Statement from José Luis Castro, President and Chief Executive Officer at Vital Strategies, on media reports that Indonesia intends to increase cigarette prices by more than a third in 2020:
“Smoking is the leading cause of preventable death in Indonesia, claiming more than 217,000 lives a year. A one-third increase in cigarette prices in Indonesia, announced by a finance ministry spokesperson and reported by media outlets, including Reuters, would represent a significant win for health and economy. Tobacco taxes have been proven to reduce smoking rates, reduce uptake by youth and prevent future cancer, heart disease and other chronic conditions.
“In Indonesia, we work with people whose lives have been harmed by tobacco. We know from their experiences and from the data that cheap tobacco is a main vector for smoking initiation among Indonesian youth. Years of too-cheap cigarettes and an unscrupulous tobacco industry with too little regulation has led to increasing rates among youth. Tragically, more than 1 in 3 boys aged 13-15 smoke. A significant tax increase is a clear win-win, deterring youth from starting to smoke and encourage more current smokers to quit, while raising revenue for Indonesia’s domestic priorities. We urge the government to implement this price increase as reported.”
Tobacco’s deadly cost to Indonesia
According to The Tobacco Atlas, more than 2,677,000 children and 53,767,000 adults use tobacco in Indonesia; the proportion of tobacco users is higher than in other middle income countries. Tobacco kills 217,400 Indonesians every year and in 2010, it was the cause of 19.8 percent of deaths among adult men and 8.1 percent of deaths among adult women – higher than the average in other middle income countries. Studies indicate that Indonesian males are initiating tobacco use at younger and younger ages – many as early as twelve years old. Tobacco use is the leading risk factor for non-communicable diseases, which could cost Indonesia’s economy as much as US$4.5 trillion from 2012 to 2030, according to the World Economic Forum. Currently, excise taxes account for 49.45% of the retail price of a packet of cigarettes in Indonesia. WHO recommends that excise taxes should represent at least 70% of the retail price to deliver reductions in tobacco use.