Chinese cigarette licence: Digging our own grave


The one cardinal rule that should be followed when one is in a hole, is to stop digging. The government of Sri Lanka does not seem to follow this simple rule in many fronts.

It seems a firm decision has be made by the Minister of Finance to grant a license to import Chinese cigarettes into Sri Lanka, in sympathy of Chinese nationals in Sri Lanka.

The two questions that the majority of people have, does not seem to have occurred to the high-flown policy makers of the Ministry of Finance: Will these cigarettes be only consumed by the Chinese? Cannot the Chinese workers who are so "addicted" use the locally manufactured cigarettes, if they cannot actually quit the habit?

We have been told by the Minister of Health that there are only around 6,000 Chinese workers in Sri Lanka. Therefore it will be interesting to know how much the government aims to earn as tax by selling cigarettes to them. It will be also interesting to know how one will count the number of cigarettes that will be imported. It also seems that one thought of calculating the costs which will be incurred by the government when implementing customs and excise laws and regulations for these imports to such a small market.

We have also been told that there are almost twice the number of Indian workers in Sri Lanka compared to the Chinese. So we can also expect cigarette imports from India. What about those from other countries such as the Iranians working in the Uma-Oya project? Interested parties may already be salivating at the prospect.

It will be also interesting to know how much these cigarettes will sell at. The best-selling cigarette made in Sri Lanka, which has a market share of over 80% sells at Rs. 65. The government taxes amounts to around Rs. 45 per stick for this cigarette. What most do not know is a that it costs less than one rupee to produce a cigarette when produced in large quantities. Therefore the Chinese cigarette can be sold at Rs. 50 per-stick and still generate a huge profit.

Research in many countries has shown that reducing the price or the increasing affordability of cigarettes is the main reason for increasing tobacco use, especially among the young and the poor. This has been very strongly stated by the World Bank and the World Health Organization (WHO). Therefore any reduction in prices have catastrophic consequences to the country and its people.

How catastrophic can it be? The United Nations Development Programme (UNDP) and WHO published a study this month, showing that Sri Lanka loses more than Rs. 200 billion each year due to social and health harms and the productivity losses caused by tobacco. The government seems to be working hard to increase this cost. The report also states that 20,000 people are killed by tobacco in Sri Lanka each year. Is the government planning to increase smoking as method of population control?

It is also well known that tobacco is the gateway to heroin. In Sri Lanka, almost all heroin users have been tobacco users first. Therefore, how can we be sure that this is not an insidious effort to increase heroin consumption?

A different structure of taxation can be applied to the imported cigarettes so that the retail price nears Rs. 65. But will the Chinese workers actually buy these? We are told that legalizing such imports is necessary to prevent smuggling. This is absurd, as the smuggled cigarette sells probably for around Rs. 25. Who will purchase the same at Rs. 65?

The answer to smuggling is enforcement of law. For example, drugs are smuggled to Sri Lanka frequently. No one argues that these drugs "prevent" smuggling and to increase government revenue. Or will we start hearing this argument as well?

Cigarette smuggling or creating the perception of smuggling has been one of the tried and tested methods of breaking into markets by the tobacco industry. There is plenty of documented evidence for this.

China Tobacco, is the Chinese cigarette monopoly owned by the Chinese government. It is by far the largest tobacco company in the world. This company, in addition to its own brands, manufactures international brands under license. It produces more than 2 trillion cigarettes every year. Its profits alone is around twice as large as the entire GDP of Sri Lanka.

This company has the reach, resources, power, influence and the hunger to eat Sri Lanka alive. Allowing one of the most dominant alcohol companies in Sri Lanka to be its partner will make things even worse.

So in addition to flouting the basic principles of protecting the public, the stated government objective of reducing tobacco consumption and contravening the legally binding obligations of the WHO Framework Convention on Tobacco Control, which Sri Lanka ratified in 2004, we will continue to dig our own grave.

Dr. Nalin Bandara


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