Philip Morris International is fighting to keep a toehold in India’s $11 billion tobacco market, as the government considers further tightening foreign investment rules in the sector, according to documents seen by Reuters.
In previously unreported letters from Philip Morris to the trade minister and an influential government think-tank, the U.S.-based company said the “discriminatory” and “protectionist” proposals would represent a blow to its plans to launch new products and make further investments in India.
The two letters dated May and October last year followed local media reports of a possible change in government policy. While the warnings may be part of the firm’s negotiations, they show the level of concern the proposals are causing.
“The proposed ban will impact our future investments in India and also force a review of our overall operations, including tobacco crop purchases,” Martin G. King, Philip Morris’ Asia president, wrote on Oct. 13 to NITI Aayog, India’s most influential government think-tank that has a say in federal policies, including those related to foreign investments.
India banned foreign investment in cigarette manufacturing in 2010, but it still allowed tobacco companies to invest through technology collaboration and licensing agreements. Investments could also be made by forming a trading company.
Over the past year, the government has been considering whether to stop these, in a bid to safeguard public health interests, according to the documents and a senior government official.
The new proposal was being discussed by the health and trade ministries at least as early as April last year, according to a government memorandum dated June 3. Neither ministry responded to requests for comment.
A Philip Morris spokesman said the company had “nothing further to add” when asked about the company’s view on foreign investment.
The final decision on the rules, based on recommendations from various ministries, will be taken by Prime Minister Narendra Modi’s cabinet.
BLOW TO PLANS
Philip Morris entered India in the late 1960s by acquiring a majority stake in the London-based parent of Godfrey Phillips India Ltd. It gradually reduced its stake in Godfrey over the years, in part due to regulatory changes.
Ahead of the 2010 ban on investments into cigarette manufacturing, Philip Morris formed a new wholesale trading company with Godfrey and an investment firm.
Under the current arrangement, Godfrey manufactures Marlboros while Philip Morris’ trading firm helps promote them.
That part of its operations would not necessarily be impacted by the foreign investment changes being considered, as such changes usually do not apply to previous arrangements.
However, if the new rules were implemented, Philip Morris’ future investment plans in India would be in jeopardy, as any form of new investment or collaboration would be outlawed.
Those plans, the company says, include the possible launch of its heat-not-burn electronic cigarette called iQOS, an alternative product which Philip Morris sees as a key step towards a smokeless future that could also bring health benefits to India.
Godfrey did not respond to a request for comment.
India is a key market for Philip Morris.
Even before the company contemplates introducing alternative products there, demand is strong for conventional cigarettes that still account for most of the company’s $74 billion in global annual revenues.
The number of male cigarette smokers, aged between 15 and 69 years, almost trebled in India to 40 million between 1998 and 2015, according to BMJ Global Health estimates. Another 48 million smoke traditional hand-rolled cigarettes, called beedis.
Marlboro faces stiff competition from premium brands of India’s largest cigarette maker, ITC Ltd, which is part-owned by British American Tobacco (BAT) as well as several state-run firms.
Still, its market share has doubled between 2012 and 2015 to 1 percent, data from Euromonitor International show.
Outlining the firm’s importance to India’s economy, Philip Morris said in its letters that it spent $460 million on tobacco leaf over the previous five years and more than $200,000 on corporate charities each year.
It says it has employed more than 90 people in its India unit.
The company does not give country-by-country figures for revenues or market share.
Philip Morris’ King wrote to the trade minister in May, saying the reported proposals would “dent India’s credibility as a reliable investment destination.” He also said the move would unfairly favour the domestic industry.
“It is discriminatory in its application since it will provide undue leverage to the domestic industry at the expense of international products,” King wrote.
ITC, which has a market share of almost 80 percent, did not comment on the proposed new policy.
King’s letter was redirected by the trade ministry to the federal health ministry for further comment.
The health ministry rejected the company’s arguments, citing India’s obligations under an international tobacco control treaty and domestic laws.
The health ministry said allowing foreign tobacco money was against public health interests and would only lead to expansion and promotion of the sector.
“There should be a comprehensive ban on foreign collaboration in any form,” the health ministry wrote on July 27, adding wholesale trading in tobacco should be banned as well.
