Country profile: Indonesia Page | 1

Country profile:

Socio economic context

Population, 2015 257.6 million Source: Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World

Population Prospects: The 2015 Revision, International Monetary Fund, World Economic Outlook Database, April

2015, World Bank Country Income Classifications, July 2015, http://data.worldbank.org/about/country-

classifications/country-and-lending-groups

Adult population (15+ years) 186.2 million

Income group, 2015 Lower middle

GDP per capita, 2015 3,511 USD

Smoking prevalence

Basic health research (RISKEDAS), 2013 (Age 10+)

Overall Men Women

Current tobacco smokers (%) 29.3 56.7 1.9

Daily tobacco smokers (%) 24.3 47.5 1.1

Current cigarette smokers (%) 29.3 n/a n/a

Daily cigarette smokers (%) 24.3 n/a n/a

* n/a : not available

Number of smokers and overall smoking prevalence (for age 15+), 2013

* The prevalence data reported in the graph above are age-adjusted estimates to enable cross country comparisons. Such estimates will therefore vary from the country prevalence data (as reported in the smoking prevalence table above) and should only be used to compare countries prevalence. Source: WHO Report on the Global Tobacco Control Report, 2015

0.1 0.7 1.4 2.4 4.9 7.6 11.9

16.6 17.6

69.4

-

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Country profile: Indonesia Page | 2

Mortality attributable to tobacco use

WHO estimated death rates (per 100 000) and percentage attributable to tobacco (att), 2004

Men Women Overall

Age 30+ 30+ 30+

Death rate, all causes 1,620 1,519 1,569

Death rate, att 317 176 245

Percentage of deaths, att 20% 12% 16%

Source: WHO Global Report on Mortality Attributable to Tobacco 2012

Death rate per 100,000 (age 30+) attributable to tobacco (att), 2004

Source: WHO Global Report on Mortality Attributable to Tobacco 2012. Data unavailable for Brunei and Vietnam.

157 174

200 209 217

245

284

344

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Country profile: Indonesia Page | 3

Economic cost of tobacco use

Total costs of tobacco-related morbidity and mortality, 2005 4.4-11.0 IDR trillion (484-1,200 USD million) = 0.12-0.29 % of GDP

Note: Government covered 35% of these costs

Source: Barber, S., Adioetomo, S., Ahsan, A., and Setyonaluri, D. Tobacco Economics in Indonesia. 2008.

Tax structure and rates, 2016

Production (billion sticks per year)

Price (IDR per stick)

Excise tax (IDR per stick)

SKM (Machine-made kreteks)

I > 2.0 ≥ 1000 480

II ≤ 2.0 ≥ 740 and < 1000 340

≥ 590 and < 740 300

SKT (Hand-made kreteks)

I > 2.0 ≥ 1115 320

≥ 775 and < 1115 245

II > 0.3 and ≤ 2.0 ≥ 605 155

≥ 430 and < 605 140

IIIA ≤ 0.3

≥ 400 90

IIIB ≥ 370 80

SPM (Machine-made white cigarettes)

I > 2.0 ≥ 930 495

II ≤ 2.0 ≥ 800 305

≥ 505 and < 800 255

Tax revenues (All tobacco products), 2013 Billion IDR Million USD

Excise tax revenue 103,570.0 8,935.4 Total tax revenue 129,508.3 11,173.2 Source: WHO Report on the Global Tobacco Control Report, 2015

Indonesia applies a tiered specific excise tax on cigarettes. The excise tax per stick depends on the

type of cigarette (machine-made kretek, hand-made kretek, or white cigarette), the company’s

production volume, and the price per stick.

An additional levy of 10% of excise is raised and goes to the Provinces directly (of which 50% is to be

spent on health) and a VAT rate of 8.7% of retail price inclusive also applies on cigarettes.

Country profile: Indonesia Page | 4

Cigarette Price

Reverse Affordability index *

Source: WHO calculations based on the WHO Report on the Global Tobacco Control Report, 2015, IMF World Economic

Outlook & World Bank data.

Real price of the most sold brand, excise tax level (IDR) and excise and total tax share (%), 2008-

2014 (base year = 2010)

* LCU: Local Currency Unit Source: WHO Report on the Global Tobacco Control Report, 2015

0

20

40

60

80

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2008 2010 2012 2014

Re

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13,774.2 13,125.0

15,170.0 14,738.7

6,093.7 6,000.0 6,462.4 6,632.4

44.2% 45.7% 42.6%

45.0% 52.6% 54.1% 51.0%

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2,000

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2008 2010 2012 2014

Real price of 20-pack in LCU (base year = 2010)

Real excise in LCU (base year = 2010)

Excise share (%)

Total tax share (%)

The graph on the left

shows that real prices of

the most sold brand have

increased slightly from

2008 to 2014 while real

excises taxes have

remained almost constant.

