Public health in Southeast Asia will be dealt a blow in 2015 as Imperial Tobacco Group PLC plans to sell more cigarettes in this region. The company has targeted two developing countries – Cambodia and Vietnam – as their “growth market to dive long-term share and profit growth”
In 2014, Imperial sold 294 billion cigarette sticks worldwide and claims to be an even stronger business this year as it celebrates its profits during its annual shareholders meeting on 28 January in the UK. Unfortunately in the ASEAN region, every year about 500,000 people die from tobacco related deaths. Many of these people are still in their productive years, hence it is a tremendous loss of human resource for developing countries.
Imperial Tobacco said it takes excise structures into account when making pricing decisions and focusing on maximising revenue. Unfortunately, revenue maximisation for the company means tax losses for governments and people. We saw this happening in Lao PDR when Imperial entered into a 25-year contract to build its business by paying low excise tax rate of 60% of wholesale price. While this ensured Imperial’s profits grew, this resulted in Lao government losing about US$80m in taxes over the past 12 years. Almost 5,000 Lao people die from tobacco related diseases every year.