Indonesia raised the minimum age limit for purchasing cigarettes and vaping products to 21 from 18 as part of a series of changes to health regulations intended to curb nicotine use in a country with one of the world’s highest smoking rates.
A country of 270 million people, Indonesia is one of the world’s top producers of tobacco, and there are about 70 million adult smokers there, according to a 2021 World Health Organization survey, a media outlet states.
In a government regulation signed by President Joko Widodo last week, Indonesia raised the minimum age for people wanting to buy cigarettes to 21. It also banned the sale of a single cigarette.
The regulation is intended to “lower the prevalence of smokers and prevent early-age smokers.” Among the provisions is banning the sale of cigarettes within 200 meters (656 feet) of schools and playgrounds.
The regulation took effect immediately.
The new regulation also bans conventional and e-cigarette sales on “commercial electronic applications” and social media sites. It also bans advertising cigarettes on social media. Penalties for violations range from a written reprimand to a temporary ban on advertising cigarettes.
The new provisions on advertising will come into force in two years.
Smoking is down but vaping is up among Indonesian minors, reports The Jakarta Globe, citing a recent health survey.
According to the Indonesian Health Survey (SKI), the prevalence of smoking among 10-18-year-olds decreased to 7.4 percent in 2023, down from 9.1 percent recorded in the 2018 Basic Health Research.
However, the figure is still higher than the 7.2 percent prevalence in 2013 and the 5.4 percent target set in the 2015-2019 National Medium-Term Development Plan, noted Eva Susanti, director of non-communicable disease prevention and control at the Health Ministry during a World No Tobacco Day media briefing in Jakarta on May 29.
Minors’ use of e-cigarettes, meanwhile, increased from 0.06 percent in 2018 to 0.13 percent in 2023.
The Health Ministry is intensifying efforts to prevent children from smoking or vaping. This includes banning the consumption of tobacco and e-cigarettes by children and pregnant women, prohibiting tobacco advertising on social media, and outlawing the sale of single cigarettes.
The Indonesian Consumers Foundation (YLKI) expressed support for a recently implemented tax on e-cigarettes, reports Tempo.
The new tax took effect Jan. 1 and aims, in part, to discourage e-cigarette use. Vaping prevalence in Indonesia increased from 0.3 percent in 2011 to 3 percent in 2021, according to the Global Adult Tobacco Survey. The prevalence of cigarette smoking among adolescents aged 13-15 years increased by 19.2 percent over the same period.
Previously, the Indonesian National Vape Association (Pavenas) asked the Finance Ministry to postpone the implementation of the tax on e-cigarettes. Secretary General of the Indonesian Personal Vaporizer Association (APVI), Garindra Kartasasmita, said that the combination of the tax and the excise tax hike would be a heavy blow to entrepreneurs, consumers and industry players.
“This needs to take into consideration that the e-cigarette industry is a relatively new industry, and most of the industry players are from communities and MSMEs [Micro, Small & Medium Enterprises],” Garindra said in a statement published ahead of the tax.
YLKI chairman Tulus Abadi rejected industry assertions that vaping can help smokers give up of conventional cigarettes. “On the contrary, people will get double health burden due to the use of electronic cigarettes,” he said.
As I travel from one country to the next, everything changes: languages, currencies, foods—and also vape laws, which are so specific and seemingly random that it is challenging to keep them straight.
Before I arrived in Indonesia, I was in New Zealand and Australia—both modern, contemporary, First World countries.
New Zealand seemed comfortable with its vape laws, and shops were abundant. In Sydney and Canberra, Australia, vape shops were less common, and I had little success getting concrete feedback from shop owners and employees. There seemed to be paranoia there, and maybe there was just cause.
With Health Minister Mark Butler having proudly stated on the record that Australia’s vape laws will be the “toughest in the world,” the vape shop owners’ fears may be justified. The government is lowering the hammer on disposables, and so far, more than A$11 million ($7.3 million) of nicotine-containing vape products—11 tons—have been seized this year.
In November, Butler announced that Australia would ban all imports of disposable vapes beginning Jan. 1, 2024. The ban will be expanded in March 2024 to include all nontherapeutic vapes, including refillable devices, while importers of vapes for medical purposes will need a permit from the Office of Drug Control.
