This article has been developed from a presentation that was to be presented at the postponed NTA meeting in Tokyo last April. Tobacco Asia thanks VINATABA for sharing this information with us.
Status of tobacco production
Activities of tobacco production and business in Vietnam have been, so far, concentrated in four major hubs, including: Vietnam National Tobacco Corporation (VINATABA), Khanh Viet Corporation (Khatoto), Saigon Industry Corporation and Dong Nai Food Industry Corporation.
The entire sector has 17 cigarette production units, three raw materials and auxiliary materials production and processing units (formerly these units were state-owned and now they have been transformed into equitable shares companies) and a scientific research unit operating in the form of a single member limited company.
Playing the main role in the tobacco industry, VINATABA is cooperating with the four global leading tobacco Groups (BAT, PM, ITG, JT) to manufacture international brands in the form of joint ventures (with PMI and ITG), and under license (with BAT and JT). Recently, in 2010, VINATABA was awarded the Hochiminh Medal by the government on the occasion of its 25th anniversary in recognition of its production and operation achievements.
Contraband and counterfeit cigarettes
Every year, Vietnamese smokers consume about 4.5 to 4.8 billion cigarette packs. Of these domestic production covers about 4 billion packs. The rest are smuggled cigarettes and counterfeit tobacco brands. Particularly in 2010, smuggled cigarettes accounted for 53% of consumption in Ho Chi Minh City and 37% in the southern provinces.
Jet and Hero brands comprise the majority of smuggled cigarettes inVietnam, entering mainly through the southwest border and the central regions. Especially, from mid-2010, Esse, originating from South Korea, has been smuggled through the northern border.
The proliferation of smuggled cigarettes is believed to be potentially affecting the health of domestic smokers as they are exposed to harmful effects of consuming unregulated products.
Tobacco smuggling remains a significant problem in Vietnam and also poses the risk of hindering the development of the tobacco industry in the country, costing the government about US$400 million annually in lost tax revenue.
The issuance of Decree No. 43/2009/ND-CP, dated May 7, 2009, has encompassed smuggled cigarettes, cigars and other forms of finished tobacco products into the list of goods and services banned from business. And Decree No. 76/2010/ND-CP on sanctioning administrative violations in the field of production and business of alcohol and tobacco has also had a positive impact on combating cigarette smuggling and counterfeit cigarette businesses. Since strict sanctions, specifically high deterrence, have been applied, cigarette smugglers and counterfeit tobacco dealers no longer trade publicly or transport the illicit goods in such large numbers as before.
- The total production of cigarettes in 2010 of the sector reached 5,048.6 million packs (20 sticks per pack), up 3.9% compared with 2009.
- Tobacco leaf export in 2010: 9,317 tons.
- Cigarettes: 1,081.7 million packs.
- Export turnover reached: US$143.5 million