Indonesia's recent changes to e-cigarette taxation, which now place e-cigarettes in the same category as combustible tobacco products, have caused uproar amongst retailers and consumers. Garindra Kartasasmita joins us to explain these latest developments, and why the government is dead-set on denying vaping science.
Chapters:
0:00 - Intro with Joanna Junak 0:48 - Indonesia's brand new vaping tax explained 2:37 - Quest to educate legislators about THR 4:00 - Retailers voice their disapproval of tax changes 4:53 - Why is the ministry of health denying the evidence? 6:04 - Are fears of a black market surge realistic? 7:55 - Closing remarksTranscription:
00:00:04 --> 00:01:06
Joanna Junak: Hello and welcome. I'm Joanna Junak and this is GFN News on GFN.TV. Indonesia has introduced additional taxes on e-cigarettes effective January 1st of this year. The country has one of the highest smoking rates in the world. And, instead of helping people quit traditional tobacco products by giving them access to safer alternatives, the government has decided to impose additional taxes on these less harmful products. Joining us today to discuss the reasons for this move is Garindra Kartasasmita, Secretary General of APVI in Indonesia. Hello, Garindra. First, why did Indonesia introduce an additional tax on e-cigarettes?
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Garindra Kartasasmita: Yes, okay. The first I must explain that in 2018, we got the excise regulation from the government. Excise and VAT for tobacco products. So we already have two kinds of costs. First is excise and the second is VAT for tobacco products. And the third just happened in this year. We call it pajak rokok. It means cigarette tax. Why? Because our Ministry of Finance see our industry or see our product as the same product or as the same risk with the conventional cigarette. We already explained about the risk, about that our product is 95% less harmful than cigarette, but they told us that for the risk measurement, it's the Ministry of Health should done, not the Ministry of Finance. But the Ministry of Finance give us a cigarette tax to give the same playing field between the conventional cigarette and electric cigarette. That's the reason.
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Joanna Junak: So, what needs to change for the government to see that e-cigarettes and traditional ones are not equally harmful?
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Garindra Kartasasmita: Right now, we are doing research with the government. In Indonesia, we have an innovation and research center. Indonesia is a government-owned We already talked with them for three years actually, but only in 2003, they are willing. Some of the division are willing to do the test, to do the risk test between conventional cigarette and e-cigarette in 2023. We start in July. We already collect the samples for e-liquid and devices. And this month we will run the test. Hopefully, after we get the result, we could show this to the government, we could show this to the Ministry of Health, Ministry of Finance and Ministry of Industry and others, that we have proof that the electric cigarette is much less harmful than conventional cigarette. So, we need the front regulation.
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Joanna Junak: And who has criticized this decision and why?
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Garindra Kartasasmita: Many, many vape entrepreneurs reject this. Also our association. We already talked to the media. Maybe every day I have one until four medias every day contact me asking about my opinion and I told them that this is not fair. Why? Because we are not cigarettes. We have different products and government should not interfere the market with regulations. It's a dangerous move from the Ministry of Finance because once we let the government interfere directly to the market, it will happen in other industries, not just us.
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Joanna Junak: Okay, you mentioned that this decision made by the government is because it believes that nicotine vapes are as harmful as smoking. Does this mean that there is little to no education of health professionals and government officials regarding THR? Or this is not the case?
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Garindra Kartasasmita: Yes, we have some professors talking for us, we have doctors talking for us, all the research had been done overseas, outside Indonesia. They will not believe it. The Ministry of Health told me that, well, if you do the research in Europe and the users are European, it's different than the Asian. And if we give them research from Korea, for example, This is also Asian. Yes, it's also Asian, but it's not the same like Indonesian. So it must be done inside Indonesia by a government agency.
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Joanna Junak: And do you think that after introducing this additional tax on e-cigarettes, the black market will explode?
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Garindra Kartasasmita: Actually, they were trying to add the cost with cigarette tax. And they also willing to change the packaging volume. They want us to reduce the packaging volume. For example, our open system, liquid in bottle, we have 15 ml, 30 ml, and 60 ml. They want it to be reduced to 10 ml. And we have also another regulation for closed system. The maximum volume is 6 ml. They want to reduce it to 2 ml. But we rejected that until now. And we told them that if it happens, if you reduce the volume that low, we cannot support them again to reject the illegal products because there will be too many illegal products like in UK right now. We went to UK in last November and we see that because 2 ml limitation is too low, then too many illegal products enter the market. Our association also happened to help much to the government for these last five years to prevent the illegal products, but if the regulation is too hard to follow, we don't know. It will be many illegal products coming.
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Joanna Junak: Thank you, Garindra. That's all for today. Tune in next time here on GFN TV or on our podcast. You can also find transcriptions of each episode on the GFN TV website. Thanks for watching or listening. See you next time.