Smoking rates in Indonesia have increased significantly in recent years, placing it with India and China as the nations with the highest smoking rates.  Katie Hamann met with researchers at a recent tobacco conference in the capital, Jakarta.  They challenge the government's position that the tobacco industry is vital to economic growth in Indonesia.

It is unlikely that smoking is part of the training regime of Indonesia's Olympic champion badminton team.  But this television advertisement indicates that cigarettes and sports are a winning combination.

Indonesians are smoking more than ever before.  The World Health Organization says more than 70 million adults regularly smoke, a six-fold increase over the past 40 years.  An estimated 400,000 people will die this year from smoking-related diseases.

But Finance Minister Mulyani Indrawati said at a recent tobacco conference that Indonesia needs a healthy tobacco industry.

Mulyani says the economy and job creation are the government's number-one priority.  And Indonesia's tobacco industry, through farming, production and sales provides an economic lifeline for millions of people.

University of Indonesia Public Health Professor Hasbullah Thabrany, says this picture is incomplete because the government does not pay for the health effects of smoking.

"At this time we do not see this burden because the government basically under-funded for the health care," said Thabrany.  "The government, so far, only allocated less than three percent of their government budget for health care."

The government says it wants to reduce smoking, particularly among young people.  But just how this will be achieved is unclear.

Smoking in most public places is banned in the capital, Jakarta, but the three-year-old law is rarely enforced.  Cigarette companies regularly hold promotions in parks, concerts and sports venues.

Thabrany says he sees little evidence of the government's commitment to reducing smoking.

"Not yet.  I see the other way.  Lots of advertising of the tobacco everywhere.  You can see here on the roads, even in front of schools.  How come?  If they want to reduce it they have to ban those kinds of advertisement[s] near the school, on television during the kind of early times," said Thabrany.  "And they [tobacco companies] support also sport events, where the young people are there."

Although prices for food, transportation and energy have risen, cigarette prices have not.  The global average for tobacco taxes is 70 percent of the sales price.  In Indonesia the average is 37 percent.  But some, including the popular kretek or clove cigarette, are taxed at 21 percent.

Doctor Sarah Barber has just completed a study of Indonesia's tobacco economy.  She says raising taxes would reduce smoking rates and help the economy.

"Households that smoke spend about 11 percent of monthly expenditure on tobacco.  It is a huge amount of money that they are spending on tobacco.  At the same time tobacco farming and manufacturing are not highly productive sectors, they are ranked relatively low in terms of overall economic output and wages," said Barber.

Barber says tobacco consumes a disproportionate part of family income, with smokers spending more than five times as much on cigarettes than on health care and education.

"Households with smokers are dedicating a very, very large amount of money on tobacco and this has serious welfare implications for the rest of their family," added Barber.  "We also know that paternal smoking is a positive predictor of malnutrition."

Barber's research also shows that the government would benefit considerably from an increase in taxes.  The industry now contributes more than $4.5 billion in taxes, accounting for as much as 10 percent of revenue.  Raising taxes, she says, could increase that amount.