BAT mulls cigarette factory in Phl

MANILA, Philippines - Cigarette maker British American Tobacco (BAT) is contemplating putting up a factory in the Philippines within the next two years on top of its committed $200-million investments in the country, its top official told The STAR.

 â€œWe will need a factory here at some point. We’re still studying the factory but it will be on top of the $200 million,” BAT Philippines general manager James Lafferty told The STAR in an interview.

He said the company is studying its options, including acquiring an existing factory, putting up a distribution site or a major manufacturing facility.

 â€œThere’s no location yet,” he said.

He pointed out that the Philippine factory can complement and even compete with BAT’s manufacturing plant in Malaysia.

On the other hand, the $200 million committed investments comprise a five-year program, with an initial $50 million to be poured in by the end of the year to beef up distribution and hire additional people that could total to 300 by the end of 2013.

Lafferty said since the passage of the excise tax reform law this year, the industry’s new players, including BAT and Japan Tobacco Inc., have strengthened their presence and introduced new brands.

“This is the beauty of free market,” he said.

He expects a stronger sales performance this year, exceeding last year’s sales.

In 2012, the company was not able to meet its 150-million sticks sales target as it was focused on the proceedings of the then sin tax bill.

BAT is the maker of the Lucky Strike, Kent, Pall Mall, Dunhill and 300 other cigarette brands in different parts of the world.

Robert Eugenio, BAT Philippines head of corporate and regulatory affairs, meanwhile, debunked earlier claims the sin tax law would kill the business of tobacco farmers.

“If they say we killed the tobacco industry, they should go to the north and look at how they are performing. They’re (the critics) wrong on everything,” he said.

President Aquino signed last year Republic Act 10351 or An Act Restructuring the Excise Tax on Alcohol and Tobacco, which prescribes higher tax rates on tobacco and alcohol products.

The new law took effect on Jan. 1, 2013.