Philip Morris wrote again in October to argue its case, this time to NITI Aayog, the think-tank.
It said an investment ban could “raise significant concerns” about India’s compliance with its obligations under international trade and investment treaties.
(Additional reporting by Manoj Kumar; Editing by Mike Collett-White and Paritosh Bansal)
COSH urges the Government to take full account of public opinions Enact Enlargement of Pictorial Health Warnings Promptly
Hong Kong Council on Smoking and Health (“COSH”) urges the Government and Legislative Council to enact the enlargement of pictorial health warnings promptly in order to reduce the attractiveness of tobacco, motivate more smokers to quit and deter youth from trying the first cigarette. Mr Antonio KWONG, COSH Chairman remarked, “Results from survey conducted by COSH and two rounds of public consultations organized by the Legislative Council showed that majority of citizens and organizations supported the enlargement of pictorial health warnings to 85%. The Government and Legislative Council should take full account of public opinions and enact the proposed tobacco control measure as soon as possible.”
The Government briefed the legislative proposals to strengthen tobacco control on 18 May 2015, including enlarging the size of pictorial health warnings to at least 85% of the two largest surfaces of the packet, increasing the number of forms of health warning from six to twelve and adding the quitline 1833 183. The date of enactment is yet to be scheduled after more than one and a half years.
The Legislative Council collected views of the public and held special meetings on the enlargement of pictorial health warnings twice. Among the hundred submissions received in July 2015 regarding the increase in the size of pictorial health warnings, more than 80% supported. Besides, over 100 submissions were received for the special meeting of Legislative Council Panel on Health Services to be held tomorrow (17 January 2017), in which around 70% agreed the proposed measure.
The School of Public Health of The University of Hong Kong was commissioned by COSH to carry out the Tobacco Control Policy-related Survey 2016. It was found that public support on enhancing the pictorial health warnings was overwhelming, 79.5% of all respondents agreed to display more threatening messages about the health risks of smoking. About 72.5% of all respondents supported to increase the coverage of the health warnings to 85% while about half of the current smokers also supported. Majority of respondents opted for plain packaging* of cigarettes as well. In addition, COSH has collected over 26,500 signatures from citizens and organizations through street counters and online platform supporting the enlargement of pictorial health warnings since May 2015.
In recent years, many countries have successfully introduced more stringent measures to regulate tobacco packaging. Prof Judith MACKAY, Director of Asian Consultancy on Tobacco Control and Senior Policy Advisor of World Health Organization claimed, “Hong Kong ranked the 72nd in the world regarding the implementation of pictorial health warning and behind many developing countries like Laos, Myanmar and Sri Lanka. Hong Kong should enlarge and strengthen the pictorial warnings promptly in order to reduce the use of tobacco.” World Health Organization called for more countries to enlarge pictorial warnings covering more than 85% and implement plain packaging. “Get ready for plain packaging” was designated as the theme of World No Tobacco Day 2016.
Recently, some organizations opposed the proposed enlargement of warnings in the pretext that it would lead to a surge in cigarette smuggling activities. A recent study also claimed that illicit cigarettes composed for around 30% of cigarette consumption in Hong Kong. Prof LAM Tai-hing, Chair Professor of Community Medicine cum Sir Robert Kotewall Professor in Public Health, School of Public Health, The University of Hong Kong said, “the public should express reservation on the results of this tobacco industry-funded study. The data collection methods and calculations of the study were unclear using dubious methods.” The tobacco industry and its allies always express strong opposition against tobacco control measures proposed by the Government under the pretext that it will lead to a surge in cigarette smuggling activities. As recommended by the World Health Organization, the most effective measure against smuggling is tight control and aggressive enforcement.
With the Government’s multi-pronged tobacco control policies over the years, the smoking prevalence in Hong Kong has gradually reduced from 23% in early 80s to 10.5% in 2015. In view of the tobacco epidemic in Hong Kong and the international tobacco control trend, we urge the Government and Legislative Councilors to take account of public opinions and implement the enlargement of pictorial health warnings as soon as possible to safeguard public health. The Government should also actively consider adopting plain packaging within 2 to 3 years and develop long-term and comprehensive tobacco control policies including regulating the emerging tobacco products and e-cigarettes, raising tobacco tax substantially, expanding no-smoking areas, increasing resources on education, publicity, smoking cessation services and enforcement to further reduce the smoking prevalence in Hong Kong and protect people from the harms of smoking and secondhand smoke.
