Tuesday, January 26, 2010

Indonesia will implement total ban on cigarette ads

Draft of implementing regulations for Health Law enacted last year points to a total ban on cigarette advertising in all media, electronic, print, and outdoors. It will be a bad news for media companies, especially televisions, but probably good news for Tax Office which complained huge ads costs have cut potential income tax payment of cigarette companies.
Government Regulation No. 19/2003 allows TV cigarette advertising after 9.30 PM until 05 AM. But under the draft of government regulation about tobacco, all kinds of ads on tobacco products are forbidden. Producers and importers will also be forbidden to become sponsors of an event. Logos will be prohibited from all kinds of non-cigarette products.
Sundoyo, head of legal bureau at Ministry of Health said the draft is part of government's plan to implement Law No. 36/2009 about Health.
Even ads related to CSR campaign of cigarette companies will be strictly regulated. TV companies will be badly hurt with the total ban because until now cigarette producers are among the biggest spenders.
But Tax Office might be happy. Advertising and promotion costs are hugh enough to cut income tax of cigarette companies. That's why last year ministry of finance issued a decree to cap the advertising and promotion costs that could be deducted in tax calculation. But early this month, the ministry revoked the policy. Total ban on advertising would be the answer.
Another important issue in the draft is prohibition to sell tobacco products in retail/pieces. People have to buy in a pack (with minimum 20 pieces). That's gonna be a bad news for street vendors.




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