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View all search resultsThe tobacco industry is up in arms over a new set of rules that could cover everything from packaging and tar and nicotine content to additives, not least because of a lack of clarity from the government for the past two years until its issuance deadline on Sunday.
Cigarettes produced in the Batam, Bintan and Karimun Free Trade Zone (FTZ) are not required to have a tobacco products excise (CHT) if consumed inside the FTZ, leading to much cheaper cigarette prices when compared to those produced inside the Indonesian customs area.
The government has walked back its previous plan to raise the tobacco excise tax, a policy that had been a central pillar of its earlier crackdown on illegal cigarettes. Under the former administration, the approach was largely punitive, marked by annual excise hikes, aggressive “Gempur Rokok Ilegal” raids on small retailers, and stiff penalties for anyone caught selling untaxed products. In a major policy shift, Finance Minister Purbaya Yudhi Sadewa has now announced that the government will instead offer amnesty to illegal cigarette producers, aiming to incentivize them to register, fulfill their tax obligations, and transition into the formal, regulated market.
Jakarta’s plan to expand smoke-free zones and tighten cigarette sales regulations has been met with strong pushback from business groups, who warn that the new rules could eat into revenues and disrupt livelihoods.
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