*Remarks: Plain packaging standardizes and simplifies the packaging of tobacco products. The pictorial health warnings on the main sides of cigarette pack are expanded. All forms of tobacco branding should be labeled according to the government prescriptions and with simple and plain format. This means that trademarks, graphics and logos are not allowed on cigarette packs, except for the brand name that is displayed in a standard font size, colour and location on the package. The packaging should not contain other colours and should include only the content and consumer information, such as toxic constituents and health warnings required by law. The quitline number should also be displayed at a prominent position. Australia was the first country to introduce plain packaging in 2012. The measure was also implemented in the United Kingdom, France and Hungary in 2016 and will be implemented in Ireland in 2017.
Survey finds most in favour of move, which advocates say can protect public health and encourage more to quit habit
An anti-smoking body has pressed the government to speed up legislation on cigarette pack health warnings after a survey revealed almost 80 per cent of people desired sterner messages on smoking risks.
The Council on Smoking and Health made the call ahead of another public hearing held on Tuesday in the Legislative Council to collect views on whether to implement the law.
The legislation will expand the size of health warnings on cigarette packs from the current 50 per cent to 85 per cent of the packaging surface.
The proposal was first submitted by the government in May 2015, and the first hearing was held in July in the same year.
According to a survey commissioned by the council and done between February and September last year, 79.5 per cent of 2,058 respondents – comprising smokers, non-smokers and ex-smokers – want cigarette packs to show clearer and more graphic warnings.
Another 72.5 per cent of them also want to see the graphic warnings enlarged to cover 85 per cent of the packaging surface, a move also supported by almost half of the smokers in the survey.
“The implementation work has dragged on for one and a half years. This measure can protect public health and help more people quit smoking.
“We hope that Legco will not procrastinate on the legislation any further,” council chairman Antonio Kwong Cho-shing said.
He said that Australia recorded a drop of 2.2 percentage points in average smoking rate after introducing plain cigarette packaging in 2012.
Of this amount, 0.55 percentage points, or 108,000 fewer smokers, were due directly to the new measure which only allowed brand names to be displayed in a standard font size, colour and position on the packaging, thereby making them less conspicuous and seemingly less desirable.
Professor Judith Mackay, a veteran tobacco control advocate and senior policy advisor for the World Health Organisation, said a larger graphic warning would have an even bigger visual impact and induce more smokers to quit.
According to a Canadian Cancer Society survey which studied the effectiveness of health warnings on cigarette packs worldwide, Hong Kong ranked 72nd out of 205 places.
“We used to be among the top 12 jurisdictions [in cigarette pack warnings] … now we are lagging very far behind from the international experience,” Mackay said. She has been working on tobacco control advocacy in the city for more than 30 years.
The survey done by the Canadian group looked at various factors, including whether graphic warnings existed on the packaging design, the sizes of the images and when the warnings were introduced.
Mackay attributed the city’s poor ranking partly to outdated warnings, which were first introduced in 2007, and the lack of information on helpline numbers for those seeking to quit the habit.
She said in the long run the government should also further increase tobacco tax to make cigarettes less affordable.
Kwong from the Council on Smoking and Health said it submitted a letter to the financial secretary late last year to suggest increasing tobacco tax to 100 per cent.
While Beijing residents accustomed to smoky restaurants, bars, and other hazy interiors doubted that the city’s latest ban on lighting up would have any effect, it’s actually been a slow but steady success: Most F&B venues report good compliance with the rules, and state media recently reported that 200,000 fewer Beijingers are lighting up these days.
Based on findings jointly released at the end of 2016 by the Beijing Patriotic Health Campaign Committee and the Beijing Municipal Health Commission, the percentage of local adult smokers has gone down from 23.4 percent in 2014 to 22.3 percent this year.
