British American Tobacco will hold back its investments worth $200 million until the amended version of the excise tax reform law gets passed, company officials said in a briefing Thursday.
BAT, which produces the Lucky Strike, Dunhill, and Pall Mall cigarette brands, packed up and left the Philippine market in 2009, but came back in February this year hoping they could participate on a “level playing field” under the Aquino administration, general manager James Lafferty told reporters.
“We are back because of the change in administration,” Lafferty said. “We have announced the [investment] plan of … $200 million over five years. We will not pour the money in until excise tax reform is done. It’s contingent upon excise reform, so I think it will be very premature for me to start talking about locations or factories.”
BAT, Lafferty said, wants to compete with cigarette giant PMFTC, the merged entity of Philip Morris and Fortune Tobacco Corp. that has cornered 94 percent of the Philippine tobacco market.
“You have four other players sharing 6 percent of the market,” Lafferty said.
If the amended sin tax law gets implemented in 2013, BAT said it would go “all out” on investments in that year.
BAT is also considering manufacturing, and there will be a full study as well, Lafferty said.
“This is a big market. You have 7,107 islands, and we need to compete cost effectively,” he said.
Lafferty has already met with Trade Secretary Gregory L. Domingo and Undersecretary Cristino L. Panlilio, informing the Philippine officials that a change in the sin tax regime will allow new players to compete.
BAT supports the amended version of House Bill 5727, which aims to unify the tax system for tobacco and liquor and index taxes to inflation.
Under the current system, brands launched on or before 1996, including Fortune Tobacco, are permanently classified regardless of increases in net retail prices.