* Gov't also raises excise tax by 11.3 pct this year
* Distribution of cigarettes needs to be limited - finmin
* Cigarette taxes contribute 10-12 pct to state budget
By Bernadette Christina Munthe and Eveline Danubrata
JAKARTA, Sept 30 Indonesia will raise its
cigarette excise tax by an average of 10.5 percent next year to
safeguard the health of the public, the finance minister said on
The planned tax increase will follow a 11.3 percent rise
this year, and the government will also intensify its crackdown
on the illegal circulation of cigarettes, Sri Mulyani Indrawati
"Cigarettes are a commodity that can harm the health of the
people, so their distribution needs to be limited," the former
World Bank managing director said. "Excise taxes are a way to
Cigarette excise taxes currently contribute 10-12 percent to
the state budget, compared with 11.68 percent last year and
12.29 percent in 2014, according to the finance ministry.
Indonesia is one of the world's fastest-growing markets for
tobacco products, with about $16 billion of cigarettes sold last
year, an increase of 13 percent from 2014, says market research
firm Euromonitor International.
Part of the reason for that growth is the relatively cheap
price of cigarettes in the country with the world's
fourth-largest population, where two-thirds of men are estimated
to be smokers.
A pack of Marlboros sells for around 25,000 rupiah ($1.92)
in Jakarta, compared with S$13 ($9.53) in Singapore and $13 in
Indonesia's biggest cigarette makers are Philip
Morris-controlled PT Hanjaya Mandala Sampoerna Tbk, PT
Gudang Garam Tbk and privately held Djarum Group.
It is unclear how much of the latest tax increase will be
passed on to consumers. Sampoerna, Gudang Garam and Djarum did
not immediately respond to requests for comment.
Indonesia's tobacco industry has also come under attack from
human rights and health lobby groups.
Earlier this year, New York-based Human Rights Watch said in
a report that several big companies lack procedures to screen
out tobacco that involves the effort of children working in
($1 = 12,995.00 rupiah)
($1 = 1.3640 Singapore dollars)
(Reporting by Bernadette Christina Munthe and Eveline
Danubrata; Additional reporting by Glenys Kirana; Editing by Kim