Issue link: https://read.dmtmag.com/i/550310
34 tobaccoasia lar brands such as Djarum Coklat, Djarum 76 and Djarum Istimewa. The excise tax levied per cigarette on hand- rolled kretek currently runs from IDR80 to IDR275 (around 2 US cents), and on machine- rolled from IDR245 to IDR375. Regional taxes in some areas of the country also add to the burden. The hope is the government will respond favor- ably towards hand-rolled kretek in order to stave off a rise in unemployment figures, which current- ly stand at 5.7%, or 7.2 million people. The excise tax has risen steadily in recent years, and although the levels are not insurmountable for large companies, the kretek industry has tra- ditionally had many small and medium-sized busi- nesses. GAPPRI claims an astonishing decline in the number of Indonesian cigarette makers from 4,900 to just 800 in the five years until 2013. 2009, as part of the Family Smoking Prevention and Tobacco Control Act. However, there is opposition, claiming it is unfair for several reasons to include clove sticks under the US ban. Bramantiyoko Sasmito, brand manager for international sales at PT Djarum, says, "It seems there is a generalization on the defini- tion of flavors in cigarettes, where in most cases kretek are being included. But kretek are differ- ent to flavored cigarettes. They are a combination of tobaccos and natural cloves – not clove flavor. They are different to menthol or cherry or choco- late flavored cigarettes. And kreteks have been a cultural heritage of Indonesia since the 1880s." An Indonesian appeal to WTO claimed, "The burden of that measure fell almost entirely on In- donesia." WTO agreed that the FDA's measure was unfair, based on the fact the US still allowed the sale of menthol cigarettes. In a 2013 ruling WTO stated the ban was inconsistent with the Technical Barriers to Trade Agreement "because it accords clove cigarettes less favorable treat- ment than that accorded to menthol-flavored ciga- rettes." The panel decided that clove and menthol- flavored cigarettes are "like products". Despite the WTO stance, clove cigarettes re- main barred from sale in the US. An Indonesian spokesman said, "It's baffling how the US, which is always demanding other countries abide by WTO disciplines and regulations, is now unable to correct its policy, which is clearly in violation of WTO provisions". WTO is now arbitrating on Indonesia's re- quest to suspend import licensing obligations and tariff concessions that it provides to the US un- der the General Agreement on Tariffs and Trade 1994. According to the Office of the US Trade Representative, Indonesia is the eighth largest ex- port market for US agricultural products. The FDA, meanwhile, is looking again into its position on menthol cigarettes. It has issued an Advance Notice of Proposed Rulemaking "to take public input [...] to inform its thinking about potential regulatory options". The body says it also plans to support new research on the differences between menthol and non-menthol cigarettes. In response to the US ban, many Indonesian kretek manufacturers upped the export of kretek cigars, which are not banned. According to re- search published in the British Medical Journal this year, sales of kretek cigars increased in the US by more than 1,400% between 2009 and 2012. Kretek may be under increased attack inter- nationally, like most of the tobacco industry, but, domestically, business continues to boom. If the government can find the right balance to protect jobs in the hand-rolled sector, everyone should be smiling for a while at least. "Sampoerna isn't just the country's biggest cigarette maker, it is also the largest company in any sector on the Indonesia Stock Exchange" One thing the government has already done, to the dismay of the industry, is to recently intro- duce a requirement for health warnings to cover 40% of cigarette packs, including kretek. In the pipeline since 2009, the measure finally came into force in June. Its immediate success was limited, however. Reports emanating from ABC News and others said tobacco companies had largely ignored the deadline. In June, Indonesia's Food and Drug Monitoring Agency revealed that although the 672 tobacco companies nationwide had been present- ed with a choice of images to use 12 months prior, they had registered images for only 409 of 3,300 brands among them. Sampoerna said it still had to sell existing stock. A company spokesman, Tommy Hersyaputera, was quoted as saying, "We believe the government will implement the regulation consistently and fairly, so as to realize a climate of healthy com- petition among cigarette manufacturers, as well as providing clear information about the impact of smoking on health." Kretek is also coming under pressure inter- nationally with more restrictions on cigarette fla- vors. The new EU Tobacco Products Directive, which came into force in May, includes a ban on flavored cigarettes. Member states have two years to introduce the legislation. And in the US the sale of clove cigarettes is already banned under the US Food & Drug Administration's (FDA) ruling in