Therapeutic vapes will be restricted from using flavors, have limited nicotine levels and be sold in pharmaceutical packaging under new rules to be introduced in 2024, with a transition period for manufacturers to comply.
The legislative package will also include a total A$75 million in extra funding for the Australian Border Force and the Therapeutic Goods Administration to enforce the new rules. Additional legislation next year will apply the same prohibitions to domestic manufacturers.
When it’s all said and done, it appears that no vape products will be sold without a prescription, and instead, they will be sold at pharmacies. Say goodbye to vape shops, and say, “welcome back, black market.”
New Zealand may not be far behind.
Currently, vaping laws are reasonable in Kiwi Country, and vape shops can operate independently but with significant government oversight. Age restrictions are huge, and to that end, disposables and flavoring (including “enticing names”) will be banned in the near future.
In late 2022, the New Zealand Parliament adopted the Smokefree Environments and Regulated Products (Smoked Tobacco) Amendment Bill, which regulators said would phase out combustible tobacco product use in the country. However, in November, New Zealand’s new coalition government announced its plans to scrap the generational tobacco ban, which would have prohibited tobacco products for people born after 2009.
While ditching the generational tobacco ban, the new government vowed to get tough on vaping by banning disposable e-cigarettes and increasing penalties for illegal sales to those aged under 18.
Meanwhile, 2,000 miles to the north is another world—“a newly industrialized country with a rapidly growing economy and political stability,” per the Indonesian press.
Most shops are basic in their appearance, as is their product supply.
The government has mostly ignored the vape market, and aside from an excise tax on e-liquids, there are few regulations on physical or online shops. For a decade, the government has stated its intention to address vape products, but for now, it has settled on a tax rate of 57 percent on vape products versus 40 percent on tobacco.
In September, the Indonesian Parliament passed Health Law No. 17 of 2023, which categorizes e-cigarettes as addictive substances. Teguh Basuki A. Wibowo, chairman of the Indonesian Electronic Nicotine Industry Alliance, told the media that including e-cigarettes in the legal framework for solid and liquid tobacco products legalizes industry participants and allows smokers to find alternative products.
The law puts Indonesia on equal footing with countries like the Philippines and the U.K., which have similar legislative frameworks for e-cigarettes, Wibowo said.
With almost 65 million smokers, Indonesia trails only China and India in terms of prevalence. Tobacco is heavily advertised through television and other media, which has traditionally been one of the first targets of restrictions.
In the city of Ubud, Bali, a favorite base for expats from all over the world, I visited Nyali Vapes, and the shop’s owners confirmed the same trends I heard about elsewhere: Disposables are the largest sellers. The people at Gaya Vapes, my next stop, said likewise, and when I asked about surprise visits from regulators, counterman Genoa admitted that these visits are frequent.
He also spoke about the differences between the locals and the tourists: “Most of the tourists come in for refills and [fewer for] disposables,” he said. “They ask for their flavors, and we usually do not have their exact brand, but we do have a similar flavor, which they are fine with.”
One of the largest groups of visitors to Indonesia, and Bali in particular, are Australians, home to the world’s most expensive cigarettes, at more than $25 a pack. Over the course of my time in Bali, I asked some Aussies if they stocked up on smokes while they were visiting, and unanimously, they all said, “hell, yes!”
Even though all countries are different, some vapers’ patterns are standard, including that of Genoa, the front desk guy at Gaya Vapes, age 25, who stopped smoking in 2017 and started vaping instead. But he did confess that sometimes money is tight, in which case he goes with a cigarette instead of a vape.
Vaping is much cheaper, but liquid prices can be off-putting for consumers with Indonesian wages. Regardless, Genoa’s passion for vaping is what motivated him to work at Gaya, one of several shops in the area with that same name.
For those earning foreign salaries, life is cheap in Indonesia, a condition that also applies to tobacco and vape products. A standard pack of cigarettes costs about IDR24,000, which equates to just under $1.60. A name brand like Marlboro will set you back about $2.25 per pack, which is still a bargain for those accustomed to foreign prices. Indonesia is not the world’s cheapest country for smokers—that honor goes to Vietnam—but it is in the lowest percentile.
