Jakarta. Indonesian businesses are nudging the government into involving the private sector when making derivative regulations related to the looming sugary drinks excise that can potentially put the industry in a sour mood.

The government is relying on an upcoming sugary drink excises to prevent diabetes. President Joko “Jokowi” Widodo earlier this year inked the implementing regulation for the 2023 Health Law. This government regulation --locally known as PP 28/2024 -- states plans for a cap on sugar levels in food and beverages distributed in the market, including excise on sugary drinks. Indonesian Employers Association (Apindo) said Friday that it had been keeping a close watch on the regulations.

“PP 28/2024 is already out, so if anyone wants to file a judicial review, be it. … But we, Apindo,  do hope that the government really involves us when making the derivative regulations [related to the excise],” the association’s chairwoman Shinta Kamdani told the press in Jakarta.

Shinta said Apindo had already been in talks with the Health Ministry to give their input. They are planning to remain in contact with the government to make sure their concerns are heard. The businesswoman feared the sugary drink excise could take a toll on the industry.

“An excise can cause prices to go up. This will affect the people’s purchasing power. When demand goes down, so does production. Of course, this might even lead to layoffs in the long term,” Shinta said.

The food and beverage industry accounted for 39 percent of the non-oil and gas industry’s gross domestic product (GDP) in 2023. Its share in the national GDP stood at 6.55 percent that year, according to Shinta as she underlined how the sector is key to the Indonesian economy.  

Shinta added: “We understand that the government wants to have [this excise] because of health concerns. …. But will the excise really help [alleviate the health problems]?”

According to the 2025 drafted state budget document, the government will impose excise on sugary beverages starting next year. 2025 also happens to be President-Elect Prabowo Subianto’s first year in office. The government aims to collect around Rp 244 trillion ($15.6 billion) in combined excise from tobacco products; beverages containing ethyl alcohol; ethyl alcohol or ethanol; and packaged sweetened beverages in 2025. 

Think-tank Cisdi estimates showed that the excise could help Indonesia save Rp 40.6 trillion by increasing the prices of sugary drinks by at least 20 percent. The savings come from getting rid of the need for diabetes treatment and preventing the economic losses from the disease-induced lost productivity.