Indonesia's cigarette production, sales both low last year

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Overall weak performance of Indonesia's cigarette industry in 2025.Production and sales are both in the doldrums. Annual production307.8 billion units(math.) genusYear-on-year decline of 3%behaviorLowest in a decade since 2016December Monthly Production29 billionThe ring ratio, however, is not as high as it should be.Increase of 3.8%but year-on-year stillA significant decline of 15.91 TP3TThe

Historically, the month of December is usually characterized byYear-end demand on the riserespond in singingConsumption tax hike expected in the following yearAnd there was an increase in production, butNo consumption tax hike in 2026that eliminates the need for manufacturers to stockpile low-priced tax bands in advance, thusDirectly affects the pace of productionThe

One of the key reasons for the decline indiminishing purchasing power.2025 Early to mid-year, weak purchasing power becomes a national issue, with January-August seeing aquadruple deflation, retail sales weakened overall. Central bank data showed that food, beverage and tobaccoReal sales fell year-on-year for five consecutive months in January-SeptemberThe

As a result of this, the Secretary of the Treasury in 2025No increase in tobacco excise tax (CHT), adjusting retail prices only. This follows the **2014 (local tobacco tax transition)respond in singingAfter 2019 (economic slowdown-cum-election year)**, theNo tax hike for the third time in 15 yearsThe

2026 Government continuesConsumption tax unchanged, policy objectives include:

- Maintaining the purchasing power of the population

- Relieving economic stress

- Curbing the flow of illicit cigarettes

Excessive tax rates tend to be counterproductive, driving consumers to cheaperillicit cigarette, further hitting the legal tobacco industry and tobacco farmers. Against the backdrop of uneven economic recovery, price increases through tobacco control may further depress household consumption. The suspension of the excise tax is therefore seen asStabilizing the purchasing power of low- and middle-income groupsAt the same timeReducing the space for illicit cigarettes to surviveA realistic option. Despite calls from the public health field for stricter tobacco control, many economists believe that this move in the current environmentfeasibleThe

Extreme tax increases not only make it difficult to effectively increase revenues, but also hit the real economy, from industry and employment to farm incomes.2025 The government has continued to crack down on illicit cigarettes, with the number of investigations and prosecutions reaching20537Illegal cigarettes were confiscated.1.4 billionYear-on-year growth77.3%The Government of the Republic of Korea, in its efforts to protect legitimate producers, has become an important measure to protect legitimate producers.

Overall, the 2025 cigarette industry downturn reflects theWeak purchasing power, cautious policy orientation and increased competition from illicit cigarettesof multiple pressures. keeping the tax policy unchanged in 2026 is the government's way ofBalancing financial, economic and social objectivesThe Embodiment.

# Social Dynamics