Apr

13

E-Cigarette Manufacture Establishment:5 Key Issues on the establishment of e-cigarette manufacturing in Indonesia you should know

After a small decline in Indonesia’s vaping population in 2020 due to the COVID-19 pandemic, the numbers began to increase again in 2021 with 1.7m vapers reported and a market worth $239m, representing an 8 percent growth from last year. Smoking rates are declining with smokers slowly shifting to vaping, while other alternatives (e.g. heated tobacco) are slowly picking up.

This report offers a broad overview of the Indonesian market, covering everything from retail channels and market size to hardware and e-liquids. In early 2022, many foreign investors have been pursuing the vaping market in Indonesia, mostly e-cigarette enterprises. Typically, establishing an e-cigarette business in Indonesia is not as easy as it seems, especially for foreign investors. An e-cigarette that contains naturally extracted nicotine is defined as a cigarette other than a clove cigarette or conventional cigarette, which includes a cigar, cigar pipe, chewing tobacco and snuff tobacco. According to the regulation in Indonesia, the definition can be found in Article 1 par. 4 of Ministry of Industry of the Republic of Indonesia Regulation No:64/M-IND/PER/7/2014 concerning Supervisory and Control of Cigarette (“MoI Regulation No.64/2014”).

Prior to establishing an e-cigarette manufacturer, there are 5 key issues that you need to be aware of:

  1. The Industrial Business Permit (“IUI”)

    IUI only can be given to a small or medium scale company with a partnership with a large scale company in the industry. Furthermore, Article 5 of MoI Regulation No.64/2014 sets the following requirement to obtain the IUI:

    • The IUI shall obtain recommendation from the Directorate General of the Ministry of Industry.
    • The application for such recommendation shall be attached with the copy of article of incorporation, tax registration number, copy of the partnership agreement with Large Scale Cigarette Manufacturer, copy of the ownership of land certificate with map of the factory, and plan for the type of cigarette and installed capacity.

  2. Restriction on the additional materials

    According to Article 12 of Government Regulation No.109 of 2012 (“GR No.109/2012”) concerning Custody on the Addictive Materials in the form of Tobacco Product for Health, it is stipulated that whoever produces a tobacco product is prohibited from using additional material unless it has been scientific proven that such materials have no harm on health.

  3. Limitation on Import Tobacco

    Please be informed that according to Article 2 par. 1 of Ministry of Trade of the Republic of Indonesia Regulation No. 84 of 2017 (“MoT Regulation No.84/2017”) concerning Tobacco Import, the import of tobacco is limited. Further, the limitation is based on the plan of utilization of tobacco in accordance with local availability and the non-cultivated varieties in Indonesia.

  4. Obligation for the Health Warning

    The Obligation for Health Warning is regulated under the law in Indonesia. Article 114 of the Health Law stipulated that:
    “Everyone who produces or imports cigarettes into the territory of Indonesia must include a health warning.”

    Further, the health warning and precaution are also regulated in Article 15 to Article 24 of GR 109/2012, where in Article 19 sets that:
    “Everyone who produces and/or imports tobacco products in the form of cigarettes is obliged to include information on the content of Nicotine and Tar levels according to the test results as referred to on the label of each package with clear and easy-to-read placements.”

  5. Possibilities on the Limitation on the nicotine concentrate

    According to various open public resources, the government is preparing a limitation regulation on nicotine concentrate in an e-liquid product that will be stated in the SNI and will most likely be published and implemented this year.

How Schinder Law Firm can help

It is of utmost importance to know these key issues before establishing an e-cigarette manufacturer in Indonesia. Our team of corporate lawyers have extensive experience assisting foreign investors with establishing e-cigarette manufacturing and wholesale businesses in Indonesia. Schinder Law Firm has forged its reputation as the leading corporate law firm in Indonesia specialized in Foreign Direct Investment. If you have any inquiries related to e-cigarette manufacturing, please feel free to contact us at info@schinderlawfirm.com.

Author: Budhi Satya Makmur

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Dear valued Visitor,

Data is a valuable currency in this new world. In the midst of digital transformation, the Indonesian government has taken the final decision to pass the Pelindungan Data Pribadi (PDP) Bill by September 2022. The PDP Law applies to all businesses established in Indonesia and puts the consumer in control. The task of complying with this regulation falls upon businesses.

The PDP Law affects a variety of business operations, including how your sales team prospect and how marketing initiatives are managed. Businesses have had to reassess their business procedures, applications, and forms. Additionally, all businesses that work with personal data should designate a Data Protection Officer (DPO) or data controller to oversee PDP compliance.

In line with this spirit, it gives us great pleasure to announce and share with all our esteemed clients and business associates that Schinder Law Firm is prepared to assist your company to understand the impacts of the Personal Data Protection Law (PDPL) and take the required measures to comply with the law. Our Privacy, Data Protection, and Cybersecurity practice group is a pioneer in providing data privacy law services in Indonesia. Personal data protection services include but are not limited to:

  • Assessing the existing systems, processes, and controls, etc.
  • Providing provide gap assessment on the existing systems, processes, and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDP Law
  • Developing policies, best practices, and procedures
  • Advising on the security of personal data and managing data breaches
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role, and responsibilities of a data protection officer
  • Advising on cross-border transfers of personal data
  • Carrying out data protection impact assessments and data protection audits
  • Recommending other necessary corrective actions in order to comply with the PDP Law
  • Training on the PDP Law tailored to clients’ businesses

We look forward to many more opportunities in the year ahead with your continued support and trust. For consultation, please send us a WhatsApp or Email.

Warmest regards,
Naz Schinder
Managing Partner

Keep Up with the New Law in Indonesia: Personal Data Protection

  • Assessing the existing systems, processes and controls, etc.
  • Providing provide gap assessment on the existing systems, processes and controls, etc.
  • Developing and ensuring contracts and agreements comply with the PDPL.
  • Developing policies, best practices and procedures.
  • Advising on security of personal data and managing data breaches.
  • Acting as the Data Protection Officer (DPO) and advising upon the appointment, role and responsibilities of a data protection officer.
  • Advising on cross-border transfers of personal data.
  • Carrying out data protection impact assessments and data protection audits.
  • Recommending other necessary corrective actions in order to comply with the PDPL.
  • Training on the PDPL tailored to clients’ businesses.
Privacy, Data Protection and Cyber Security
We help our clients to understand the impact of the Personal Data Protection Law (PDPL) on their companies and take the required measures to comply with the law.