Cigarette makers capitalize on ASEAN free trade, plan to expand<\/p>\n
P. Parameswaran, Agence-France Presse, Manila<\/p>\n
Cigarette manufacturers are finding a new haven in Southeast Asia
\nas they take advantage of a regional free trade plan which
\nshields them from steep tobacco taxes and high production costs.<\/p>\n
Faced with shrinking Western markets, top tobacco firms are
\nrelocating to Southeast Asia to keep prices low, maximize access
\nto nations in the region with underdeveloped tobacco-control
\nmeasures and cuddle up to enticing markets, including China,
\nhealth officials say.<\/p>\n
\"I know of companies that really want to develop tobacco
\nindustries in this region but I don't have specifics as to how
\nmany but I am sure they are increasing,\" Shigeru Omi, the World
\nHealth Organization's (WHO) regional director for the Western
\nPacific, told a media briefing in Manila this week.<\/p>\n
With smokers making up more than half of Southeast Asia's 500
\nmillion population, the WHO is concerned about a continued rise
\nin tobacco use and aggressive marketing and lobbying by cigarette
\nproducers, he said.<\/p>\n
In the Philippines, a 300-million-dollar cigarette production
\nfacility was launched recently by Philip Morris, the world's
\nlargest tobacco manufacturer.<\/p>\n
British American Tobacco, the world's second largest tobacco
\ncompany, has also clinched the right to form a 40-million-dollar
\njoint venture in Vietnam with a local state-owned tobacco firm.<\/p>\n
The tobacco processing plant will be the most modern factory
\nof its kind in Vietnam, which has one of the world's highest
\ntobacco consumption rates among males.<\/p>\n
\"Finding new customers in developing countries in Asia and the
\nPacific is an attractive option for the industry, particularly as
\nit adjusts to shrinking North American and Western European
\nmarkets,\" Omi said in a report released to the media.<\/p>\n
A free trade agreement of the 10-nation Association of
\nSoutheast Asian Nations (ASEAN) commits member countries to
\nlowering import tariffs to between zero and five percent on
\nproducts traded among themselves beginning 2003.<\/p>\n
For example, cigarettes now manufactured in the Philippines
\nwill become a local ASEAN product if at least 40 percent of the
\ntobacco used is from that country. The cigarettes will be exempt
\nfrom customs duties when traded among other ASEAN member
\ncountries.<\/p>\n
\"This lowers or maintains the low cost of cigarettes and makes
\nit more enticing for current and would-be smokers, particularly
\nthe young, to buy,\" Omi said.<\/p>\n
ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia,
\nMyanmar, the Philippines, Singapore, Thailand and Vietnam.<\/p>\n
ASEAN officials argue however that while tobacco firms may
\nescape heavy import tariffs through the ASEAN free trade plan,
\nthey can still be hit with heavy domestic taxes by individual
\nnations.<\/p>\n
Robert Teh, the director for economic cooperation at the ASEAN
\nsecretariat, said that although the free trade pact required
\nmember countries to lower import tariffs, they were free to set
\n\"appropriate domestic or internal taxes\" on such products as
\nalcohol, tobacco or automobiles.<\/p>\n
\"You may wish to note that many ASEAN countries slap high
\ndomestic taxes on cigarettes because together with alcohol, these
\nproducts generate a fair amount of tax revenues for the
\ngovernment,\" he told AFP in reply to written queries.<\/p>\n
Tobacco use is one of the greatest public health problems in
\nSoutheast Asia, a key component of the WHO's larger Western
\nPacific region where one person dies every 32 seconds from
\ntobacco-related causes.<\/p>\n
Cigarette lobbyists argue that the tobacco trade creates jobs
\nand benefits economies \"but if you look at the real cost, this is
\na myth,\" said Annette David, technical officer for the tobacco-
\nfree initiative at the WHO regional office in Manila.<\/p>\n
For example, she said, in 1999 the Philippine tobacco industry
\nnetted 26 billion pesos (US$520 million) in profits but the
\nhealth care costs for tobacco-related illnesses was 46 billion
\npesos.<\/p>\n
\"So, who is winning here and who is paying the bigger price?\"
\nDavid asked.<\/p>",
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