PMI acquired Sampoerna in 2005, and both companies have since made considerable contributions to Indonesia by investing in various transformation and innovation initiatives, significantly benefiting various stakeholders.

During an interview with several media on March 18 in Jakarta, visiting PMI CEO Jacek Olczak was upbeat about the government’s long-term business strategy, which is reflected in the persistently favorable investment climate created largely through the political stability developed and maintained under different administrations over the decades.

“Indonesia and Sampoerna are very fitting from a business strategy perspective, and we are pleased that this assumption we made at that time came true. We have been very successful in the domestic market for 20 years,” said Olczak, referring to PMI’s decision to expand in the Indonesian market.

According to Olczak, PMI has invested US$6.4 billion in the domestic market, including its latest investment package of around $330 million. PMI’s latest investment aims to bring cutting-edge technology into Indonesia, to both serve the domestic market and create a base for exports.

“Part of this investment is directed toward digital initiatives, building stronger relationships with adult customers and investing in technologies,” said Olczak.

“This means it is not only about manufacturing and technology, but also about creating new jobs in areas we haven’t had before, particularly in R&D [research and development] – scientific research, scientific foundations and engineering,” he explained.

“One hundred eleven-year-old Sampoerna and Indonesia are among the biggest recipients of this investment. Therefore, it is not mere employment, but also about the quality of employment,” Olczak said.

PMI began its transition to smoke-free products several years ago, following the development of new technology that enabled the delivery of products similar to conventional cigarettes.

The result of PMI-funded research conducted 20 years ago, products that use the new heating technology that offer the same satisfaction to adult smokers, but with significantly reduced risks to their health.

PMI’s smoke-free products, developed through an investment of more than $14 billion, addresses the combustion of tobacco: the primary factor that makes smoking harmful. The new technology also allows for the reduction of harmful and potentially harmful compounds found in cigarette smoke.

“The smoke-free product doesn’t involve combustion, nor does it generate smoke. While it does have aerosol, it’s not smoke. This way, the product is better for adult consumers and public health.”

PMI started commercializing its heated tobacco products 10 years ago, beginning with an initial introduction in Italy and Japan.

“Indonesia started later because we needed to adapt the product to local consumer preferences. For instance, we offer a product that contains clove, a specific characteristic that required additional innovation,” Olczak noted.

“However, we are confident that our product will resonate with Indonesian smokers, as the innovation and technology we bring here will reduce health risks posed from combustion.”

Sampoerna President Director Ivan Cahyadi, who accompanied to the media interview, said smoke-free products were also in alignment with its company philosophy, especially its pillar on providing better alternatives for adult consumers.

Sustainability

According to Olczak, sustainability is part of PMI’s long-term investment commitment to generating positive outcomes.

In terms of commodities, sustainability to PMI means making continuous efforts to create a product that lowers the risk of cigarette smoking. The company also aims to create opportunities to solve related issues that have been recognized by agencies worldwide, including the United States Food and Drug Administration.

“Regarding our practices and how we run our business, sustainability means ensuring the use of sustainable or environmentally friendly energy and how we manage emissions,” Olczak said.

“For example, at Sampoerna, which has a huge manufacturing footprint, we focus not only on technology for maintaining production levels but also on practices that make our operations more sustainable. Therefore, we invest in energy-efficient technology and ensure that the energy we use comes from better sources.

“The same goes for water usage, as we aim to minimize water pollution and improve water efficiency in our processes. We’re mindful of our water consumption because, as we know, energy and resources will be crucial moving forward. We need to adapt our processes accordingly,” he said.

Technology is also a part of this transformation.

“At PMI, we invest in making sure our people understand and leverage technology. We’ve already implemented artificial intelligence and other innovations, always looking at things from an opportunity perspective,” said Olczak.

Not only that, in Indonesia, Sampoerna also empowers Micro, Small, and Medium Enterprises (MSMEs). “We empower MSMEs in Indonesia, with around 250,000 traditional retailers through the Sampoerna Retail Community [SRC] program. We work to professionalize how they run their businesses by incorporating digital tools,” Olczak explained.

“Additionally, through the Sampoerna Entrepreneurship Training Center (SETC), we have created an entrepreneurship center to train them to keep up with evolving market needs,” he said.

“I believe sustainability involves ensuring human capital evolves at the same pace as the changes around us.”

“Ultimately, sustainability must make business sense, or it won’t last. We invest in our people because we have extremely loyal employees who help create this success, rather than relying on constant hiring and turnover,” said Olczak.

Meanwhile, Ivan said sustainability was also at the core of Sampoerna’s second pillar, which focuses on benefiting employees, business partners, and shareholders.

“The way we treat human capital extends beyond just our employees. It starts from the very beginning of our supply chain,” said Sampoerna’s President Director.

“At Sampoerna, we have 22,000 fostered tobacco and clove farmers we help develop, and we take care of the entire supply chain, the aforementioned SRC, which is on the front lines and is central to our business,” he said.

“In terms of our employees, Sampoerna directly or indirectly employs over 90,000 people, as ensuring inclusiveness is of paramount importance for us.”

According to Ivan, Sampoerna has an employee onboarding program to help them integrate into the company’s culture and to develop human capital.

“We focus on identifying the skills required for success, with an emphasis on teaching them the skills of the future,” Ivan explained.

“To facilitate this, we send people to work outside of Indonesia to contribute to our parent company, PMI. Currently, we have around 70 people working overseas, and we also bring people from around the world to Sampoerna to share knowledge.

“Our commitment spans from the farmer to the community. This is how Sampoerna contributes to Indonesia,” he underlined.