My new friend William at Glory Vapes confessed that he was a dual user, and because vaping was so much cheaper (even at those insanely low cigarette prices), he was able to make his disposables last up to three weeks. Add in his love for all the fruit flavors, and he remains biased toward the liquids, so he smokes cigarettes only when socializing with friends.
He also shared that local police officers regularly visit the shop, but he suspected they came in more to alleviate boredom than to look for anything illegal.
Norm Bour is the founder of VapeMentors and works with vape businesses worldwide. He can be reached at norm@VapeMentors.com.
Indonesia will start imposing a tax on e-cigarettes from the start of 2024.
The additional levy is on top of the existing excise levy as the country steps up efforts to limit consumption in Southeast Asia’s largest economy.
E-cigarettes will be taxed at 10% of the prevailing excise rate, according to a finance ministry regulation, according to media reports.
In Indonesia, tobacco products are subject to two levies — at central and local government levels — of which 50% of the revenue is earmarked for public health services.
“Long term consumption of electronic cigarettes has been shown to affect people’s health,” the finance ministry said, adding the tax on e-cigarettes is also needed to level the playing field with conventional cigarettes.
A group of e-cigarette producers and customers (PAVENAS) criticized the lack of discussion and the timing of the implementation of the tax, considering excise tariffs for the product will increase next year.
The group said in a statement it may consider going to court to challenge the tax if the government goes ahead with it.
Indonesia is adding e-cigarettes and vape liquids to its inflation basket, a collection of goods and services used to calculate the Consumer Price Index rate, reports Bloomberg.
The change will update the composition of Indonesia’s consumer basket to reflect changes in technology, income and people’s consumption patterns, especially after the pandemic, according to the country’s statistics office.
Other new inclusions include face masks, hand sanitizers, TV receivers and fares for Jakarta’s recently-launched Mass Rapid Transit line. Online shopping for men’s and women’s shoes, Muslim clothing, mobile phones and perfume will also be tracked in five major cities, including Jakarta, Bogor and Surabaya.
Items like TV antennas, DVDs and print magazines have been dropped from the basket.
Indonesia is one of the world’s largest tobacco markets. Vapes have gained popularity in recent years, especially in urban areas.
The Indonesian Parliament recently passed Health Law No. 17 of 2023, which categorizes e-cigarettes as addictive substances, according to 2Firsts.
Teguh Basuki A Wibowo, chairman of the Indonesian Electronic Nicotine Industry Alliance, stated that including e-cigarettes in the legal framework for solid and liquid tobacco products legalizes industry participants and allows smokers to find alternative products.
The law puts Indonesia on equal footing with countries like the Philippines and the U.K., which have similar legislative frameworks for e-cigarettes, he said.
Customs in Batam, Indonesia, have seized illicit goods worth IDR1.37 trillion ($89.35 million) in the first half of 2023, including tobacco products, illegal cigarettes, e-cigarettes and alcoholic beverages containing methanol, according to 2Firsts.
The operation was a result of tax operations aiming to ensure compliance of retail tax paying sellers as part of the area’s free-trade zone and free port, according to Anbang Puriyongo, director of Batam Customs.
Three individuals have been named as suspects and undergone trial, according to Puriyongo. He called on citizens to report suspicious activities and actively participate in creating a fair trading environment.
“We will further enhance inter-department coordination and cooperation, leveraging the latest technology,” Puriyongo said. “We aim for such actions to continue in the future, creating a better trading environment for Indonesia.”
Philip Morris International’s Indonesian subsidiary, Sampoerna, inaugurated a factory for the production of IQOS HEETS consumables in Karawang, West Java, on Jan. 12, reports The Jakarta Post.
The facility, which started operations in the fourth quarter of 2022, represents an investment of more than $186 million.
The new HEETS factory, which will serve customers in Indonesia and the Asia Pacific region, fits with the government’s policy to encourage investment and increase the export of finished products. Speaking at the inauguration, Coordinating Minister for Economic Affairs Airlangga Hartarto said the investment will encourage innovation and create value in other sectors, such as retail, agriculture and R&D.
