker, closed two factories in Lumajang and Jember, East Java, resulting in layoffs of more than 4,000 workers.