Indonesian Vape Tax Stamp Purchases Hit Rp2.8T in 2024

The Indonesian Personal Vaporizer Association (APVI) has reported a remarkable 50% increase in electronic cigarette tax stamp purchases, reaching an impressive Rp2.8 trillion in 2024. This substantial growth is a testament to the rapid expansion of the electronic cigarette industry, driven by strong demand from both domestic and international markets.

Factors Contributing to Growth

According to APVI Chairman Budiyanto, the surge in tax stamp purchases can be attributed to the growing orders from not only the domestic market but also export destinations such as South Korea, Malaysia, and Saudi Arabia. However, he noted that the production volume for domestic consumption still dominates the industry.

Budiyanto expressed optimism about the industry’s performance prospects for the current year, citing the absence of tax rate increases for electronic cigarette producers and the Ministry of Finance’s decision to maintain the Value Added Tax (VAT) on Tobacco Products at 9.9%. “There is indeed still an increase in the Minimum Retail Selling Price which will hamper growth. However, it won’t be as significant as if the excise tax had also been raised,” he explained.

Read more: Indonesia Imposing 10% Tax on E-Cigarettes Starting 2024
Indonesia Announces Increase in Retail Selling Prices for Conventional and Electric Cigarettes in 2025

Regulatory Challenges and Opportunities

Despite the positive outlook, APVI acknowledges that the industry faces challenges in 2025, particularly in terms of non-fiscal regulations introduced through Government Regulation Number 28/2024 on Health. This regulation has begun to impose restrictions on the electronic cigarette industry, specifically in the areas of packaging and marketing.

One of the most significant impacts is expected to stem from the prohibition of product sales within a 200-meter radius of educational units and children’s playgrounds. Budiyanto expressed concern over the potential detrimental effects on existing and future vape retail stores, stating, “Just imagine, if there is a vape store located outside the required 200-meter radius, but suddenly a school or tutoring center opens in front of that retail store, does the store have to close?” He believes that such policies could hinder investment in the electronic cigarette industry.

Despite these challenges, Budiyanto sees opportunities arising from the shift in consumer behavior towards nicotine products that offer practicality and flavor variations. Vape products are well-positioned to cater to these preferences by providing convenience and a wide range of flavor options. Moreover, public awareness of the benefits of vape products, both in terms of health and economic aspects, is gradually increasing.

Read more: The Evolution of E-Cigarettes in Indonesia: Trends, Regulations, and Innovations

The Need for Education and Collaboration

To capitalize on these opportunities, Budiyanto emphasizes the need for cooperation from various parties to provide education and understanding regarding the benefits of vape or electronic cigarette products. He also underscores the importance of responsible marketing, stating, “What needs to be remembered is that these vape products contain nicotine and are not intended for people under 21 years of age.“

Conclusion

The remarkable growth in electronic cigarette tax stamp purchases in Indonesia, reaching Rp2.8 trillion in 2024, is a clear indication of the industry’s rapid expansion. Driven by strong domestic and international demand, the industry is poised for continued growth, despite facing regulatory challenges.

As the industry navigates the evolving regulatory landscape, it is crucial for stakeholders to collaborate in providing education and promoting responsible use of electronic cigarette products. By doing so, the industry can capitalize on the opportunities presented by changing consumer preferences while ensuring the well-being of its customers and compliance with regulations.

The electronic cigarette industry in Indonesia has demonstrated its resilience and potential for growth, and with the right strategies and cooperation, it is well-positioned to continue its upward trajectory in the years to come.

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Matthew Ma

Marketing at Ecigator

With over a decade of experience in the e-cigarette industry, Matthew Ma is a seasoned expert in both the manufacturing and usage aspects of vaping products. His extensive background has provided him with a deep understanding of the intricacies and evolving dynamics of e-cigarettes.