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 The latest proposal was mooted at a meeting 10 days ago between the
trade minister, the law minister and senior parliamentarians, two
people who attended told Reuters on condition of anonymity. The
government has not given details of the meeting.
Government officials have proposed a ministerial decree as an
alternative to the draft law, Oke Nurwan, director-general of
foreign trade at the trade ministry, told Reuters, although he did
not specify when the proposal was made.
Teten Masduki, the chief of staff for President Joko Widodo,
declined to comment on the meeting and the proposal for a tobacco
decree.
Indonesia is one of the world's top producers of tobacco and has one
of the heaviest rates of smoking in the world. Late last year, the
country's powerful parliament proposed a draft law covering
production, distribution and excise taxes of tobacco, which it
claimed would safeguard millions of jobs in the industry.
Among other provisions, the bill stipulated that manufacturers of
tobacco products had to use locally sourced tobacco for at least 80
percent of production, while imports of ready-to-use cigarettes may
be subject to an excise tax of 200 percent.
The country's tobacco industry contributes almost 10 percent to
government revenues through taxes.
The plan sparked an outcry from health groups and infighting between
ministries. Critics say the proposal would sharply increase
production of tobacco and most would be absorbed by local cigarette
manufacturers, who would step up production.
The decree, proposed as a compromise, covers the absorption of local
production, the setting of prices for farmers and some import
restrictions, officials said. Compared to a law, it will give the
government some discretion on implementation.
But it made no mention of the 200 percent excise tax on imported
ready-to-use cigarettes laid out in the bill.
NO AGREEMENT YET
Parliament and the government have not yet reached an agreement on
the decree, said Firman Subagyo, the parliament member who initiated
the bill and who comes from Indonesia's second-biggest party, Golkar.
Health Minister Nila Moeloek, who strongly opposed the tobacco bill,
was a notable absentee from the March 20 meeting.
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Asked why the health minister did not attend the meeting, Law
Minister Yasonna Laoly said: "All the perspectives from all the
ministries have been represented."
A health ministry spokesman reiterated the minister's opposition to
the bill on Wednesday, but declined further comment on the meeting
and the proposed ministerial decree.
Indonesia is the world's fourth-biggest cigarette producer and is
also a fast-growing market for major companies including Phillip
Morris-controlled PT Hanjaya Mandala Sampoerna Tbk, Djarum Group and
PT Gudang Garam Tbk.
Nearly two-thirds of men are smokers in Indonesia, a country of 250
million people where an average packet of cigarettes costs less than
$2.
The country produced 269.2 billion cigarette sticks in 2015, a jump
of 43.5 percent from 2010, according to data from research firm
Euromonitor International. The market was last valued at 231.3
trillion rupiah ($17.3 billion).
Anti-tobacco activist Julius Ibrani criticized the government's
latest proposal to issue the ministerial decree, saying that health
concerns have not been adequately represented in the discussions.
"Whether it's a ministerial decree or a law, at the end of the day
it will apply to society," Ibrani said. "The problem is with the
substance."
(Additional reporting by Bernadette Christina Munthe, Gayatri Suroyo
and Jakarta Newsroom; Editing by Ed Davies and Raju Gopalakrishnan)
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