Electronic Cigarettes (Vape) has gained popularity among youths. These devices mimic the usage of cigarettes by shifting the main ingredient from tobacco to other flavoured liquids. Vaping trends are reaching their pinnacle in 2020, with 68 million individuals using vapes worldwide. (Harm Reduction Journal,2021), particularly among youths. Vapes are popular because of their compact size, eye-catching designs, and reputation for safety for both smokers and nonsmokers.
When comparing vape to tobacco, vape is perceived as more attractive and “safer” due to its lower nicotine content and less vigilant usage. Global consumer choice is shifting from tobacco to e-cigarettes (Vape) due to this sudden shift. Philip Morris International (PMI), a prominent American multinational tobacco company known for its globally popular Marlboro cigarettes, has recently announced plans to ramp up production of vape. This decision is driven by the growing demand for vape and PMI’s objective to achieve its goals of reducing tobacco consumption through the promotion of Reduce Risk Products (RRPs). While this may seem likea straightforward transition, it may be less apparent to countries that do not manufacture tobacco. However, the transition from toba co to vape could have a significant impact on the national economy of tobacco-producing countries, particularly Indonesia.
In Indonesia the Tobacco industry has significantly contributed to the country’s economy through its impact on GDP, employment, and tax revenues. The tobacco industry contributes to Indonesia’s GDP which rose from 95.67 (2014) to 147.83 (2023). Furthermore, as of 2021, the tobacco sector in Indonesia, which includes both large and medium-scale operations, employed approximately 246 thousand persons. This number has been steadily increasing since 2013, and it includes tobacco farmers who labour in places where tobacco is grown, providing them with employment opportunities. Furthermore, in relation to Indonesia’s tax revenue, the Tobacco sector in Indonesia has made a contribution of over IDR 150 trillion annually to the country’s national income.
In addition to its economic significance, smoking tobacco particularly in Indonesia holds cultural and social relevance. Smoking in Indonesia is widely regarded as a deeply ingrained cultural practice, particularly among men. It is associated with social values such as masculinity and reciprocity. Many Indonesians believe that smoking can also promote a sense of togetherness through the act of sharing a pack of cigars. Moreover, Indonesians perceive smoking as a commonplace behaviour. This phenomenon can be traced to the prevalent smoking practices handed down through generations in Indonesian families, which have therefore influenced societal standards, associating masculinity with smoking among men.
Often regarded as less damaging, the decline in tobacco cigarette consumption among young people is not primarily attributed to health concerns, but rather to their transition to vape Despite both having their own drawbacks, vaping contains fewer toxins compared to smoking tobacco, making it a popular choice for individuals seeking ways to slowly quit smoking by transitioning to vapes and utilising a variety of flavoured e-liquids which can minimise their cravings for the taste of tobacco. Furthermore, the regulatory modifications related to cigarettes, such as the imposition of excessive cigarette taxation result in the exorbitant pricing of cigarettes. Consequently, individuals transitioned to vape partly because of their affordability and convenience, as a pack of cigarettes typically lasts less than a week yet a vape e-liquid may last for over a month.
Due to the significant decrease in demand for tobacco many products are being modified to non- tobacco alternatives such as vape. Tobacco industry giants like PT HM Sampoerna TBK which operates primarily in Indonesia, have shifted their focus from selling tobacco cigarettes to the production of vape. Numerous tobacco farmers in Indonesia received employment cuts particularly in areas heavily reliant on tobacco farming as their primary source of income. The impact on employment can also be observed in the tobacco retailing sector Such as PT Djarum who acknowledged the decreasing demand for tobacco products. hence they had to adjust its production levels by conducting an operational downsizing followed by employees laid off. This shift has resulted in a growing number of unemployment and starvation.
As vape has become more prevalent and interest in cigarettes has waned, the tax revenue that formerly experienced a significant increase has ultimately declined. impacting Indonesia particularly on the government. Given its reliance on tobacco production, Indonesia suffered from a decline in tax revenue as a result of the change in consumer preferences which has a significant rise on the country’s economy. The tobacco industry in Indonesia offers employment opportunities to a significant number of unemployed individuals, thereby helping to alleviate the high unemployment rate in the country. Additionally, the revenue generated from tobacco taxes contributes to the development of Indonesia’s infrastructure, including the construction of community facilities such as hospitals, bus stops, and parks. Furthermore, the fund resulted from Indonesia Tobacco industries supports Indonesia’s education, health plans, and social welfare programmes, ultimately promoting economic stability in the country.
Therefore, a reduction in cigarette taxes caused by the shifting preferences could potentially result in jeopardizing public expenditure, namely in the area of healthcare, which may later lead to a decline in the quality of health technology and medical staff. Furthermore, a decrease in Indonesian tax revenue might have a significant influence on medical accessibility, particularly for impoverished individuals. Other than that, It could also affect the infrastructure and education programmes creating larger class categories and a lower quality of education, which would ultimately have long-term consequences for Indonesia’s human resources.
On top of that, the emergence of vaping in Indonesia alone is powered by a growing number of users that has increased from 3.0% to 11.9% in 2014 to 2024. This trend has prompted several tobacco companies to alter their business strategies and focus on producing more vape. The absence of regulations on vape usage in Indonesia has created a competitive environment among national cigarette industries, as they strive to develop and market the most superior vape product.
Therefore, in order to effectively handle this economic transition, Indonesia must generate employment prospects through the establishment of new e-cigarette manufacturing facilities. Therefore, assisting in mitigating the job losses resulting from layoffs in the tobacco industry. Such as Imposing taxes on e-cigarettes and e-liquid which could assist the government in replenishing the tax revenue that has declined as a result of the fall in tobacco consumers.
To conclude, both tobacco and vape present an equitable combination of benefits and drawbacks, mostly in terms of health and the economy. The government can mitigate job losses resulting from unemployment created by the Tobacco businesses by implementing equitable laws and taxation policies on vape Such as, implementing explicit policies and regulations that precisely categorise vape and establish stringent quality criteria for their importation and manufacturing. In addition, implementing a well-organized tax system that is determined by the quantity of e-liquids and nicotine present in vape increasing the tax rate in proportion to the nicotine content will effectively contribute to the reduction of nicotine addiction. Finally, providing education to the general public on the risks associated with e-cigarettes and emphasising the regulations pertaining to e-cigarettes. thereby implementing fair and just regulations and tax policies, This approach would promote the long-term economic growth and public stability of Indonesia and effectively help address the issues brought about by the shift in consumer choice from tobacco to vape.