According to PMI, the Indonesian plant is the company’s seventh factory for innovative smoke-free products worldwide and its first in Southeast Asia.
During the inauguration, Sampoerna President Director Vassilis Gkatzelis conveyed his appreciation to the Indonesian government for the conducive investment climate, as well as the government’s commitment to maintaining national economic stability.
“As a company that has been operating for almost 110 years, we aim to continue to contribute to the national economy through continuous investment as well as the economic impact on the national tobacco industry supply chain and ecosystem,” he said.
Vassilis also noted PMI’s considerable investment in smoking alternatives. The company, he said, has invested more than $9 billion to develop, scientifically substantiate and commercialize innovative smoke-free tobacco products.
IQOS debuted in Indonesia through limited market testing since 2019 and is available in Jakarta, Surabaya, Denpasar and Bandung, among other cities.
Chinese e-cigarette manufacturers are expanding into Indonesia to better serve markets.
By Yutong Song and Alan Zhao
China’s rules for the vaping industry are stringent. They do, however, allow leniency for most exports. There is one rule, though, that can make shipping product to some countries nearly impossible: China’s regulations state that all products produced for export must comply with the regulations and laws in the destination country, according to 2FIRSTS, a vaping industry vertical media firm. If a country does not regulate e-cigarettes, China’s rules for vaping products would apply to those exports, including bans on flavors and synthetic nicotine.
To better serve countries that have not yet created regulations for electronic nicotine-delivery system products, manufacturers are opening factories outside of China. Many of those companies are moving into Indonesia where there are more than 70 million combustible cigarette smokers. The preference of Chinese manufacturers for Indonesia is also evident from a set of recent news headlines:
“Jinjia Group’s manufacturing base in Indonesia to provide integrated e-cigarette services.”
“Smoore Technology Indonesia (STI), a subsidiary of one of the largest e-cigarette manufacturers, has invested $80 million to establish e-cigarette factories in Indonesia.”
“The Indonesian factory of Zhijing Precision, an e-cigarette assembly supplier, is to be operational by 2022.”
The cost factors, such as land and labor, make Indonesia the first choice for e-cigarette companies setting up abroad, but the country has more to offer. Garindra Kartasasmita, secretary general of the Indonesian Vapor Entrepreneurs Association, mentioned in his keynote speech at the IECIE Vape Show that the Indonesian vaping market has been growing since 2013, with an annual rate of 50 percent except for the year 2021, when it shrank by 7 percent due to the Covid-19 pandemic. It is expected to rebound to 50 percent growth in 2022.
Integration of Production and Sales
Indonesia is ripe for helping to grow vaping businesses and boost the harm reduction potential of vaping products. One major advantage of moving e-cigarette production into Indonesia is the ease of integration and sales offered by the country’s large population. With 280 million people, Indonesia is the world’s fourth most populous country, accounting for 40 percent of all people in Southeast Asia. Moreover, Indonesia has 70.2 million smokers, which translates into a smoking rate of 34 percent.
The presence of so many nicotine consumers means e-cigarettes produced in Indonesia could also be sold domestically. Indonesia’s regulatory environment is conducive to the marketing of nicotine products that present lower risks than combustible cigarettes. Indonesia is the only country in Southeast Asia that allows tobacco advertising on television and in the media. It also has a place for e-cigarette bloggers and cross-category blogging, such as beauty and skin care. Indonesia has the second-highest number of posts on Instagram sharing vaping and related devices among all countries.
E-cigarette brands can be imported and sold in Indonesia only if they are recommended by the country’s National Agency of Drug and Food Control (part of the Ministry of Health) and the Ministry of Industry. Additionally, the products must be certified by the Indonesian National Standard. The policies are a positive for Chinese e-cigarette manufacturers.
