Indonesian President Susilo Bambang Yudhoyono has signed a regulation requiring producers to place photographic warnings on cigarette packaging, a bid to curb consumption in a nation where most adult males smoke.
The shares of PT Gudang Garam fell 0.4 percent to 53,800 rupiah ($5.45) at the midday break in Jakarta, while those of PT Handaya Mandala Sampoerna and PT Wismilak Inti Makmur dropped 0.8 percent to 63,000 rupiah and 1.4 percent to 710 rupiah, respectively. The Jakarta Composite Index declined 0.4 percent.
Tobacco taxes will generate more than 80 trillion rupiah for state coffers in 2013, according to a draft government budget. Any impact on tobacco companies would be outweighed by a recent decision to increase minimum wages, which will boost consumption among low-income groups, said Joseph Pangaribuan, an analyst at PT Samuel Sekuritas in Jakarta.
“The industry outlook remains positive as tobacco excise only rose by 5.6 percent this year, lower than the rate that we have seen over the past eight years,” he said.
Cigarette producers will have 18 months to implement the rules, which also prohibit the use of terms such as “mild” and “light” in connection with tobacco products, according to a posting on a government website late on Jan. 9. Some 66 percent of Indonesia men aged 15 and over are smokers, according to the Global Adult Tobacco Survey published by the World Health Organization.