Dynamics of the Most Complicated Legislation in Indonesia

Despite being a commodity that often sparks controversy, tobacco does not yet have a legal rule in the form of a law in Indonesia. The expert even said that the discussion of the Tobacco Bill was the most complicated in the history of this republic.

The tobacco products industry, particularly cigarettes, is a giant of the Indonesian economy. As far as memory goes, the list of the richest people in Indonesia has always included the owner of a cigarette factory at the top. Not surprisingly, this industry is so strategic, both economically and politically. Every attempt to draft a law to regulate it ends in a stalemate. The tug-of-war forces within, too strong to resolve.

Lecturer of Constitutional Law at UIN Sunan Kalijaga Yogyakarta, Gugun El Guyanie.  (Photo: Mouab/Nurhadi Sucahyo)

Lecturer of Constitutional Law at UIN Sunan Kalijaga Yogyakarta, Gugun El Guyanie. (Photo: Mouab/Nurhadi Sucahyo)

Lecturer of State Islamic University (UIN) Sunan Kalijaga Yogyakarta, Gugun El Guyanie confirmed this.

“I follow the dynamics of the Tobacco Bill, the only Bill (RUU) in Indonesia, throughout history, which is the toughest over the package of the Election Law or the Political Party Law, only the Tobacco Bill. How many drafts have been submitted to the Legislative Body of the House of Representatives,” said Gugun in a discussion related to tobacco excise regulations, in Yogyakarta, Monday (5/10).

Citing notes from the Indonesian Legal Aid Foundation (YLBHI), the long history of the Tobacco Bill began in 2006. At that time, Commission IX of the DPR submitted a Bill on Controlling the Impact of Tobacco Products on Health (RUU PDPTK). It took three years for this bill to be included in the National Legislation Program (Prolegnas), in 2009. However, due to the resistance of the cigarette industry, this bill remained unclear.

In 2010, there was a Tobacco Bill that shifted the PDPTK Bill and was allegedly drafted by a cigarette industry group. For eleven years, this bill was adrift.

Attract Interest

Gugun said the unclear fate of the Tobacco Bill was not only due to the tug of war between the health sector and the tobacco industry. Within the tobacco industry itself, there is a difference of opinion.

“The industrial group has its own draft, there is a suggestion that there is an article that must limit tobacco imports. Another group wants import quotas not to be limited. A month later there was another new draft. They both feel they have an interest in the Tobacco Bill,” added Gugun.

This condition illustrates how chaotic Indonesia’s roadmap for regulating the tobacco sector is. The government’s plan to increase excise duties in the midst of the economic recession and the huge impact of the global pandemic, is another proof.

“This is because of a wrong policy but it has been considered normal for decades. The problem is that the Ministry of Health and the Ministry of Finance are in charge of this roadmap for the tobacco industry,” he said.

Organizations of tobacco farmers and cigarette workers in Yogyakarta sent paintings to President Jokowi as a form of concern.  (Photo: Mouab/Nurhadi Sucahyo)

Organizations of tobacco farmers and cigarette workers in Yogyakarta sent paintings to President Jokowi as a form of concern. (Photo: Mouab/Nurhadi Sucahyo)

In fact, the Ministry of Agriculture, Ministry of Industry and Ministry of Trade should have the greatest interest in this commodity. The health and financial sectors, can be included but are not policy makers.

As a solution, Gugun hopes that Indonesian tobacco industry players can change their attitude.

“Lower ambition for hegemony. Otherwise, we don’t have a legal umbrella that can harmonize the fate of tobacco farmers and cigarette workers,” said Gugun.

DPR has not given certainty

Chairman of the Special Committee for the Tobacco Bill of the DPR, Firman Soebagyo.  (Photo: DPR Public Relations)

Chairman of the Special Committee for the Tobacco Bill of the DPR, Firman Soebagyo. (Photo: DPR Public Relations)

The DPR itself has not moved much. Last week, the Tobacco Bill was the subject of discussion in the Legislation Forum. Chairman of the Special Committee (Pansus) for the Tobacco Bill of the DPR, Firman Soebagyo, acknowledged that tobacco is a strategic commodity. The annual excise tax received by the government currently reaches Rp. 170 trillion.

