The government aimed to push the share of illegal cigarettes in the market below 3 percent from around 4.8 percent in 2020, said Customs and Excise Director General Askolani, citing a survey from Gadjah Mada University (UGM).

“[With the operation] we are conducting this month and next month, we hope we can reduce it to below 3 percent,” Askolani said during an online event on Thursday to announce the annual operation against illegal goods.

According to directorate general estimates, the distribution of illegal cigarettes had dropped to 3.03 percent in 2019, half of the distribution a year earlier, before a recent sharp increase.

This comes at a time when overall trade in illegal goods appears to be on the rise. The number of prosecutions over illegal goods exceeded 14,000 in the first seven months of the year, nearly two-thirds of the figure seen for the full year of 2020.

At Rp 12.5 trillion (US$866.19 million), the total value of the cases prosecuted in those seven months is nearly double the full-year 2020 figure.

This is comparable to the amount of illegal goods confiscated in 2018, which was estimated at Rp 11 trillion.

Read also: Indonesia at war against illegal cigarette trade

Some 41 percent of the illegal goods are cigarettes, followed by alcoholic beverages, drugs, vehicles, textile products, medicines and machines.

The number of discovered illegal cigarettes rose to 384.51 million in 2020, up 6.44 percent from a year earlier, the directorate general’s data show, reversing a 1.02 percent decrease in the number of illegal cigarettes seen in 2018.

Andry Satrio, an economist at the Institute for Development of Economics and Finance (Indef), said the distribution of illegal cigarettes was estimated to have surged especially in Greater Jakarta, but it would require a dedicated study to assess whether the 4 percent figure was an underestimate.

The pandemic-induced fall in income, on top of rising tobacco excise, is believed to have pushed up demand for illegal cigarettes, according to Andry.

Read also: Sampoerna, Gudang Garam see 20% profit drop after excise hike

“We also have to assess the impact on the industry. Legal tobacco will have to compete against illegal tobacco that does not pay excise. That competition will harm the legal industry,” Andry told The Jakarta Post in a phone interview.

The government has raised the tobacco excise tax on average by 12.5 percent for this year in a bid to curb smoking.

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