|Indonesia: Smoke, smoke,
smoke that cigarette
By Tony Sitathan
JAKARTA - If you want to light up a smoke in
Indonesia, you'll have plenty of company and plenty of
encouragement. Visitors leaving Jakarta airport for the
bustling metropolitan city of 18 million are greeted by
a plethora of colorful billboards and lighted neon
displays strategically placed opposite the pick-up zones
Among the billboards is one
for Marlboro, with its laid-back American cowboy in a
scenic country outback. Just outside the airport are
signs for local cigarette brands including Djarum Super
and Sampoerna A Mild. In fact, in Jakarta or its
outskirts, smoking is ubiquitous. The very air seems
blue over most of the country with the scent of cloves
from Indonesia's famed kretek cigarettes.
In fact, at a time when across the world smokers
are reviled and hounded into stubbing out the butts in
public places, Indonesians are happily bucking the
trend, health concerns be damned. Beyond the usual
health warnings and high taxes, there seems to be no
serious government inclination to stop them doing so.
Some 60 percent of adult males acknowledge smoking,
according to Synovate Indonesia, a market research
organization, although only 4 percent of females do.
If Synovate's figures are right, at a time when
smoking is decreasing across most of the world, it is
increasing in Indonesia. Some 53 percent of Indonesian
males smoked in 1986, according to the World Health
Organization (WHO). Female smoking has remained steady
at 4 percent, although some women do regard smoking as
"Whenever you visit coffee
chains like Starbucks or Coffee Bean, as long as it's
not an enclosed building you find just as many female
smokers as males, and in pubs and discotheques and other
entertainment places you see female executives smoking
hand in hand with their male counterparts," said Lisa
Kustini, a media planner from Ace Advertising. "It's a
sign that the female is equal to the male in a society
where the male has always played the dominant role," she
As a 1980s advertisement for the Virginia
Slims brand used to say in the now increasingly
smoke-free United States, you've come a long way, baby.
Meanwhile, in nearby Singapore, which long ago
cracked down dramatically on both smokers and those who
advertise to them, only 31.9 percent of males smoke, and
only 2.7 percent of females, according to the WHO.
Across most of the developed world, as anti-smoking
campaigns have gained headway and governments have
raised taxes on cigarettes, smokers have dropped to less
than 30 percent of the adult male population.
But in Indonesia, "Smoking cuts across all age
groups, both the rich and the poor, and is part and
parcel of the Indonesian lifestyle," said Juniadi
Indrayuma, a social psychologist with a health institute
based in Jakarta. "It's difficult to break the smoking
habit that originates from young."
Indonesians seem aware of the dangers of cardiac arrest,
lung cancer and impotency caused by cigarette smoking,
according to the Synovate survey. Almost all smokers
queried say they know about government health warnings.
They just don't quit, despite most of them having tried
periodically. About two-thirds of smokers agree with the
statement "I am addicted to smoking."
difficult to break the viselike grip of the cigarette
companies on their chain-smoking patrons, who start as
early as 12 years old. Enforcing strict legislation and
increasing cigarette sale taxes doesn't seem to deter
smokers, nor do warnings of premature death. Weaning
smokers away from the habit remains an uphill battle.
Unlike countries such as Singapore, Indonesia
appears to welcome overt public displays of advertising
messages in the various print media, radio and
television stations. The revenue generated from
cigarette brand advertisements and sponsorship of events
has been estimated to gross more than US$250 million
alone in 2002, a figure expected to increase by 20
percent in 2003.
The kretek remains
dominant despite increasing inroads by multinational
tobacco companies, with 83 percent of smokers preferring
clove cigarettes to so-called white cigarettes (17
percent). Nonetheless, white cigarettes are increasingly
popular among female smokers (27 percent) and in Jakarta
In the face of these increases,
the dominant kretek brands are not resting.
Manufacturers such as PT HS Sampoerna, PT Djarum and PT
Gudang Garam are continually evolving and releasing
different versions of kretek-based cigarettes.
Milder brands such as Star Mild from Bentoel are
starting to be popular among women.
the state benefits as well. The so-called sin tax is a
whopping 40 percent of the price of each cigarette pack
sold in Indonesia. Mitra Adayani, a tax consultant for a
state-managed enterprise, estimates that the Indonesian
government collects as much as $2.3 billion in taxes on
cigarette products alone. And it is no surprise that the
highest individual taxpayer in the mid-1990s in
Indonesia was HS Sampoerna, the heir to the Sampoerna
business empire that deals in consumer goods, including
the famed Sampoerna kreteks.
Gunawan, a research analyst for Trimegah Securities,
said that the most attractive stocks on the Jakarta
Stock Exchange are those belonging to the cigarette
companies. "Companies like Gudang Garam, Philip Morris
and Sampoerna are considered 'blue chip' companies where
their stocks are rated highly both by domestic investors
as well as international buyers and investors," he said.
Sampoerna revealed plans in its recent annual
general meeting for an approved shareholder payout of 75
percent of net profits of 2002. There are also plans to
allocate up to Rp417 billion (about $51 million) for
share buybacks over the next 18 months.
current price of Rp4,125 per share, this buyback is
equivalent to around 101 million shares, or equivalent
to a 2.3 percent stake. This buyback is expected to
enhance the company's earnings per share," Gunawan said.
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