Tobacco Asia

Volume 20, Number 2

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16 tobaccoasia FRONT PAGE NEWS 卷首新闻 As part of its efforts to enter new overseas markets, KT&G launched a new subsidiary in the US and started selling a modified version of its Time cigarettes in 2010. In 2015, the company sold a total of 2.8 billion cigarettes in the US, more than double its 1.1 billion sales in 2010. In Africa, KT&G sold only 40 million cigarettes in 2010, but sales have skyrocketed over the last five years to reach 2.8 billion cigarettes last year. An official said that introduction of slim cigarettes in Africa has led to the company's sales success. Sales have increased sevenfold in Latin America and doubled in the Asia-Pacific region. "Time cigarettes lead the sales in the US while consumers in Africa and Latin America like Pine. And Esse cigarettes were the company's best-selling brand in the Asia-Pacific region where Bohem cigar was popular among Taiwanese consumers," said one official. "KT&G's sales success in new overseas markets is significant because the company has entered into markets already dominated by transnational tobacco companies." India Asia's No.2 Cig Maker Drops According to Bloomberg, ITC Ltd., Asia's second-largest cigarette maker by market value, declined from a four- month high after shutting Indian factories in protest against a new government rule mandating bigger health warnings on its packs. Shares in the company part-owned by British American Tobacco Plc dropped 1.6%. Other Indian cigarette makers, too, are closing plants, accord- ing to trade body the Tobacco Institute of India. Godfrey Phillips India Ltd. slid 3.8% and VST Industries Ltd. lost 1.7%. ITC said it was compelled to close the plants as of Friday, when the new rules came into effect, until there is clarity on the health warning guidelines. The Kolkata-based company flagged uncertainty stemming from legal challenges and potential modifications suggested by a parliamentary committee. The tobacco institute estimates daily industry-wide losses of 3.5 billion rupees (US$53 million) from the closures. India's tobacco industry and the government are tussling over the regulations, which require that pictorial warnings cover 85% of a pack's surface, up from 40% of just the front panel. At the same time, a prolonged industry closure could have some impact on government revenues, since taxes constitute as much as 60% of the selling price of cigarettes in India. Godfrey Phillips said in an exchange filing that it has temporarily suspended cigarette production for the local market pending implementation of the pro- posed graphical health warning. One plant in Navi Mumbai in Maharashtra state is continuing to make cigarettes for export, the company said. Indonesia Expert Calls for Tax Hike University of Indonesia public health expert Hasbullah Thabrany threw down the gauntlet to the government recently, demanding that it amend existing tobacco excise provisions in a bid to downscale the prevalence of smoking in the country as well as increase the revenues raised from the industry. Tobacco excise is regulated under the 2007 Excise Tax Law, which is an amendment of the original 1995 version. The current provision allows excises on tobacco products to be as high as 275 percent of their factory prices or 57% of their retail prices. Hasbullah criticized the regulation for "not doing enough to dissuade Indonesian people from consuming cigarettes on a daily basis". "The government must boost the minimum excise on tobacco products to 200% of their retail prices," Hasbullah said, adding that he had based his demand on the Nawacita, a Sanskrit term for "nine programs" authored by president Joko "Jokowi" Widodo and vice president Jusuf Kalla. "Higher excise taxes would place a higher price on a pack of cigarettes than they have now. It would prevent people from consuming cigarettes due to their stifling price," Hasbullah explained. On the other hand, he said, the boost in tobacco excise would be unlikely to curb the habits of heavy smokers, since "heavy smokers will always light a cigarette, even if the price is stifling". The center for health economics and policy studies (CHEPS) proposed that the government earmark money raised from an increased excise to be put toward several programs, including empowerment training for tobacco farmers, the national health insurance program, sport and art activities and medical research, but the Finance Ministry's customs and excise policy head Nasruddin Djoko Surjono said the government had already been directing revenue from tobacco excise to the revenue sharing fund (DBH) since 2007. Netherlands Lawyer Files Tobacco Case A Dutch lawyer and lung cancer patient are planning to take tobacco companies to court for for producing cigarettes designed to turn people into addicts as quickly as possible. Lawyer Benedicte Ficq and cancer victim Anne Marie van Veen are putting together a criminal case against cigarette producers, arguing that out of court settlements do not go far enough. "I want to see tobacco firms prosecuted for deliberately damaging people's health," Ficq told television program RTL Late Night recently. Tobacco firms cannot hide behind the freedom of choice of people to smoke because they are deliberately influencing smokers' behavior, Ficq and Van Veen argue. "To limit that freedom, addictive chemicals such as nicotine and other additives are put into cigarettes," they say. "And [the companies] overcome our natural aversion to poisons by adding substances like menthol." Nor does the argument that the government does not ban smoking hold water, Ficq said. "If I fed my children rat poison every day and they eventually died, I would be prosecuted for mur- der," she said. "The tobacco industry is simply getting away with it." Ficq and Van Veen are appealing for other people to sign up to their campaign.

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