“In terms of economic value, there is no higher value for agricultural commodities than tobacco commodities. This means that tobacco has great potential for the country,” said Firman in a discussion, Tuesday (28/9).

A member of the Special Committee for the Tobacco Bill, Cucun Ahmad Syamsurijal promised that the Tobacco Bill would soon be realized. He even asked the government to support this effort, because it aims to protect the domestic tobacco industry, from upstream to downstream.

The DPR believes that the Tobacco Bill aims to provide legal certainty as well as better protection to increase the productivity of tobacco cultivation and industry.

This bill is also considered to have the potential to encourage the welfare of domestic farmers, workers, and business actors. However, it is not clear yet, the target set by the DPR itself to complete the bill which has been sitting for a dozen years.

Awaiting Legal Umbrella

The absence of the Law on Tobacco as a legal umbrella for this sector makes the government implement policies that are out of sync. Regarding excise duty, for example, the Ministry of Finance continues to raise it, but farmers and industry are not assisted by the Ministry of Agriculture or Industry. As a result, farmers screamed because they felt left out.

Secretary General of the Tobacco Farmers Association in Yogyakarta, Triyanto admitted that farmers are waiting for a legal umbrella that can protect them.

“The most affected are farmers, with a reduction in labor, production restrictions, it will reduce our production absorption. If the harvest volume is large, absorption is small, the price will be cheap, not reaching the cost of goods sold,” said Triyanto.

The absence of a legal umbrella is also troubling cigarette factory workers. The chairman of the Federation of Tobacco and Food and Beverage Cigarette Workers Unions (FSPRTMM) from the All-Indonesian Workers’ Union (SPSI), Sudarto, said the condition of this sector was worrisome.

“About 10 years ago, 60,889 cigarette workers lost their jobs. If made on average, in that year 6 thousand people lost their jobs in the cigarette industry. More specifically, they are SKT workers, hand-rolled kretek cigarettes,” said Sudarto.

Sudarto said the cigarette labor union was one of those whose members continued to decline. This figure does not include workers outside the union, namely workers who are not organized. In fact, SKT is a purely local product because it contains domestically produced products.

In addition, the majority of SKT cigarette workers are women, and with limited education. Rolling a manual cigarette, is their opportunity to work, earn an income and a decent living.

“In fact, this country does not pay attention to them,” added Sudarto.

Sudarto reminded, in the last ten years, excise taxes have been routinely increased every year and only took one break. Plans to raise it again later this year will certainly be a heavy blow.

“Data from the Ministry of Industry, in 2017 there were still around 700 cigarette factories or industries. What I hear at the moment, there are only around 400, that’s all, not all of them are active. What is really routine production, I think it’s under 100 factories, “continued Sudarto.

Cigarette factories in Indonesia are concentrated in East Java, Central Java, DI Yogyakarta and North Sumatra. Unfavorable economic conditions, added Sudarto, forced factories to reduce production, which automatically reduced workers’ income. Some workers were also laid off or enforced stricter working hours arrangements. The sector is also experiencing ongoing layoffs.

Unabsorbed Harvest

In the IV National Conference of the Indonesian Tobacco Farmers Association (APTI) in Yogyakarta last week, this issue was also discussed. Chairman of the DPN APTI Soeseno explained how to calculate the tobacco farmers will not be absorbed by the industry.

Cut tobacco in the drying process relies on the sun's heat.  (Photo: Courtesy/APTI)

Cut tobacco in the drying process relies on the sun’s heat. (Photo: Courtesy/APTI)

He said cigarette consumption is estimated to fall by 10 percent. The current figure is around 340 billion sticks, which means that it will decrease by 34 billion sticks. For each cigarette, one gram of tobacco is needed. This means that there will be 34 thousand tons of unabsorbed tobacco.

“If one hectare of land produces one ton of tobacco, it means that there will be 34 thousand hectares of planting area where the tobacco harvest will not be purchased,” said Soeseno.

Farmers themselves say that this year’s conditions are similar to the disaster in 2017. The worst grade A tobacco leaves are currently selling for only Rp. 19 thousand per kilo, similar to last year’s 2017 price of Rp. 17 thousand per kilo. The price for grade B is Rp. 25 thousand, and grade C is Rp. 47 thousand. Supposedly, this last grade cost Rp. 70 thousand. (ns/ab)

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