British American Tobacco mulls $200M investment in PH

British American Tobacco (BAT) on Monday said it is preparing to invest $200 million in the Philippines, but only if the sin tax reform law is passed.

Jim Lafferty, BAT Philippines General Manager, said the company's investment plans will depend on the "leveling of the playing field in the tobacco industry."

"Currently the excise system is a barrier to entry of new players. New brands, whether locally-produced or imported, are taxed higher than old brands. This is what has deterred us in the past and fixing this is a prerequisite for this kind of major investment," he said.

BAT is hoping the government can level the playing field in the tobacco industry soon by enacting the Sin Tax Reform bills, which are currently pending in Congress.

"There are several means to leveling the playing field and we are supportive of those options. All we want is a chance to fairly compete... Our position is, there is nothing better that can happen to the tobacco industry in the Philippines than if the market is opened up to full competition. Right now what you have is a monopoly. The historic excise system essentially supports the monopoly. If there are more players, the stakeholders stand to benefit more," Lafferty said.

Lafferty emphasized the importance of the Philippine market to BAT.

"We believe that the Philippines is presently on the right track and offers outstanding potential. It can become one of the biggest economies in the next decade. We want to be part of that growth... And, to achieve this we must invest heavily in the Philippines market, across all areas including investing in people to build a world-class organization," he said

Even without a local presence in the Philippines, BAT bought more than 1 million kilos of leaf last year from Philippine tobacco farmers. "That was when Philippines was not even in our operations radar. Imagine what we can do, as we know more of the market, and we have a significant presence here," Lafferty said.

The planned $200 million investment will go to developing, producing, distributing and marketing British American Tobacco brands in the country within the next 5 years. The BAT official said this will create jobs, as well as contribute taxes for the government.

"This is classic open market practices at work. The $200 million would follow as a direct result of establishing a level playing field. And we believe this is only the start of the new levels of investment to flow in once sin taxes are properly reformed... Everybody wins in a true level playing field. The farmers have more buyers for their produce. There are more jobs, more infrastructure, more taxes paid. More modernization. It ripples into every area of the economy,” Lafferty said.