Cigarette Industry Participates in Corona Pandemic Victims

The Cigarette Manufacturing Association (Gapero) said the corona virus pandemic (Covid-19) also had an impact on the cigarette industry, specifically related to the production and sale of cigarette products. Almost all Gapero members, especially in Surabaya, were affected by Covid-19.

“So if we expect an increase in the excise tax rate or PMK No. 152 there is a decrease in production of around 15 percent, plus there is a covid outbreak now, if later the government and we cannot resolve the covidand pandemic19 so that the Covid-19 outbreak dissolves, we predict it will there is a decrease in 2020 of about 40 percent, “said Chairman of the Joint Cigarette Factory (Gapero) Surabaya, Sulami Bahar in a written statement in Jakarta, Tuesday (05/19/2020).

However, Sulami Bahar conveyed, all members are still continuing to carry out business activities. So that it still absorbs labor and drives the economy of the community.

In addition, his party is very compliant with government regulations, especially relating to the Covid-19 prevention protocol. This is to prevent Covid-19 transmission in the factory area and to keep employees healthy.

“All manufacturers under the auspices of Gaperosu are still producing but of course they are very compliant with the health protocol. I think that in order to move the economy, the cigarette industry is still able to help move the economy of the people until now, “he said.

“So, for the time being, with the Pandemic, we have not been able to predict how much it will decline but if for example it drags on we predict that production will decrease by around 40 percent why because of the first where there is PSBB and it is very influential,” Sulami continued Bahar

Excise Increase

In addition, Sulami Bahar said that corona outbreaks that hit the world, including Indonesia, also disrupted government programs to improve public health. One of the government’s efforts to improve health is to issue Minister of Finance Regulation (PMK) Number 152 / PMK.010 / 2019 concerning the increase in Tobacco Product Excise Tariffs signed on October 18, 2019.

In the PMK the government raised the excise duty on tobacco products by 23 percent. It also raised the retail selling price (HJE) by 35 percent.

The increase is the highest in the last 10 years and conditions are worsened by the presence of a COVID pandemic19. With the increase in excise duty, it has an impact on increasing the price of cigarettes per stick and per pack. So that the people reduce their cigarette consumption.

“The theory is that by raising excise tax and retail selling prices of cigarettes, the government wants to limit people’s consumption of cigarettes. The selling price of cigarettes increased high both per stick and per pack. So that the public will stop consuming cigarettes. But the reality is not like that. As a result, people turn to cheaper cigarettes with high nicotine levels, “said Sulami Bahar.

He acknowledged, the increase in excise and HJE cigarettes respectively by 23 and 35 percent had reduced the production and sales of cigarette products by 15 percent from the previous year. It also resulted in changes in the pattern of consumers switching to affordable cigarettes, and they were worried that they would switch to illegal cigarettes. As a result, if the purpose of PMK No. 152/2019 is for health, apparently not right.

As a result, illegal cigarettes are increasingly widespread and the goal to improve health is not achieved. In contrast legal cigarettes are reduced by 15 percent or worse because of the effects of COVID19. That means that government revenue from cigarette excise was reduced by 15 percent.

“So with the issuance of regulation on the increase of excise tax in PMK No. 152, now it has an impact on production decline of up to 15 percent. Conversely, with high excise tax rates that do not guarantee the reduction of smokers, it may even be detrimental to the state because those who are unable to buy expensive cigarettes will switch to cheap or illegal cigarettes. so the state’s income actually decreases right, “said Sulami Bahar.