Tobacco Asia

Volume 18, Number 3

Issue link:

Contents of this Issue


Page 43 of 75

44 tobaccoasia TOBACCO MANUFACTURING 制造新闻 Indonesia Sampoerna closes plants HM Sampoerna, Indonesia's largest tobacco manufacturer, recently closed two more of its seven hand-rolled cigarette factories. The move, according to the company representatives, is a result of its declining market share (down to 23.1% in 2013 from 30.4% in 2009) in the country's hand-rolled cigarettes industry as consumers are shifting to machine-rolled cigarettes. The hand-rolled cigarette plants in Jember and Lumajang (both in East Java) closed on May 31, which led to the termination of 4,900 employees. The company will give them a severance package and entrepreneurship training. The production of hand-rolled cigarettes fell 16.1% in the first quarter of 2014 (against the same period last year), and HM Sampoerna's expects this trend to continue and therefore decided to restructure. The company was also negatively affected by a variety of domestic regulations such as Government Regulation No. 109 - 2012 on the Protection of Materials Containing Addictive Substances (which requires all cigarette producers to include health warnings both in writing and pictures on the front and back sides of the cigarette box), an excise duty, and higher local taxes (10%). According to the Indonesian Agriculture Ministry, the country's tobacco exports plummeted 66% over the past five years (from 110,000 tons in 2008 to 37,000 tons in 2013) chiefly because of weak global demand and lower quality tobacco produced by local Indonesian farmers. EU New bill on tracking The European Union (EU) has asked tobacco firms to implement more measures to track and trace their products, so the huge black market problem could be tackled. Under the new legislation govern- ments must impose multifaceted control systems on manufacturers that track every pack from the factory it originates to store shelves, through all the hands it passes with details such as time and place of production, intended market, names of buyers, and payment records. The new law, which is to go into effect over the next two years, also imposes various other strict measures like graphic image health warning on packs and institutes a ban on menthol. However, the fact of the matter is that international tobacco corporations like Philip Morris International (PMI), British American Tobacco (BAT), Japan Tobacco International (JTI), and Imperial Tobacco already have a well proven track-and-trace system in place – called Codentify – developed by PMI, and they do not wish to add any more costly and unnecessary third-party systems to their operations. Daniel Hubert, BAT's supply chain tracking and verification program manager and a director of the Digital Coding & Tracking Association (DCTA), a group made up of BAT, PMI, JTI, and ITG, says that their "biggest concern is proprietary solution providers pushing unproven solutions on to governments." Tobacco industry critics say Coden- tify is not good enough, because it focuses too much on production and does not store product codes or track them, and tobacco firms do acknowl- edge that Codentify only does part of the job, but insist that critics do not take third-party technology used alongside it to make it fully compliant into account. According to Euromonitor's Shane MacGuill, "there's a lot of resistance to allowing the tobacco industry to use its own technology." The new rules will mostly come into force in the first half of 2016, which means that EU member-states have about two years to bring their national legislation into line with the new regulations. The industry has been fighting illicit trade for many years. In 2012, PMI donated €15 million (US$20.42 million) over the following three years to Interpol to help it fight the black market. Ireland Eight years for violations According to a proposed legislation by the minister for health James Reilly, anyone who fails to follow the new laws that impose plain packaging on all tobacco products could be looking at eight years in prison. The recently published Public Health (Standardized Packaging of Tobacco) Bill 2014 provides for penalties both for individuals and legal entities. The bill gives the minister the power to prescribe the way in which the brand name of a cigarette may be printed on a cigarette pack. The minister will also decide the form of packaging used, including the color, script, size, posi- tioning, and appearance of a brand name in order to decrease the appeal of cigarettes, increase the effectiveness of ineffective health warnings and "reduce the ability of retail packaging of cigarettes to mislead consumers about the harmful effects of smoking". Tobacco companies will be permit- ted to display a brand name or company name on three surfaces of the pack once, provided that it does not obscure or interfere with the health warnings. Imperial Tobacco criticized the Department of Health's for not releasing the regulatory impact assessment for the bill. A spokeswoman called for the "immediate and full" publication of the assessment. The department said it would be published shortly. A person found guilty of breaking the law will have to pay a €4,000 (US$5,437) fine and/or spend six months in prison. Repeat offenders must pay a €5,000 fine and/or get a 12-month prison sentence. More serious offences may result in a fine or impris- onment for up to 8 years. The legislation will take full effect in May 2017 to allow for the dissipation of existing supplies of tobacco products bearing the names and logos of the manufacturers.

Articles in this issue

Archives of this issue

view archives of Tobacco Asia - Volume 18, Number 3