Illicit Cigarettes in Indonesia: A Call for Better Enforcement and Tax Administration

This Policy Brief was written by Center for Indonesia’s Strategic Development Initiatives (CISDI) in Indonesia. The policy brief assesses the illicit cigarette market in six major cities: Bandung, Jakarta, Makassar, Medan, Semarang, and Surabaya. Specifically, researchers collected 8,179 discarded empty cigarette packs, 7,417 of which were eligible for analysis, and examined the tax stamps and pictorial health warnings (PHW) compliance to classify packs as licit or illicit. The results found that 10.77% of the packs were illicit. 64% of these illicit packs were unregistered brands that lacked both tax stamps and pictorial health warnings. These unregistered products are likely manufactured by micro- or small-scale producers operating without legal registration. Out of the selected cities Makassar and Surabaya had the highest prevalence of illicit cigarette consumption at 21.48% and 20.61%, respectively. The policy brief concludes with recommendations for decision makers to strengthen control of the supply chain and improve tax administration.

A corresponding Report can be found here.