The Tobacco Processing Industry Contracts for Two Consecutive Years

Tobacco excise, which has continuously increased, and environmental restrictions for smokers are pressuring the national tobacco processing industry. Many small-scale cigarette industries in various regions have closed down as a result of the tobacco excise rate hike policy.

The Central Statistics Agency (BPS) reported that the tobacco processing industry's gross domestic product (GDP) at current prices (ADHB) was Rp135.14 trillion in 2021. This value accounts for 4.59% of the total non-oil and gas processing industry GDP and 0.8% of the national GDP.

Measured by GDP at constant 2010 prices (ADHK), the tobacco processing industry contracted by 1.32% in 2021 compared to the previous year.

This contraction is the second consecutive one in the last two years. The tobacco processing industry also experienced a contraction of 5.78% in 2020. In the last 11 years, the tobacco processing industry has contracted four times, as shown in the graph.

The government targets excise revenue of Rp203.9 trillion in the 2022 State Budget (APBN). The majority of this excise revenue comes from tobacco excise.

For information, the realization of revenue from tobacco excise reached Rp179.83 trillion in 2020. This value accounts for 96.74% of total excise revenue.