Stricter smoking restrictions were announced in 2014, and put into effect citywide in 2015, barring anyone from puffing at eateries, workplaces, public transport and other public places. However, skeptics assumed that those rules would be less than successful, seeing as a 2011 ban did little to rid the capital tobacco haze (though, according to the BBC, those rules were more vague).
Such doubts were quickly dispelled in the summer of 2015, however, when the rules began to be earnestly enforced. State media says more than 127,000 restaurants, bars and other businesses were inspected since June of last year, leading to 5,300 people being forced to at least stub out their cigarettes, while of those 2,719 people in violation of puffing had to pay fines, which totaled RMB 142,500 (USD 20,700) between June 1 and November 30 last year.
Longtime F&B blogger and renowned man-about-town Jim Boyce vividly recalls just how different a night out in Beijing was before the ban. “Eating, drinking, and smoking were the trinity of activities for people going out back then,” he recalls. “I remember a night at places like First Floor, The Den, or Fubar would leave your clothes reeking of smoke — but that was also true of many bars and restaurants.”
Many Beijigers would argue that the capital’s livehouses were the smokiest of all local joints. I can recall the popular Wudaoying livehouse School Bar being so ashy on New Years Eve 2012, when indie troop Hedgehog drew such large throngs of cigarette-puffing fans that one member of my party opted to leave mid set, complaining her eyes were stinging so bad she could hardly see the band.
School Bar owner Felix Liu says such smoke-adverse patrons breathe easier at the livehouse now. “Most people follow the rule and smoke outside and in our yard, because no one actually wants to stay in a hazy room. But we still have some guests that smoke indoors, and we have to get our staff to stop them.”
Other venue owners say the new clear-air era of Beijing’s public spaces went easier than expected. Pink, manager at Temple Bar, says the stricter smoking ban has been successful. “Most customers are happier about the air quality inside our bar now, and smokers are understanding about the rule and go outside to smoke.”
Tristan Macquet, co-owner at Cafe de la Poste, attributes such compliance to the ban’s financial consequences, saying past capaigns “used to be words without actions, but this time [the authorities] really went all out. Fines for smokers and the restaurants were an incentive. Asking for people to report smokers has its pros and cons but it proved effective. We saw it at the time even in Chinese restaurants on Guijie: smokers were asked to go out to have their cigarette.”
Macquet says Beijing’s bar scene has boded well after the ban, adding: “for Café de la Poste, I definitely believe it was the right thing to do. Of course smokers groaned a little at first, but not for long. And the whole atmosphere of the restaurant got better afterwards. Soon it was as if it had always been like this. I think that air quality is such an issue now, especially in term of awareness, that customers really prefer it this way.”
One of the proprietors at Bungalow Tiki Bar says venue owners had just as much, if not more, to gain from the ban. “You reduce table surfaces getting burned, ash on the floor, and, when you have a small place like ours, you avoid the smell. Our bar would be a smoke pit if we’d been open before the smoking ban. It’s changed the whole Beijing nightlife scene. I know a few bars where you can still smoke inside, and now when I go in it’s quite horrible.”
And while the general acceptance, along with assertive enforcement, both seem promising for those opposed to tobacco, not all of the findings in the Patriotic Health Campaign Committee and Municipal Health Commission study were positive. CCTV, for instance, notes that a mere 30 percent of the capital’s adults said they understood the ill effects caused by lighting up. But at least 16.8 percent of them put in the effort to give up the cigs in 2016, a 1.9 percent uptick compared to 2014. We would have been equally interested, however, to learn just how those strong willed Beijingers gave up smoking. Vapes? Tobacco patches? Nicorette gum? Or did they go cold turkey?
Hopefully the next report will clear the air in that regard.
Seeing someone use an e-cigarette encourages smokers to light up, a study has warned. Even though they don’t look like a normal cigarette, ‘vape pens’ can trigger the same cravings as real tobacco products.
A study by Chicago University found the devices were a ‘potent trigger’ to encourage young adults to smoke as they mimic the same behaviour – inhaling and exhaling – and use the same hand and mouth movements as regular cigarettes.
The findings cast doubt on how well the smoking ban has worked to put cigarettes ‘out of sight’, as vaping becomes common.
