Is Big Tobacco in US Targeting Youth in Indonesia?

July 10, 2012— -- Indonesia is home to the chubby YouTube superstar known as the "smoking baby", whose chain-smoking antics have racked up over 17.5 million views. But while many may be tempted to write this off as another passing fascination, the "smoking baby" actually represents just the tip of the iceberg of an astonishing, global epidemic of youth smoking.

A year-long ABC News investigation examined the tobacco industry's expansion into Indonesia, which critics say is being fueled, in part, by one of the most powerful and profitable corporations in the United States.

Indonesia, the world's fourth-largest country, has an enormous, thriving tobacco market and very few regulations on the sale and consumption of cigarettes. One company in particular, Philip Morris International (PMI), has found tremendous success in Indonesia, making millions selling Marlboros and popular local brands.

PMI can market their products to young people there in ways they could never do in the U.S. or Europe, where government agencies clamped down on tobacco advertising to youth over 40 years ago. In Indonesia, cigarette ads are abundant on television, and billboards even feature the iconic Marlboro Man, whom Philip Morris, under public pressure, laid to rest in the U.S. in 1999.

ABC News first reported on this issue last September and PMI has repeatedly denied requests for interviews. So ABC News confronted PMI's CEO Louis Camilleri at the company's annual shareholder meeting in New York City in June and showed him a photo of a Marlboro-branded kiosk located near a school in the capital city Jakarta that ABC News had previously reported on.

Camilleri said PMI had attempted to locate the kiosk after ABC News broadcast its first investigation, but said the company was unable to locate it. Camilleri also defended his company's efforts to reduce their products' exposure to children in Indonesia.

During an attempt to interview Camilleri on camera after the shareholder meeting, he admitted that in Indonesia, "there are marketing freedoms that we don't have in a number of other places, and we need to compete." When asked if he is comfortable with the way PMI does business in Indonesia today, Camilleri said, "I think we're doing the most responsible thing in Indonesia and that we've been very vocal advocates for restrictions."

Despite those claims, "there has been no fundamental change in the fact that PMI and other tobacco companies continue to advertise every place they are allowed throughout Indonesia," according to Matthew L. Myers, president of Campaign for Tobacco Free Kids in Washington, D.C.

"Indonesia was a tobacco industry playground, and today, sadly, Indonesia remains an industry playground," he said.

In 2008, Altria, the parent company of Philip Morris USA, spun off its international operations and became PMI. Today, PMI is the leading international tobacco company, with tobacco products sold in approximately 180 countries. According to its annual report, PMI's 2011 net revenues were $31.1 billion, up over 14 percent from 2010. PMI also reported a net income of $8.5 billion, a 18.3 percent increase over 2010.

In 2005, PMI had acquired Indonesia's third largest tobacco company, Sampoerna. Selling a mix of Philip Morris brands and popular Sampoerna brands, PMI is now the number one tobacco company in Indonesia, controlling an estimated 30 percent of the market. According to the company's annual report, PMI's business in Indonesia accounts for 9.4 percent of its 2011 profits, up 25 percent over 2010.

PMI has claimed that it does not intentionally market to Indonesian youth, but in the years following PMI's entry into the Indonesian market, government statistics show youth smoking rates there have nearly doubled.

In this wild west environment, children face almost no obstacle to purchasing cigarettes. In Jakarta, where tobacco ads were plastered on billboards, ABC News witnessed an 8-year-old girl buying tobacco from a vendor in a busy public market.

In tiny Palembang, a remote fishing village in Eastern Java, an elderly man freely admitted that he introduced smoking to his grandson, Chairul, when he was barely of grade-school age. "It's all right," the man said, "as long as he drinks enough coffee with his cigarettes."

Not far from where Chairul lives, we found the original "smoking baby," whose name is Aldi Rizal. His mother said she never wanted him to pick up smoking, but that his withdrawal-fueled tantrums were too difficult to endure.

Nearly a year after ABC News began its investigation, PMI did take down their brand logos on the kiosk outside the school in Jakarta.