Indonesia has more than 60 million smokers and one of the highest smoking rates in the world, but is one of nine countries yet to sign or ratify the Framework Convention on Tobacco Control (FCTC). This treaty, negotiated under the auspices of the World Health Organisation, enforces signing parties to suppress tobacco consumption within their countries.
This reluctance is driven by myriad reasons, including fear such controls would harm the welfare of local tobacco farmers.
In fact, our research shows tobacco imports are the primary threat for Indonesian tobacco farmers.
Our observation of other four countries that have ratified the FCTC - Bangladesh, Mozambique, Pakistan, and Zimbabwe - showed the treaty would, in fact, control tobacco imports (as well as reducing overall tobacco consumption).
Research findings
We conducted our research in 2019 by analysing Indonesian tobacco farming data from 1990 – 2016.
We found Indonesia relies heavily on imported tobacco products (including Virginia tobacco leaves from China, Brazil and the US), at the expense of local producers.
While the local production growth is stagnant with an average growth of 1.65% over 27 years, tobacco imports into Indonesia have grown by more than double since 1990.
Higher import leads to lower demand for local tobacco products, which disadvantages local tobacco farmers.
While Indonesia still struggles to control tobacco imports that hurt local farmers, some large tobacco market countries such as Zimbabwe, Mozambique, Pakistan and Bangladesh have, in fact, boosted local tobacco production after ratifying the FCTC. Tobacco imports to these nations fell after the treaty was ratified.
There are at least two ways the FCTC could control tobacco imports.
Firstly, the FCTC promotes high tobacco taxes, including import tariffs. Higher import tariffs will limit tobacco imports.
Secondly, the FCTC reduces local tobacco consumption. Once the local demand drops, tobacco imports will follow suit as decreased demand for cigarettes will decrease the demand for tobacco leaves. Hence, the demand for imported tobacco leaves will also decrease. Our studies of the four countries have also proven this.
The story of four countries
Despite the relatively high local tobacco production, the four countries we looked at managed to keep the import-to-export ratio low.
Zimbabwe, one of the world’s highest tobacco exporters with nearly 92% of its tobacco production exported, ratified the FCTC in 2014. Cigarettes in Zimbabwe became less affordable between 2014 and 2016 following the implementation of higher tobacco taxes. The higher tobacco taxes lower cigarette consumption, which eventually cut imports.
This also applies to Mozambique, a net tobacco exporting country. Mozambique was able to increase cigarette prices by 85% after signing the FCTC. Increasing cigarette prices lead to declining local tobacco demand and hence reduces demand for tobacco imports.
Bangladesh is known for its alternative to tobacco agriculture. Bangladeshi tobacco farmers switched from tobacco to food crops such as potato, melon and French bean. Bangladesh ratified the FCTC in 2005. Since then, the country has significantly reduced smoking prevalence from 28.2% in 2005 to 23% following the issuance of the country’s 2005 Tobacco Control Law after the ratification. The law imposed higher tobacco taxes, which reduces consumption. A decline in tobacco consumption leads to lower tobacco imports.
Pakistan ratified the FCTC in 2004 and is relatively strict in the implementation of the treaty’s protocols. Of the countries we looked at, Pakistan is the only one to fully implement policies on smoke-free environments, health warnings and anti-tobacco campaigns.
This allows Pakistan to reduce tobacco use from 22.7% in 2005 to 20.1% in 2016 . The decline in tobacco consumption makes it easier for Pakistan to control tobacco import growth as the demand for local and imported products in Pakistan declines. Pakistan tobacco imports contributed to only 1.7% of local consumption in 2016.
Recommendation
The lack of tobacco control has burdened Indonesia’s economy. Rising tobacco consumption has led to increased tobacco imports.
Ratifying the FCTC could fix this. Our research on four other countries that have ratified the convention shows how these countries controlled tobacco consumption and reduced their tobacco imports.
Ratifying the FCTC is one of the most effective ways to reduce tobacco imports as it also enforces the implementation of tobacco import tariffs.
By ratifying the convention, Indonesia would not only help local tobacco farmers by enforcing import tariffs but also control tobacco consumption.
Nadira Amalia from University of Malaya in Malaysia has contributed to this article