Although the 18 to 35-year-olds in the study who were influenced by e-cigarettes already smoked, the findings also raise concerns about a ‘gateway effect’ encouraging people who smoke to vape as well.
The study, published in journal Nicotine & Tobacco Research, used 108 volunteers ranging from light smokers to those who went through a pack of cigarettes a day.
When they saw someone use a vape pen, they were more likely to want a cigarette or reach for one.
Vape pens look more like pens than cigarettes but still deliver a nicotine hit and puff out vapour.
Research leader Dr Andrea King, director of the clinical addictions research laboratory at Chicago University, said, “Vape pens look different but they share too many salient features of the act of smoking – including inhalation, exhalation and hand-to-mouth behaviours. This makes them a potent trigger, encouraging people to smoke.
Their impact is roughly equal to watching someone light up a cigarette. They made the young adults in our study want to smoke.”
The decade-old UK ban on smoking in public places was designed to make the habit seem less normal by keeping smokers out of offices and pubs.
However, despite calls from the World Health Organisation for countries to consider a similar ban on e-cigarettes, they are becoming increasingly popular.
To measure their effect on susceptible young adults, the researchers planted a pretend volunteer among their study group who smoked either a conventional cigarette or a vape pen.
Both cues increased the desire among research subjects for a cigarette or an e-cigarette. Then 26 of the group were tested 20 minutes later by placing a cigarette on a tray, along with a lighter and an ash tray.
Told they would receive a cash reward of 20 cents for every five minutes they resisted, those who had seen the person smoking a cigarette or vape pen managed to hold out for only 20 minutes.
Dr King said, “Our study focused on a classical Pavlovian trigger, as seeing someone smoke is a known potent cue that can induce others to smoke. We did not expect that the vape pen would be as potent a cue as the regular cigarette, but it was as potent.”
JAMES Bond isn’t the only one with a licence to kill. The World Health Organisation reports that smoking costs the global economy RM4.5 trillion a year, and will take eight million lives annually by 2030.
For a species that has invented fire, travelled to space and split the atom, we are still paying an industry to kill us. Mankind is indeed strange.
Decades of research have shown that smoking can be fatal. So, we are often asked: if cigarettes cause such harm, why are they allowed to exist?
One challenge is the separation of the problem — the health industry sees tobacco as a health issue, while businesses and governments see it as an economic driver.
But the same WHO report also states that the cost of smoking far outweighs the revenue from tobacco taxes.
Treating smoking-related diseases drives up the cost of healthcare. In 2005, Malaysia’s Health Ministry spent 26 per cent of its budget to treat those diseases, which accounted for 0.74 per cent of its gross domestic product.
There are also the environment, productivity and human development — smoking pollutes our air and water, and smokers are 30 per cent more likely to miss work (for longer periods, too). In some families, money for cigarettes is taken from household essentials.
No other industry causes as much damage to its users and non-users alike — and remains legal.
Instead of protecting this industry, we urge the nation to support tobacco control efforts in Malaysia.
Tobacco control can work. A study published in the United States this month reports that efforts since 1964 had resulted in eight million fewer smoking deaths.
We should want the same for our fellow Malaysians.
National Cancer Society Malaysia
The House of Representatives’ plan to ban tobacco companies from advertising their products on television and radio aims to protect young audiences, says a lawmaker.
Lawmaker Elnino M. Husein Mohi argued that cigarette advertisements could be easily viewed by children.
“Broadcasting companies run the industry using state-owned frequency, which is supposedly used to help build good character,” Elnino told The Jakarta Post on Friday, adding that smoking did not help build positive character. “The plan to ban cigarette advertisements is basically meant to protect youngsters from the campaign”.
The politician from the Gerindra Party explained the House had included stipulations to ban such advertisements in a draft bill on broadcasting to amend a prevailing law passed in 2002. The current draft was initiated by the House.
Elnino, a member of House Commission I overseeing defense, foreign affairs and information, however, ensured that Commission I would open the deliberation process to the public to include relevant stakeholders in the discussion.
“We are aware of the complexity of the issue. Therefore, deliberations will later invite insights from various stakeholders, including the broadcasting industry, so that we can obtain a comprehensive understanding before passing the bill into law,” he emphasized. (dmr)