28 October, Bangkok: The Southeast Asia Tobacco Control Alliance (SEATCA) and various international health groups expressed their solidarity with the government of Lao PDR (GOL) in its commitment to not renew the Investment License Agreement (ILA) it has had with the tobacco industry for the past 25 years. The GOL’s decision is aligned with the 2016 Law on Investment Promotion, which prohibits incentives for harmful industries, and the WHO Framework Convention on Tobacco Control (FCTC), which Lao PDR ratified in 2006.
The government had signed the ILA in 2001, establishing Lao Tobacco Ltd as a joint venture between the government and the tobacco industry, expecting it would bring economic prosperity to the country. Instead, the major beneficiary has been Imperial (Tobacco) Brands, which has a 53% controlling stake in the company, which had been granted, under the ILA, an initial five-year exemption from income and dividend taxes, along with low excise tax rates fixed for 25 years and other economic privileges.
The ILA’s negative impact on Lao PDR’s economy has been staggering. The low excise tax rates, far below the rates set by newer legislation, have cost the government at least LAK 698.3 billion (USD 31.9 million) in foregone revenues—funds that could have strengthened public services and economic development.
The extremely low tax rates have also made tobacco more affordable and accessible, contributing to high smoking rates. In Lao PDR, up to 6,700 people die annually from tobacco-related illnesses, accounting for 15% of all deaths in the country. The financial toll of tobacco use, including healthcare expenses and productivity losses, amounts to LAK 3.6 trillion (USD 164.2 million) each year.
Citing the ILA as basis, the industry has also refused to pay the government tax intended for the Lao Tobacco Control Fund, resulting in an additional LAK 16.7 billion (USD 76.2 million) in lost revenues between 2018 and 2023 and hampering tobacco control implementation.
By not renewing the ILA, the Lao government is taking a decisive step to protect its citizens from tobacco-caused diseases and premature death and uphold public health. Ending the agreement will enable the country to implement stronger tobacco control measures, reduce tobacco use, and collect much-needed funds for public health initiatives and socio-economic development.
“The international public health community stands with the Lao PDR government as it seeks to end this exploitative agreement with the tobacco industry. The health and well-being of our Lao brothers and sisters should be paramount over any commercial interests, particularly those of the tobacco industry,” stated Dr. Ulysses Dorotheo, Executive Director of SEATCA.
Click to view copy of the letter of support (in English).
Contact Information:
Ms Val Bugnot, Media and Communications Manager, SEATCA,
Email: val@seatca.org
Mobile: +63 917 312 4600
About SEATCA
SEATCA is a multi-sectoral non-governmental alliance promoting health and saving lives by
assisting ASEAN countries to accelerate and effectively implement the tobacco control
measures contained in the WHO FCTC. Acknowledged by governments, academic institutions,
and civil society for its advancement of tobacco control in Southeast Asia, the WHO bestowed
on SEATCA the World No Tobacco Day Award in 2004 and the WHO Director-General’s Special
Recognition Award in 2014. SEATCA is an accredited ASEAN entity and an official Observer to
the WHO FCTC Conference of Parties.