Jokowi Requests a 15% Annual Excise Tax Increase, Checks Global Market Value of Electronic Cigarettes

President Joko Widodo will increase the excise duty on other processed tobacco products (HPTL) and electronic cigarettes in 2023. Specifically, the Head of State instructed a 15% average excise increase for electronic cigarettes and a 6% increase for HPTL.

"For electronic cigarettes, there will be a 15% increase every year for the next 5 years," said Finance Minister Sri Mulyani Indrawati at the Bogor Palace, via the official Presidential Secretariat channel on Thursday (3/11), as quoted by *Katadata.co.id*.

According to *Global News Wire*, the global e-cigarette market is projected to grow from $18.15 billion in 2021 to $21.63 billion in 2022, with a compound annual growth rate (CAGR) of 19.2%. The market is expected to reach $38.53 billion by 2026, with a CAGR of 15.5%.

Major players in the e-cigarette market include Philip Morris International, MCIG Inc, Altria Group Inc, British American Tobacco plc, Japan Tobacco Inc, Imperial Tobacco Group, Njoy Inc, International Vapor Group, Reynolds American Inc, and VMR Product.

Growth is primarily driven by companies resuming operations and adapting to the new normal while recovering from the impact of Covid-19, which previously caused restrictive measures involving social distancing, remote work, and closures of commercial activities, resulting in operational challenges.

The e-cigarette market consists of sales of e-cigarettes. E-cigarettes are battery-operated handheld electronic devices containing a solution of nicotine, glycerin, and flavorings that are converted into a vapor that can be inhaled by the user. These are available in various flavors such as mint, menthol, and chocolate.

The main types of e-cigarette products are Disposable, Rechargeable, and Modular. Disposable products are intended to be discarded after use. The composition used includes tobacco, flavorings, and nicotine-free options. Distribution channels include specialist e-cigarette stores, online sales, supermarkets, tobacco shops, and others.

Increasing awareness of health problems caused by conventional tobacco smoking among the smoking population is driving the growth of the e-cigarette market. Conventional tobacco cigarettes release toxic compounds that have adverse effects on individual health. E-cigarettes are less toxic and safer compared to conventional tobacco cigarettes.

For example, British American Tobacco released the Vype iSwitch and Vype iSwitch Maxx based on Puretech blade technology, which involves using ultra-slim stainless steel blades to heat the e-liquid and produce vapor. Vapor products do not burn tobacco; the vapor contains significantly lower levels of toxins than the smoke produced when burning tobacco. Therefore, e-cigarettes have a lower risk profile compared to traditional cigarettes.

(read: Top 10 Tobacco Importing Countries in Indonesia in 2021: China Takes the Lead!)