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Tobacco Industry Warns of Job Losses if Excise Is Increased

Jakarta. Indonesia’s powerful cigarette lobby continues to rail against a government proposal to raise the tobacco excise, claiming producers have been forced to lay off 15,000 workers this year as demand for the cancer sticks weakens.

“More layoffs will [continue to] happen and many more will be surely affected, for example others in the supply chain,” Hasan Aoni Aziz, the secretary general of the Indonesian Cigarette Producers Association (Gappri), said on Tuesday as quoted by

“We may have to cut down production. We declare [our] objection [to the proposed excise hike]. This industry can no longer bear [any] additional burden. During the first half of the year alone, production dropped significantly.

This has never happened before,” he added.

Hasan did concede, however, that the slowing economy was not the sole factor behind the downturn in the cigarette industry, noting that many companies were automating their production processes to cut labor costs. He also said that Indonesian smokers increasingly favored “milder” cigarettes that used less tobacco, hence resulting in job losses in the tobacco-farming regions.

In Indonesia, where about 60 percent of men smoke, cigarette production increased at an annual 7 percent average between 2007 and 2013. In 2014, it declined 0.5 percent and this year will see a 2 percent fall, according to the association.

Tobacco taxes have been raised an average 11 percent annually since 2010, but the government is undecided on what to do with the tax for 2016.

The customs and excise chief previously said the government did not want to impose a tax that would price cigarettes out of the reach of consumers – an attitude in keeping with the Indonesian government’s refusal to acknowledge, in deed if not in rhetoric, the health dangers of smoking.

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