Lack of awareness is guiding policy

The following article was published in The Jakarta Post on 28 August 2008. Unfortunately, in their wisdom, the editorial staff changed my original headline to one that was grammatically incorrect. I have reproduced the original article for your reading pleasure.

Last week, a senior official in the Ministry of Finance made comments to the media on the government’s tobacco excise policy (The Jakarta Post, 20 August 2008). His comments highlighted the lack of awareness that persists in Indonesia regarding tobacco, even among the educated elite.

The official explained that the government might refrain from increasing tobacco excise in the next year. He was concerned that an increase in cigarette excise “would hurt the cigarette industry and risk the jobs of its millions of workers.”

The official also said that “cigarettes which are harmful to human health are perhaps those that are illegal or those that have high levels of nicotine. Branded cigarettes have less nicotine.” The implication of this statement is that cigarettes with low levels of nicotine or those that are legally purchased are not harmful to human health.

Within two days of these comments being made, the Demography Institute at the University of Indonesia released a report entitled Tobacco Economics in Indonesia. This report comprehensively rebutted the government’s stance on tobacco excise policy.

Contrary to the Ministry of Finance’s assertion, there are not millions of Indonesians at risk of losing their jobs if tobacco excise was increased. The report found that tobacco manufacturing ranks number 48 out of 66 sectors in terms of its contribution to total employment in Indonesia. Less than 1 per cent of the labour force is employed in tobacco manufacturing.

Modelling undertaken as part of the report suggested that an increase in tobacco excise would negatively impact on employment in this relatively minor sector. However, this impact would not be such that millions of jobs are jeopardised. In fact, as consumption expenditure is diverted from tobacco as a result of the excise increase, other economic sectors are stimulated. The report concluded that a doubling of tobacco excise would likely increase overall employment in Indonesia by 281,035 jobs as a result of growth in industry sectors other than tobacco.

In addition to this, the report found that less than two percent of Indonesian farmers are engaged in tobacco cultivation. Of these farmers, the majority have diversified holdings and cultivate crops in addition to tobacco. This provides them with the requisite equipment and expertise to substitute their tobacco crops with other produce. With rapidly rising global prices for agricultural commodities, the burden of such substitution for an individual farmer is considerably reduced. The overall burden of a tobacco excise increase on the agricultural sector is, therefore, small.

It needs to be remembered, of course, that an increase in tobacco excise will not wipe out a whole industry. The higher price will lower consumption of tobacco. This will have impacts on the tobacco manufacturing and cultivation sector but will not destroy them or lead to widespread unemployment. Cigarettes will still be produced and consumed in Indonesia regardless of the excise policy.

The report found that the overall economic benefits of a tobacco excise increase, when all factors were considered, were positive. Moreover, the report concluded that an increase in excise would increase government revenue and decrease tobacco consumption. From the perspective of the Ministry of Finance, this would seem to be ideal. A judicious increase in tobacco excise to control consumption in the near future would be an excellent policy reform.

Aside from the economics, the official’s comment on the impacts of branded cigarettes on human health is perhaps a greater cause for concern. It indicated that, even within the higher echelons of Indonesian government, there are still many people who are unaware of the realities of tobacco consumption. Despite a growing global awareness of the dangers of smoking, many Indonesians remain ignorant of the fact that smoking has huge negative health consequences.

All forms of smoking tobacco negatively impact on physical fitness and increase vulnerability to an array of health risks. The evidence suggests that the health impacts of smoking low nicotine (the so-called “mild”) cigarettes, high nicotine cigarettes, branded cigarettes, illegal cigarettes or of smoking tobacco in other ways are the same. Any of these methods of consuming tobacco greatly increase the incidence of cancer, heart disease, impotence, and health problems with unborn children. Given the very high number of smokers in Indonesia, these health problems are imposing significant costs on the government, economy and society as a whole.

Widespread ignorance of the dangers of tobacco is a key hindrance to meaningful policy reform. If senior policy makers are unaware or apathetic to the risks of tobacco, it would seem likely that policy related to smoking is being formulated in the absence of full information. Moreover, there will be limited impetus to increase awareness of these risks among ordinary Indonesians.

This leads to an intolerable situation in which saturation advertising of tobacco products, nicotine addiction and social pressure are often the only factors guiding tobacco consumption choices. Full information on the risks does not feature in the individual’s consumption equation. This is one hurdle, among many others, that will have to be overcome if Indonesia is to curb its addiction to tobacco.

The writer is an advocacy consultant to the Indonesian Consumers’ Organisation (YLKI).