Indonesian Tobacco Control Narrative Appears Stalled But Movement Will Come

Source from:  farmer's voice 09/01/2015

According to latest Euromonitor data, at 8%, the Indonesian cigarettes market recorded the strongest growth of our 80 directly researched markets in 2014 for a total size of 239 billion sticks. By our categorisation, which excludes the significant hand-rolled kretek segment, it is the world's fourth largest cigarettes market by volume. However, according to Philip Morris International, taking the hand-rolled segment into account, the total Indonesian duty paid market surpassed that of Russia's in 2014 and is now behind only China globally in terms of cigarette consumption. This dynamic has consistently been attributed to the country's relatively weak tobacco control regime, one which is currently showing little sign of meaningful evolution.

One word makes all the difference

In fact, many in the public health community suggest that Indonesia is regressing in terms of addressing cigarette consumption. The government's ongoing failure to ratify the Framework Convention on Tobacco Control (despite Indonesian agencies being heavily involved in its development) is a consistent source of disappointment to local and global health groups. And while some progress has been made - a 2009 law which classified tobacco as an addictive substance and a 2012 regulation governing pack warnings - the legislature has signally declined to pass a comprehensive 2010 Tobacco Control Bill emanating from the parliament's Health Committee and instead is now contemplating a bill of a different stripe, a Tobacco Bill, drafted by the Indonesia House's Industrial grouping.

In contrast to the 2010 bill the proposed Tobacco Bill does not put the health effects of the country's tobacco consumption front and centre but rather places controlling consumption in a mix with (and indeed after) the aim of maintaining the production of and revenue from tobacco - in other words tobacco control does not take precedence over the socio-economic position of the industry in Indonesia. While sources indicate that the likelihood is this bill, codifying the developmental goals of the Indonesian tobacco industry, will not in fact pass (at least in 2015) the fact that it is being given serious consideration indicates the political climate on the issue.

FCTC not a magic wand but ratification would be symbolic

Ratifying the FCTC is not a magic wand for member states (since China's ratification of the treaty in 2005 its domestic consumption of cigarettes has grown by 30% while in the same period the US - which has not ratified - has seen a decline of the same magnitude) and there is a danger that with regard to Indonesia the debate over it becomes a distraction but it does publically commit nations to the precept that in the tobacco sphere, at a national level, measures aimed at protecting health take precedence over the vitality of the industry - however economically important it may be. Without such a (meaningful) commitment in Indonesia, a certain stalemate will tend to persist, and tobacco control measures such as the 2012 regulations on marketing and promotion will continue to be moderate.

However, there are reasons to believe that over time Indonesia will become a less tobacco-friendly market. The strength of its economy and its GDP growth are elements in the expansion of cigarette volumes in the market but are also conversely, forces which will lessen the importance of the tobacco sector. The country currently has a relatively narrow tax base with a low ratio of tax revenue to GNP, amplifying the significance of reliable tobacco excise revenue. Further, the civic tobacco control community in Indonesia is based mainly in Jakarta around a small group of public health academics and activists - any expansion of this community, particularly into the tobacco producing stronghold of Java will lend greater influence.

International manufacturers more interested in value than volume

Finally, and arguably at the other end of the spectrum, the greater involvement of international manufacturers is likely to provide increased structure to the market. While the international manufacturers (Philip Morris International which purchased Sampoerna in 2005 and British American Tobacco which acquired Bentoel in 2009) are heavily criticised for their marketing practices in Indonesia, they still control less than 40% of the market and are arguably competing on local terms. While not comfortable with all aspects of the FCTC (particularly articles such as 5.3) they have become reconciled to its existence and are, in general, proponents of tobacco regulation. It is the value growth in the Indonesia market (within the top five fastest growing markets in 2014) which is of most interest to international manufacturers rather than the soaraway volumes which laxer regulation facilitates. Enditem