Cigarette Prices Rise at the Beginning of the Year, Do Smokers in Indonesia Decline?

The issue of rising cigarette prices in the middle of the year was widely discussed by the cigarette industry or smokers in Indonesia. Over time, the case finally turned into reality when the Indonesian Minister of Finance, Sri Mulyani confirmed this in October 2019.

Policies regarding the increase in excise duty and cigarette price restrictions contained in the Minister of Finance Regulation (PMK) 152/2019. PMK 152/2019 regulates the amount of excise tax and the minimum price tag according to its type. Under these rules, the average excise tax increased by 23 per cent. Head of the Public Relations Bureau of the Ministry of Finance, Nufransa Wira Sakti, confirmed the regulation. He emphasised if the tariff increase would take effect starting in early 2020.

Although the new regulation will take effect in January 2020, the increase in cigarette prices can already be felt by the public towards the end of the year. At first, many complained about the rise. Based on information taken from CNN Indonesia, it was mentioned that one of his interviewees named Dian (36 years) complained about the rising cigarette prices in November to December. “My favourite cigarette, which was originally priced at 27 thousand, rose to 30 thousand at the end of the year. Could it be that the price will still rise in January? ” said Dian.

Apart from smokers, cigarette traders also complained at the beginning of the basic price increase of cigarettes. Still from the same source, CNN Indonesia, Fahri, one of the cigarette traders in Gandaria Market, South Jakarta, admitted that the increase in cigarette prices made him need to think harder so that the turnover of his kiosk business remained normal. “If later on, the price of cigarettes increases continuously, we as sellers will eventually become difficult,” he said with a sad face.

Does an Increase in Cigarettes Cause the Number of Smokers to Decrease?

As a result of the increase in excise prices and restrictions on the sale price of cigarettes. Does this cause the number of smokers (especially in Indonesia) to decrease? According to data from WHO which says that the number of smokers in the world has continued to decline. Slightly since 2010, the number of smokers in Indonesia has not decreased significantly. Based on the facts on the ground, smoking at this time is no longer a place to look cool but has become part of the lifestyle.

This reinforce by the opinion of an analyst from OSO Sekuritas, Sukarno Alatas. They said that if the cigarette excise tax increase would not have a significant effect on cigarette sales in Indonesia. It can happen because smokers who are already bound to cigarettes will continue to consume them, even though the price is getting higher.

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