Philip Morris Sees Dire Impact From SICPA

Source from:  Manila Bulletin 02/01/2010

Philip Morris Philippines Manufacturing Inc. (PMPMI) has warned of a drastic reduction in industry sales should the government pushes with the implementation of stamp tax on every pack of locally made cigarettes. PMPMI managing director Chris Nelson told reporters that the tracking and tracing system offered by the Swiss firm SICPA Product Security SA could mean additional costs that when applied could translate to 5 to 7 percent reduction in demand. Last year, the industry suffered a 13 percent negative growth. "The cost can even go up to 13 percent. That is a very high impact on the industry," Nelson said noting that this could reach higher than the 13 percent negative growth last year. But if the SICPA is not implemented it could mean an industry growth of 3 to 4 percent next year. The P13-billion SICPA proposal involves tracking, tracing and monitoring the cigarette products through the use of a secure automated system of tamper-proof strip stamps to be affixed in every pack of locally manufactured cigarettes for purposes of efficient excise tax collection, monitoring and field inspection. The objective is to impose enhance monitoring of cigarette sales and stop the smuggling of this product. The Philippines ranks as the world's 12 largest cigarette market. Nelson said they have its own system, which is a lot better, more effective and far cheaper than the unsolicited proposal of SICPA. Nelson even offered the Philip Morris system for the industry players. "We trace our own products," he said noting that its proprietary system is very cheap that is not even comparable to the SICPA cost of 52 centavos on every cigarette pack. The cost of the stamps "translates to around P564 million to P1.1 billion a year" for PMPMI and between P1.6 billion and P3.2 billion. Former Socioeconomic Planning Secretary Ralph Recto, who is running for the senatorial slate in May this year, has likened the P13-billion SICPA stamp-tax proposal to a potential NBN-ZTE scandal waiting to happen. Recto warned that the public would shoulder the cost of adopting the SICPA technology which promises to curb cigarette smuggling through its stamp-tax system. Enditem