9 June 2016
Philip Morris International is parading Indonesia as its “crown jewel”, gloating over the huge profits it makes there and that its business is set to grow even further. In 2015, PT Sampoerna recorded a net profit of $774 million, (10.4 trillion rupiah) an increase of 1.8% from the previous year.
According to PMI/Sampoerna’s President Director as reported in the Wall Street Journal, “We have huge opportunities to grow our business,” and the future is inmachine-rolled clove cigarettes and light brands. Last year setting public health aside, the Indonesian President signed an MOU worth $1.9billion with PMI/Sampoerna to increase its business in the country.
Indonesia remains alone in going the opposite way in tobacco control. Other than pictorial health warnings on packs, the Indonesian government has refused to adopt other effective national tobacco control measures that can reduce smoking rates. About 230,000 people die from tobacco related illnesses every year.
According to Euromonitor, cigarettes sales in Indonesia reached more than $16 billion in 2014, making it the third-largest market in Asia, after China and Japan. It predicts an increase in sales of more than $23 billion by 2018.
Indonesia is the only country in Asia where the government has a definitive policy to increase tobacco production. The Ministry of Industry is pushing to boost production between 5% – 7.4% annually to 2020.
Indonesia has the world’s fourth-largest population of smokers (90 million) where more than two-thirds of men smoke. A young population with rising disposable incomes and the addicted poor will contribute towards Sampoerna’s profits.
Sampoerna has a clear strategy to polish the crown jewel with profits from targeted populations. The Wall Street Journal reports, cigarette prices range from less than a dollar a pack to closer to $2 for premium brands. With about 40% of the population living on less than $3 a day, cigarettes still account for a large portion of many households’ monthly spending.
Indonesia is the only country in Asia that has still not banned tobacco advertising. Tobacco adverts are allowed on television (after 9.30pm), in print media and on billboards, although a few cities including Jakarta and Bogor have banned outdoor adverts.
Keeping tobacco adverts foremost in children’s view is important to grow Sampoerna’s business. Last year a survey of 360 schools in 5 major cities including Jakarta, Bandung and Makassar, found tobacco billboards near 1 out of 3 schools, even a tobacco videotron was placed right in front of a junior high school.
Tobacco adverts were found in shops in close proximity of 85 percent of all the schools. The survey was jointly conducted by Lentera Anak Indonesia (LAI), the Children Media Development Foundation (YPMA) and Smoke Free Agents (SFA).
Sampoerna continues to lie about targeting youth. It claims “Mistakes do occur, and when we find out about the mistakes we try to rectify it immediately.” No such thing, as nothing was done to remove the adverts near the schools. The only solution is to ban all forms of tobacco advertising, promotions and sponsorship.
When will the Indonesian government stop helping the tobacco industry increase its profits and instead rescue the 90 million smokers who make up its crown jewel?
For status of ban on tobacco advertising, promotions and sponsorship, see here