Commenting on Smoore’s plant in Indonesia, Bahlil Lahadalia, Indonesia’s investment minister and director of the Investment Coordinating Board, publicly stated, “We need cooperation, we need jobs, we need opportunities that will make our brothers owners of our country.” And Clayton Shen, president of Smoore Indonesia, expressed his gratitude for the support of the Indonesian government, including the tariff-free incentives granted by the Ministry of Investment for the company’s much-needed machinery that needed to be imported.
Challenges Ahead
There are some challenges in the Indonesian market, however. Although the Indonesian market represents a large pie for Chinese manufacturers, it is not easy to navigate the market. A well-known Chinese e-cigarette manufacturer intending to build a factory in Indonesia revealed to 2FIRSTS that logistics is a problem for manufacturers, and currently no good solution is available.
For example, if the end products are filled and assembled in China and then sent to Indonesia, the amount of time the products could be held at customs is unpredictable. “I had a batch of goods that arrived at customs the end of last month, but they are still in customs as of the 20th of this month,” the manufacturer said. “If it was assembled in Indonesia and sent from the Indonesian factory, the time difference in delivery is not much different from if it were delivered from China.”
There is also a lack of e-cigarette machinery. Another vaping product manufacturer told 2FIRSTS that “there’s a critical lack of tools and machinery to keep pace with the production lines. Should factories be built here, machinery must be transported from China, which is a critical problem to tackle. It’s a misconception that the only shortage we would face is raw materials.”
Credit: Donvictori0
There is also a “workers’ gap” that can often create staff training and production concerns. In addition to overcoming cultural and geographical challenges when training local workers, it’s difficult to have the workers adapt to the Chinese style of work, which is very dedicated and focused on teamwork. An insider told 2FIRSTS that some workers have a “casual attitude to being late.” He said that he had to create numerous incentives to discourage employees from being late for work and/or going home early. “This is very different from the Chinese work habits,” he said.
Migration or Spillover
Shenzhen is considered the vaping capital of the world. Located just north of Hong Kong, the city designs and manufactures an estimated 90 percent of the world’s vaping and e-cigarette devices. There are more than 1,000 factories and thousands of support companies that form the supply chain throughout Guangdong Province and the rest of China.
A joint report from the E-Cigarette Professional Committee of the China Electronics Chamber of Commerce and 2FIRSTS anticipates the global e-cigarette market to grow by 35 percent in 2022. The total market is expected to exceed $108 billion. In 2021, China’s total e-cigarette exports were $19.8 billion and were expected to reach $26.7 billion in 2022. The expansion of China’s e-cigarette industry from Shenzhen to Indonesia can more accurately be described as “spillover” rather than “migration.”
Just because Shenzhen’s e-cigarette manufacturing hub status is unshakable in the short term does not mean that the global manufacturing layout is cast in stone. In fact, over the past five years, the country’s e-cigarette industry has spilled from the city into China’s Greater Bay Area. We have seen spillover from Shajing of the Bao’an District of Shenzhen to the Dongguan area and in between.
This spillover has not affected the development of China’s electronic cigarette industry, however. During the same time, there was also a period of rapid industrial growth and improvements on the supply chain side of the industry.
In a recent interview, 2FIRSTS co-founder and Chief Operating Officer Echo Guo said that years of development not only granted the Bao’an District of Shenzhen a number of e-cigarette enterprises but also brought together supporting supply chains, including industrial design, molds, batteries and other essential needs for manufacturing vaping products. “Here to there is a ‘two-hour traffic circle’ within the whole e-cigarette industry, with all of its subbranches cooperating closely,” said Guo. “Even when the manufacturers and customers exchange new ideas, it would take less than two hours to get a prototype ready.”
The spillover of China’s e-cigarette industry to Indonesia can also be seen as the absorption and utilization of manufacturing resources by China’s e-cigarette industry, which has broken the boundary of China’s Greater Bay Area and extended to a broader region of the Asia-Pacific. The entire region will now have the opportunity to create greater economic success through the growth of the e-cigarette and vaping industry.
One of the largest groups of visitors to Indonesia, and Bali in particular, are Australians, home to the world’s most expensive cigarettes, at more than $25 a pack. Over the course of my time in Bali, I asked some Aussies if they stocked up on smokes while they were visiting, and unanimously, they all said, “hell, yes!”
