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A Smoking Ban Fires Up Jakarta Law Takes on One of Indonesia's Most Entrenched Industries BUSINESS ASIA By Bloomberg

Posted on: Thursday, 19 January 2006, 12:00 CST

By Arijit Ghosh and Wahyudi Soeriaatmadja

Ari Kurniawan, a smoker since he was 12, says he will not quit after Jakarta bans smoking in the city's offices and public buildings starting next month.

"I can't change," said Kurniawan, 34, taking a pull on his kretek, a clove-flavored cigarette favored by Indonesians. "I will smoke someplace else. Everyone is smoking."

The ban, which applies only in the capital, is the first attempt to curb smoking in the world's fifth-largest tobacco market. Health officials say it will have no effect and that only tougher rules will dent rising tobacco sales. Opposing the reformers are lawmakers, an industry that employs as many as 400,000 people, and fans of the kretek, which accounts for nine in 10 cigarettes consumed in Indonesia.

The pungent aroma of kretek permeates Jakarta's hotel lobbies and restaurants. Cloves, a spice native to Indonesia, are added to the tobacco, imparting a sweet scent and emitting eugenol, a chemical that numbs the effect of smoke in the throat.

"After decades of permissive smoking in front of other people's noses, in front of babies and young children, this is more of a recognition that smoking is bad for other people," said Widyastuti Soerojo, head of tobacco control at the Indonesia Public Health Association. The Jakarta ban "is not enough."

Jakarta's offices, restaurants and public buildings will have to provide a separate smoking space starting Feb. 4. Smokers and building managers who disobey face six months in jail or a fine of as much as 50 million rupiah, or $5,000, more than four times what the average Indonesian earns in a year.

"The government should educate people about the dangers of smoking rather than telling restaurants to ban smoking," said Puma Rahmadi, a partner at Banyumas, a Jakarta eatery. "Small restaurants like ours don't have enough space to implement it. Anyway, I don't expect people to adhere to the rule."

Some lawmakers are proposing a more ambitious bill. They want to ban advertising and the sale of tobacco products to minors. Opposition comes from members of Parliament who argue that stricter rules could cost jobs.

The tobacco industry employs about 400,000 people, according to Ismanu Sumiran, chairman of the Indonesian Kretek Producers Association, out of 95 million workers in Indonesia.

"There should be regulations," said Andrew White, a director at H.M. Sampoerna, which is Indonesia's oldest cigarette maker and was bought by Altria of New York last year. At the same time, he said, businesses, hotels and restaurants "should have some flexibility on deciding where they do and where they don't allow smoking."

Cigarette taxes last year generated about 32.2 trillion rupiah, or 7 percent of the government's revenue. That may rise to 36.6 trillion rupiah in 2006 after the government increased retail prices, used as a benchmark for excise duties, in July.

Production of kretek, named after the crackling sound made by the burning cloves, is forecast to increase 6 percent this year, Sumiran said. Kretek cigarettes deliver more nicotine, carbon monoxide and tar than conventional cigarettes, the U.S. Centers for Disease Control and Prevention said in a July 2004 fact sheet on its Web site.

Tobacco opponents face an uphill battle: The proportion of smokers in Indonesia rose to 31.5 percent of the population in 2001 from 26.9 percent in 1995, according to the World Health Organization. That was more than double the 15 percent rate in Singapore, which since then has banned tobacco sales to people under 18 and has introduced graphic warnings on packages.

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Tobacco companies are expanding in nations with less restrictive smoking policies as the rules are tightened in countries like the United States, the world's second-largest cigarette market. Smokers declined to 21.6 percent of the U.S. population in 2003 from 22.8 percent in 2001, according to the Centers for Disease Control. Altria completed the $4.9 billion acquisition of about 98 percent of Sampoerna in May. Sampoerna is Indonesia's third-largest cigarette maker. Altria is the world's biggest cigarette company; one of its units, Philip Morris, makes Marlboro cigarettes. Indonesia's biggest tobacco company, Gudang Garam, is controlled by Rachman Halim, the nation's richest man. The unlisted Djarum Group, the second- largest, is owned by Budi Hartono. He is the country's second- richest man, according to Forbes magazine.

Companies selling kretek spent $139 million on advertising in the first 11 months of last year, 29 percent more than in the same period a year earlier, according to Nielsen Media Research.

"After the acquisition of Sampoerna, there is aggressive marketing not only from Philip Morris but other competitors," said Soerojo of the health association. Tobacco makers focus on recruiting new smokers, said Hatai Chitanondh, president of the Thailand Health Promotion Institute, who helped draft Thailand's tobacco-control law.

"Tobacco companies lose a lot of customers," he said. "A number of them are successful in quitting, and older smokers die of smoking- related diseases."

The average age at which Indonesians start to smoke fell to 18.3 years in 2001 from about 19 in 1996, according to the World Health Organization. With no restrictions on sales to minors, many start much younger.

Source: International Herald Tribune

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