Philip Morris Stops Cigarette Exports to South Korea and Pakistan

March 13th, 2015 00:00

Philip Morris Fortune Tobacco Corporation (PMFTC) will stop exporting cigarettes to Pakistan and South Korea, as the packing in those two countries does not carry tax stamps. “Certainly one of the issues currently with exports is that when you export to a country that doesn't provide tax stamps, you yet have to put on the Philippine tax stamp,” PMFTC leader Paul Riley stated in an interview several days ago.

PMFTC is behind the best-selling cigarette brands like Marlboro, L&M and Philip Morris as well as local brands - Fortune, Champion and Hope.

Starting next year, all cigarettes, no matter if produced locally or imported, must have prepaid tax stamps, a method of monitoring whether the alleged “sin” taxes as well as duties had been paid by the cigarette company. When it comes to Pakistan and South Korea, where PMFTC has been exporting just 1 % of the around 70 billion sticks it churns out annually, cigarette packages do not carry stamps; alternatively, graphic health warnings are set. “If we place the Philippine tax stamp, it will cover the graphic health warning. They would not acknowledge that in Pakistan and South Korea,” Riley stated. As for bordering Thailand, PMFTC will keep on exporting, as cigarettes sold there should also carry tax stamps.

The company imports the stamps prior to production, and then places them on packages designed for export to Thailand. PMFTC’s exports to Thailand const6itute about 15 % of entire production, as outlined by Riley. The company uses 80-85 % of the overall capacity of its plants in Marikina City and Tanauan City, Batangas. Even with competitor Mighty Corporation eating into its market share, PMFTC’s production has been “stable” up to now, Riley added.

One time a virtual monopoly when giant cigarette maker Philip Morris joined its Philippine operations with Lucio Tan-led Fortune Tobacco Corporation in 2010, PMFTC’s market share dropped to 70.9 % in June this year in contrast to 76.7 % for the similar period last year.

The share of Mighty in local cigarette sales, in the meantime, have increased from 17.9 % in June 2013 to 23.9 % in June 2014. PMFTC has been accusing Mighty of “regular fraud” as the latter presumably evades payments of taxes and import duties on raw materials in order to maintain prices of its products at low-cost

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