Jakarta. Finance Minister Purbaya Yudhi Sadewa has decided not to raise tobacco excise tax (CHT) rates in 2026, a move lawmakers say will safeguard millions of jobs in one of Indonesia’s most labor-intensive industries.

Deputy Chairman of House Commission XI Hanif Dhakiri welcomed the decision, calling it a “pro-worker” policy. “With stable rates, the government is showing its commitment to protecting tobacco farmers and workers,” Hanif said, as quoted by state news agency Antara.

He added that the policy helps preserve employment in the tobacco industry, which contributes significantly to state revenue while remaining a key source of livelihoods. “Certainty over excise rates will not only help the sector endure but also provide space for new investment,” he said.

Hanif, however, urged follow-up measures to maximize the benefits. These include tighter enforcement against illegal cigarettes, accelerated development of industrial zones, and better use of revenue-sharing funds from tobacco excise.

Minister Purbaya said the decision followed consultations with domestic cigarette producers. While excise rates remain unchanged, the government is preparing alternative strategies to maintain fiscal stability, such as expanding designated tobacco industrial zones equipped with facilities for legal producers.

The ministry also plans to encourage illegal cigarette makers to join the formal system and pay taxes. “This way, not only large companies but also small producers can benefit,” Purbaya said.

The policy comes as Indonesia enforces new excise regulations for 2025 under Finance Ministry Regulations No. 96 and 97 of 2024. While tax rates were left untouched, minimum retail prices across all cigarette categories were raised to curb smuggling and illicit sales. Excise duties range from Rp 1,231 ($0.08) per stick for premium machine-made kretek to Rp 223 for lower-tier hand-rolled kretek. Imported cigarettes face similar rates, while e-cigarettes are taxed up to Rp 6,776 per milliliter.