PMFTC to halt exports to South Korea, Pakistan

PMFTC Inc. will stop exporting cigarettes to Pakistan and South Korea, as the packaging in those two countries does not bear tax stamps.

“One of the problems now with exports is that when you export to a country that does not have tax stamps, you still have to apply the Philippine tax stamp,” PMFTC president Paul Riley told reporters last week.

PMFTC is behind the global brands Marlboro, L&M and Philip Morris as well as homegrown Fortune, Champion and Hope.

By early next year, all cigarettes, whether produced domestically or imported, should bear prepaid tax stamps, a means of tracking whether the so-called “sin” taxes as well as duties had been paid by the tobacco firm.

In the case of Pakistan and South Korea, where PMFTC has been exporting a measly 1 percent of the about 70 billion sticks it churns out yearly, cigarette packs do not bear stamps; instead, graphic health warnings are placed.

“If we put the Philippine tax stamp, it will cover the health warning. They would not accept that in Pakistan and South Korea,” Riley explained.

As for neighboring Thailand, PMFTC will continue its exports as cigarettes sold there must also bear tax stamps.

The company imports the stamps ahead of production, and then sticks them to the packs intended for export to Thailand.

PMFTC’s exports to Thailand comprise up to 15 percent of total production, according to Riley.

The company uses 80-85 percent of the total capacity of its factories in Marikina City and Tanauan City, Batangas.

Despite rival Mighty Corp. eating into its market share, PMFTC’s production has been “steady” so far this year, Riley said.

Once a virtual monopoly when global tobacco giant Philip Morris merged its Philippine operations with Lucio Tan-led Fortune Tobacco Corp. in 2010, PMFTC’s market share slid to 70.9 percent in June this year from 76.7 percent in the same month last year.

The share of Mighty in domestic cigarette sales, meanwhile, climbed from 17.9 percent in June 2013 to 23.9 percent in June 2014.

PMFTC has been accusing Mighty of “systematic fraud” as the latter allegedly dodges payments of taxes and import duties on raw materials to keep prices of its products low.