Despite annual rises in tobacco duties, smoking continues to increase due to its affordability and weak control over cigarette advertising.
A report from the Southeast Asia Tobacco Control Alliance (SEATCA) found that cigarettes have become cheaper in relation to the rise in individual incomes in six Southeast Asian countries, which have seen gross domestic products (GDP) continue to grow.
The report found that the Relative Income Price (RIP), the percentage of per capita GDP required to purchase 100 packs of cigarettes in Indonesia, stood at 0.06 percent in 2001. The figure decreased to 0.03 percent in 2010, reflecting the increased affordability of cigarettes.
“The RIP steadily decreased over the past ten years because the six countries are developing rapidly and have high growth rates in terms of GDP and population income,” Sophapan Ratanachena of SEATCA said in a press conference on Monday.
“For Indonesia it is extremely low, the percentage is below 1 percent,” she added.
Other countries in the region have much higher RIP ratios than that of Indonesia.
The RIP for average-price cigarette in Laos, for example, stood at 4.67 percent in 2010. The RIP for the most popular medium-priced brand of cigarettes in the Philippines stood at almost 3 percent in 2009.
The Finance Ministry raised the duty on cigarettes by 8.5 percent in 2013. The duty increase in 2012 was 15.5 percent compared to the year earlier, yet cigarette production is rising every year.
Abdillah Ahsan, a researcher from the Demography Institute at the University of Indonesia said that the continued rising trend in the consumption of cigarettes. He said that in 2009, Indonesia consumed 251 billion cigarettes. The number increased to 302 billion in 2012.
Abdillah added that there was currently only 46 percent tax on the retail price of cigarettes, which was much lower than in neighboring countries.
Thailand, for instance, has 70 percent tax on the retail price, Singapore 69 percent and Brunei 67 percent, followed by Philippines with 53 percent.
“Indonesia should increase the tax on cigarettes up to 80 percent, just like the tax on alcohol,” Abdillah said.
Sophapan said the government should raise tobacco taxes immediately to reduce tobacco affordability.
“When the government increases the cigarette tax, it should ensure that the increase affects all types of cigarettes,” she said.
She said that an increase in tax on all types of tobacco products would make it impossible for smokers to switch from factory-produced cigarettes to hand-rolled ones, which are much cheaper.
Ulysses Dorotheo, the project director of the Southeast Asia Initiative on Tobacco Tax of SEATCA, said that as long as the industry passed on the additional tax to consumers, increasing tobacco excise would not adversely impact on the industry’s profit margins.
“The increase in excise will significantly increase tax revenues, while at the same time reducing tobacco consumption,” Ulysses said.
Indonesia had maintained its increase in smoking prevalence, he said, because of the weakest cigarette regulation compared to other countries in the region such as Hong Kong and Singapore.
In those two countries, consumption is quite low because they already have bans on public smoking, require pictorial warnings on cigarette packages and have higher taxes.