Surabaya – Saifuddin Alamsyah, Chairman of the Permanent Committee for Relations with State Institutions and Government Affairs of the East Java Chamber of Commerce and Industry (Kadin East Java), acting under the direction of Kadin East Java Chairman Adik Dwi Putranto, believes that the government's plan to limit nicotine content to 1 milligram (mg) and tar content to 10 mg in cigarette products could conflict with its objective of optimizing state revenue from Tobacco Excise (CHT) in 2027.

According to Saifuddin, there is a paradox in the policy direction currently being formulated by the government. On one hand, the government regards tobacco excise as a key source of state revenue that should continue to be optimized. On the other hand, it is proposing regulations that could potentially undermine the sustainability of the national tobacco industry.

"It is as if one hand is building while the other is tearing down. The government wants to increase revenue from tobacco excise, yet at the same time it is preparing regulations that could effectively cripple the very production engine that generates that revenue," Saifuddin said in Surabaya on Sunday (May 31, 2026).

He explained that, based on the 2027 Macroeconomic Framework and Fiscal Policy Principles (KEM-PPKF), the government clearly positions tobacco excise as an important instrument for optimizing state revenue.

Therefore, he argued, the sustainability of tobacco product manufacturing and sales cannot be overlooked if the government intends to achieve its revenue targets.

"The logic is straightforward. If the government wants to generate substantial excise revenue, the industry that serves as the source of that revenue must remain operational. No country increases its tax revenue target while simultaneously restricting the viability of the taxable sector itself," he said.

Saifuddin further highlighted the proposed maximum nicotine limit of 1 mg, which he believes would be difficult to implement under the current conditions of Indonesia's tobacco industry. He noted that most locally grown tobacco naturally contains nicotine levels exceeding the threshold stipulated in the proposed regulation.

"Approximately 90 percent of locally produced tobacco has natural nicotine levels ranging from 2 to 8 mg. If the 1 mg limit is enforced, the majority of farmers' harvests may no longer be absorbed by the industry because they would fail to meet the regulatory requirements," he said.

He added that such a policy would affect not only the cigarette industry but also tobacco farmers in major production regions, including East Java, Central Java, Lombok, and North Sumatra.

According to Saifuddin, the potential chain reaction could include reduced production, lower absorption of farmers' harvests, and a decline in excise contributions to state revenue.

He also argued that the policy could run counter to the government's revenue intensification strategy outlined in the 2027 KEM-PPKF. The document emphasizes efforts to optimize revenue collection through stricter supervision, stronger law enforcement, and the closing of tax avoidance loopholes.

"Revenue intensification should strengthen existing taxable sectors to maximize revenue collection. However, if regulations instead continue to narrow the space for production, what follows is not intensification but a potential path toward deindustrialization," he stressed.

Beyond its impact on industry and farmers, Saifuddin also warned of a possible increase in illicit cigarette circulation if nicotine restrictions are imposed without taking domestic market conditions into account. He argued that consumers who are accustomed to products made from local tobacco would not automatically quit smoking simply because nicotine limits are introduced.

"When legal products can no longer meet market demand, that gap may be filled by illicit cigarettes or even by hand-rolled cigarettes made by consumers themselves. This could expand the black market and make enforcement more difficult," he said.

For this reason, Saifuddin urged the government to align public health policies with the realities of Indonesia's economy, industry, and agricultural sector in order to avoid policy contradictions.

"I have consistently emphasized in various forums that the government should continue using the nicotine and tar standards currently stipulated under the prevailing Indonesian National Standard (SNI). In that way, public health objectives can still be pursued without sacrificing the sustainability of the industry, the welfare of farmers, and state revenue," he concluded.