Tobacco Asia

Volume 19, Number 5

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60 tobaccoasia CLOSING NEWS 卷尾新闻 Philippines Fake Cigs Still a Challenge The new president of cigarette manufac- turer Philip Morris Fortune Tobacco Corporation Incorporated (PMFTC) said that local players and the govern- ment have more work to do to ensure a level playing field in an industry strug- gling with illicit or fake goods. The presence of fake cigarettes in the country remains a big challenge for the industry, PMFTC president Roman Militsyn said on the sidelines of the 9th Bright Leaf Agriculture Journalism Awards late last week. "We need to continue to work on the illicit trade and make sure that there is a level playing field, make sure there is no contraband and counterfeit which is definitely a growing concern for us," Militsyn said. "As long as we continue as an industry to work in that direction plus [with] the support and enforcement from government agencies, I think the conditions for this market are very good," he added. Militsyn took over as president of the firm last September, replacing Paul Riley who moved to Philip Morris International in Japan. Militsyn said that the sin tax law can actually be beneficial to the industry by providing predictability. "We think that it is a good roadmap for the fiscal environment for the industry going forward. I think it's important to believe that it is for predictability, and to level the playing field," Militsyn said. Milistyn did also point out that the cigarette market will continue to exist despite the fact that people are becom- ing more health conscious as some adults still decide to smoke. "We expect some decline but we also believe that the industry will continue to be there and that [it has] good potential in terms of the profitable growth of the industry going forward," he added. Research conducted by the UK- based Oxford Economics last Septem- ber showed that illicit cigarette con- sumption in the Philippines cost the government an estimated P22.5 billion (US$476.6 million) in lost tax revenue last year, representing a 44.1% increase from 2013. Oliver Salmon, senior economist for Asia of Oxford Econom- ics, said that illicit cigarettes, both local and non-domestic, accounted for 19.4% of total consumption in 2014, the highest level since 2012. He also stated that nearly one in every 5 cigarettes consumed in the Philippines originated through illicit channels in 2014. Australia Gov't Loses $1.42bn to Illicit Cigs Latest figures from a new report prepared for British American Tobacco Australia, Imperial Tobacco Australia, and Philip Morris Limited have revealed that Australia's Federal Government is missing out on $1.42 billion due to illicit cigarettes and chop chop – untaxed, illegal, loose tobacco – as almost 15% of all tobacco consumed in Australia is now sold on the black market. Chop chop makes up 65% of all illegal tobacco consumed in Australia, sold as finely-cut loose leaf tobacco or in boxes of 100 pre-filled tubes with no labelling or health warnings. In mid-October 2015 the Australian Border Force (ABF) formed a strike team against the tobacco black market. Since then it has seized millions of dollars' worth of the contraband. On October 18, ABF officers in Melbourne targeted a container from Singapore said to contain masking tape, but which actually contained 10.6 million cigarettes which would have attracted $5.6 million in duty if imported legally. In November the tobacco strike team also seized two consignments of molasses tobacco totaling seven tons. One consignment was wrongly declared as herbal molasses, which doesn't attract duty, and the other was consigned to a fake company. These goods would have attracted $4.7 million in duty if imported legally. However, despite the ABF strike team's efforts, illegal cigarettes and chop chop are still easily accessible. The Herald Sun reported BAT Australia spokesperson Scott McIntyre as saying, "The growth in illegal tobacco is directly linked to the federal govern- ment's annual 12.5 % excise increases. These large excise increases and other excessive regulations fuel the black market and make it more lucrative for organized criminals to smuggle illegal tobacco into Australia. Hopefully, the ABF strike team can help stamp out the illegal tobacco problem as it comes across the border. However, more resources need to be deployed at the retail level for enforcement." Singapore Tobacco Kicked Off Shelves The Ministry of Health has announced that starting in 2017, retailers of tobacco products will not be allowed to display them in their shops. The ministry has said it will move to ban stores from displaying the products after amendments to the Tobacco (Control of Advertisements and Sale) Act are tabled in Parliament. Once the ban, which will require that tobacco products are to be out of sight from the public at all times, is in effect, retailers may choose to use existing storage units, modify them, or install new storage units that are permanent, self-closing, and opaque. They could also use vertical blinds or even a curtain to ensure the tobacco products are hidden. The storage units are also to be in the same color as the decor or interior walls of the outlet, as long as the color does not draw specific attention to storage units. Exceptions to this rule will be made in the process of restocking the display unit or during a sales transaction, unless the staff carrying out these actions stops to do something else. The Ministry of Health also said it is prepared to allow a text-only price list in a standard format to facilitate transac- tions and ensure a level playing field while preventing misuse as a form of advertisement. The ban is the latest initiative by the Ministry to encourage smokers to quit smoking and to prevent youngsters from starting. However, some retailers are saying that customers who want to buy cigarettes will still ask for and buy cigarettes anyway.

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