Philippines: Govt, Private Sector Seek to End Tobacco Smuggling

Source from:  Business Mirror 11/30/2015

Ending illegal tobacco trade would ensure a level playing field in the local tobacco industry and protect consumers, an official of the Philip Morris Fortune Tobacco Corp. (PMFTC) said.

PMFTC President Roman Militsyn told reporters on　the sidelines of the Ninth Bright Leaf Awards Night held in Pasay City that players in the tobacco sector, such as PMFTC, are working with the government to stop the entry of smuggled and counterfeit tobacco products in the Philippines.

"We're making sure that there is a level playing field, making sure that we continue to address particularly the contraband and counterfeit [of tobacco products], which affects prices and the taxes. It's a big challenge that we need to work together as an industry, together with the government agencies," he said.

Quoting a report from Oxford Economics last year, the president said illicit trade corresponds to 19 percent of the global tobacco industry. Another report from the World Bank put it at 10 percent, he said.

Militsyn, who has only recently sat as the new president of PMFTC, described the Philippines as a "challenging" market since there is very strong competition among many cigarette brands. He added that as long as the industry ensures there is an equal playing field, with the support of the enforcement from the government, the conditions of the Philippine tobacco market will remain "very good."

When asked if he would propose any moves from the government with regards to the review of the sin-tax law next year, Militsyn only said it is important to maintain the implementation of the law, and for the tax on tobacco and alcohol to "continue to increase."

"I think the sin-tax law actually provides good predictability for the industry for next year and the years after, which, for many businesses, is very important. We think that it is a good road map for the fiscal environment of the industry going forward," he said.

The sin-tax law, or Republic Act 10351, was signed by President Aquino in December 2012. The law sought to restructure the taxes imposed on alcohol and tobacco goods. Aside from generating additional revenues for the government, the law also promoted healthy lifestyle to Filipinos.

Meanwhile, Militsyn also told reporters that the graphic health warnings the government is imposing on cigarette packages will have an impact on the local tobacco industry. However, he said he is still positive PMFTC will still experience positive growth despite the new regulation.

"I think [the effects of graphic health warnings to cigarette sales] depend on different countries and different population. To quantify it is difficult because different countries and different smoking population have different dynamics, but yes it has an impact," he said.

"Some people are becoming health conscious; some adults still decide to smoke. We expect some decline but we also believe that the industry will continue to be there and that is a good potential in terms of the profitable growth of the industry going forward," Militsyn added. Enditem