The Tobacco Processing Industry (IHT) not only contributes significantly to national tax revenues but also drives regional economies and creates jobs, particularly in the hand-rolled clove cigarette (SKT) sector. This industry is a key economic driver in East Java (Jatim), which annually receives the largest share of tobacco excise revenue (DBHCHT). According to Iwan, Head of the East Java Department of Industry and Trade, the IHT sector significantly impacts Jatim's economy, being the second-largest contributor to the province's Gross Regional Domestic Product (PDRB) from industrial processing. The SKT sector is labor-intensive and closely linked to both upstream and downstream processes, involving over 300,000 tobacco and clove farmers. The dominance of the tobacco industry in East Java makes it the largest contributor to Indonesia's tobacco excise, correlating with substantial job creation in the sector.
The national tobacco industry's growth also increases demand for tobacco as raw material, benefiting local farmers. However, the health risks associated with smoking require balanced measures, including consumer education and protection for stakeholders in the tobacco trade. In the first quarter of 2024, Jatim's economy grew by 4.81% year-on-year, with the industrial sector contributing 31.54% to the provincial PDRB, and IHT contributing 22.78%, the largest after the food and beverage industry. East Java produces 43.9% of Indonesia's tobacco, with 1,041 IHT units in 2023, 91.64% of which are medium and large-scale producers of SKT, totaling about 195 billion cigarettes. Najib Bukhori, Vice Chairman of the Bahtsul Masail Institute of the Nahdlatul Ulama, emphasized that while the SKT sector provides significant employment and economic benefits, it is crucial to protect this sector and its workers. Increased tobacco excise taxes could lead to job losses, so the government must ensure the sustainability of tobacco farming and SKT livelihoods.
