Jakarta (ANTARA) – Cigarette production is estimated to decline by 3.3 percent in 2021 after the government raised the excise rate on tobacco products by 12.5 percent, effective since February 1.
“Based on our assumption, cigarette production in 2021 will decline by 2.2 to 3.3 percent,” Sarno, head of the excise sub-unit of the Fiscal Policy Agency (BKF) of the Finance Ministry, stated during a webinar organized by the Tobacco Control Support Center of the Indonesian Public Health Association here on Tuesday.
Sarno elaborated that the total production of cigarettes comprising machine-made kretek cigarettes (SKM), machine-made white cigarettes (SPM), and hand-made kretek cigarettes (SKT) had reached 298.4 billion in 2020.
Production in 2021 is expected to decline to 288 billion, he stated.
Cigarette production in 2020 had declined by 11 percent after the government raised the excise rate on tobacco products by 23 percent.
Sarno remarked that the ministry had projected that will a 12.5-percent excise hike in 2021, the affordability index would surge, from 12.2 percent to 13.7-14 percent.
The excise hike will only be effective for SKM and SPM products, while the rate for SKT will be maintained to secure the labor-intensive sector amid the COVID-19 pandemic.
“The increased excise rate in 2021 has indicated that the price of cigarettes will be less affordable for the public,” he remarked.
The prevalence rate for cigarette smoking in adults will decline to 32.3-32.4 percent, while the percentage of juvenile smokers will decline to 8.8-8.9 percent in line with the target of the Medium-term Development Plan (RPKMN) 2020-2024 set at 8.7 percent in 2024.
Sarno noted that the policy to raise excise rate on tobacco products had focused on consumption control.
The policy is expected to boost state revenue from the excise sector in 2021 that is targeted at Rp173.78 trillion.
State revenue in the sector had reached Rp170.24 trillion in 2020, rising from a revenue of Rp164.87 trillion in 2019. This figure was higher than the target set at Rp164.94 trillion in 2020.
Source: Antara News