Gudang Garam’s cigarette sales
Gudang Garam’s entry into the list of top global cigarette manufacturers is not surprising. In the Euromonitor International report, per August 2016, it was founded in 1958 by Tjoa Jien Hwie, a.k.a Surya Wonowidjojo, the largest holder of the cigarette market share in Indonesia, with a score of 28.8 percent, or only slightly ahead of HM Sampoerna by 28.7 percent. Djarum trailed the two with a market share of 12.4 percent. The rest is Bentoel (British American Tobacco), with 7.4 percent. Then there is PMI 6.6 percent, Nojorono 6.4 percent, Wismilak 0.7 percent, KT&G 0.4 percent, and others 8.4 percent. The reality in Indonesia is relatively opposite to the countries in ASEAN. For example, the Cambodian market is fully controlled by British cigarette manufacturers, namely the Imperial Tobacco Group, which takes 38 percent of the portion. On the other hand, BAT controls the Malaysian cigarette market up to 62 percent, and Singapore is controlled by PMI up to 47 percent.
Besides being preferred in local brands, in 2015, cigarette sales in Indonesia were still the largest in the region, with 248 billion cigarettes per year, followed by the Philippines with 90 billion sticks and Vietnam with 79 billion sticks. Until 2020, it is predicted that Indonesia will continue to dominate cigarette sales in the region, up to 281 billion cigarettes.
Accordingly, it is widespread that Indonesia is listed as the country with the fourth-largest cigarette market share in the world, along with the Philippines, which is among the top nine global cigarette markets. Indonesia is the ASEAN country with the most cigarette exports, up to 31.5 billion cigarettes, followed by Singapore and Vietnam, with 27 billion cigarettes and 23 billion sticks. This, of course, has the potential to increase the state treasury more than in other countries, which significantly benefits the government. The Indonesian government’s cash income from cigarettes is indeed the largest in the region. In 2015, supplies totaled $ 10.6 billion, compared to Brunei’s only $ 196,000.
In terms of taxes, Indonesia is still slightly below other countries in determining the cigarette tax on the price of cigarettes sold at retail. In ASEAN, Thailand is the country that applies the highest cigarette taxes, which is up to 70 percent of the retail price, followed by Singapore and Brunei, with 66 percent and 62 percent. Hence, cigarette prices in Indonesia are still relatively “favorable” to consumers’ pockets. The price of cigarettes in Indonesia is around $ 1.4 per pack for foreign brands. Meanwhile, the price of cigarettes in Singapore can reach $ 9.6 per pack, and Brunei can reach $ 5.1 per pack.
Due to the relatively low price of cigarettes and the prevalence of smokers in Indonesia, which is the highest in ASEAN, Indonesia must bear the consequences of health costs due to cigarettes, which are unequal with tax revenues from cigarettes. The Southeast Asia Tobacco Control Alliance (SEATCA) report, November last year, revealed that in 2015, health costs due to smoking reached $28 billion, while the average tax revenue from cigarettes was only $7.9 billion per year. It can be said that Indonesia is one of the most underdeveloped countries in ASEAN countries.