Jakarta. Beverage producers fear that the upcoming sugary drink excise will only add salt to the injury amid a weakening purchasing power and the government's massive spending cuts. The Indonesian Soft Drink Producers Association (Asrim) even warned that any additional pressure on the industry could lead to layoffs.

The government plans to slap an excise tax on sugary drinks starting in the second half of 2025. Once in place, producers will likely raise the prices of the sweetened drinks.

Amid the nearing excise, a wave of layoffs has hit Indonesia. Most recently, the country's largest textile maker Sritex laid off over 10,000 workers. People's purchasing power remains weak as the country recorded 0.48 percent in month-to-month deflation in February. President Prabowo Subianto has ordered his government to cut Rp 307 trillion (around $18.8 billion) in non-essential spending, including ceremonial activities that would usually order soft drinks for refreshments.

As the industry faces problem after problem, soft drink producers are trying their best to make sure that none of its employees become jobless, according to Asrim's chairman Triyono Prijosoesilo.

"I can't say that the industry is safe [from layoffs], but we are really trying to be extra careful here. In the short term, Ramadan can give us some hope. ... But the government should help protect the industry by not putting too much pressure on us," Triyono said in an interview with Beritasatu TV on Wednesday.

Asrim reported that the fasting month of Ramadan would account for 40 percent of the total annual sales in the beverage industry. The numbers are unsurprising as people tend to crave for sweet beverages when they break their fast in the evening. Amid the sweet opportunities that arise from Ramadan, the sugary drink excise is keeping beverage producers on their toes.

"The industry is still unstable. The people's purchasing power is currently under pressure. But the government is thinking of having additional taxes. Let's just see what will happen, but we have seen the many layoffs across various sectors. Surely we don't want this to happen in the food and beverage industry," Triyono said.

Triyono is hoping that the excise gets delayed while urging the government to discuss with the industry first before imposing the tax.

He added: "Listening to our feedback might enable the government to come up with the right taxation scheme to protect the industry and reach the intended health goal at the same time."

The excise aims to discourage people from consuming sugary drinks. This way, Indonesia can prevent diabetes among kids. Estimates by think-tank Cisdi show that Indonesia can save up to Rp 40.6 trillion by raising the prices of sweet beverages by at least 20 percent. The savings come from not having to pay for diabetes treatment and preventing economic losses from lost productivity.

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