Therefore, the excise tax

share and total tax share

remained relatively flat.

Affordability has increased from 2008 to 2014. This means that after taking into account inflation, population and GDP growth, cigarettes have become more affordable from 2008 to 2014.

* Affordability index (RIP index) = average real price of 100 packs cigarettes (most sold brand) divided by real GDP per capita. A line (reverse affordability index) going up in the graph indicates that cigarette affordability is increasing.

Country profile: Indonesia Page | 5

Price of 20 sticks comparison (in International Dollars*) for ASEAN† members in 2014

*An International Dollar is a hypothetical unit of currency with the same purchasing power parity that the USD had in the

United States at a given point in time.

† ASEAN is the Association of Southeast Asian Nations (Members States are Brunei Darussalam, Cambodia, Indonesia, LAO

PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam).

Source: WHO Report on the Global Tobacco Control Report, 2015

Production and sales

Tobacco production 2009 2010 2011 2012 2013 2014

Cigarettes (billion pieces) 170.3 187.7 209.0 222.4 251.0 267.9 Unmanufactured tobacco (‘000 tonnes) 176.5 135.7 214.6 260.8 260.2 n/a * n/a : not available Source: Euromonitor International 2016 Ltd; FAOSTAT 2015

Cigarette production of ASEAN members

Source: Euromonitor International 2016 Ltd

64%

13%

50%

33%

8%

45%

67%

51%

62% 60%

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10%

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Excise tax PPP Other taxes (i.e. VAT, Import duties)

Price minus all taxes Excise share (%)

0

50

100

150

200

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300

Indonesia Singapore Philippines Malaysia Viet Nam Thailand

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Country profile: Indonesia Page | 6

Cigarette retail sales per capita (age 15+) 2000-2014

Source: WHO Calculation based on data from Euromonitor International 2016 Ltd and population data from the United

Nations World Population Prospects.

Major cigarette companies and market share

Global Brand Owner Market share (%)

2010 2012 2014

Philip Morris International Inc 67.3 70.7 66.9 British American Tobacco Plc 24.1 21.5 25.4 Japan Tobacco Inc 7.7 7.6 7.6 Others 1.0 0.2 0.1 Source: Euromonitor International 2016 Ltd

500

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Indonesia is by far the largest producer of cigarettes in ASEAN. Additionally, unlike other ASEAN countries,

production has been increased over time.

Cigarette retail sales per capita have increased steadily from 2003 to 2014, by 4.1% per year on average. This

can be explained partly by the fact that increases in real GDP per capita have outstripped real price increases

of cigarettes and so cigarettes have become more affordable.

Country profile: Indonesia Page | 7

Trade information, 2014

Indonesia’s imports and exports, 2012

Trade flow Commodity Trade value (Million USD)

Net weight (Tonnes)

Export Cigarettes 765.8 75 819 Unmanufactured tobacco 181.3 35 009 Import Cigarettes 15.4 627 Unmanufactured tobacco 569.8 95 732 Source: WHO calculations from UN Comtrade data.

Indonesia’s main trade partners (cigarettes), 2014

Main export partners Share of total exports quantity (%)

Main import partners Share of total imports quantity (%)

Cambodia 50.9 China 62.3 Malaysia 15.6 Hong Kong 32.8 Singapore 10.4 Indonesia 2.1 Thailand 6.8 Germany 1.3 Vietnam 3.3 Russia Federation 0.5 Others 12.9 Others 0.9

Indonesia’s main trade partners (unmanufactured tobacco), 2014

Main export partners Share of total exports quantity (%)

Main import partners Share of total imports quantity (%)

Malaysia 19.0 China 48.3 USA 15.1 Brazil 9.2 Belgium 12.3 Turkey 6.3 Philippines 8.0 USA 5.6 China 4.6 Zimbabwe 4.6 Singapore 4.5 India 4.4 Others 36.6 Others 21.7 Source: WHO calculations from UN Comtrade data.

Indonesia is a net exporter of cigarettes and a net importer of unmanufactured tobacco. Indonesia’s

trade balance for these products was +362.0 million USD in 2014.