[Intl-tobacco] Production, Sale of Cigarettes to be Liberalized in S Korea

[Robert Weissman]

Production, Sale of Cigarettes to be Liberalized in S Korea
Source: Asia Pulse, Friday, 9/8/00

SEOUL, Sept 8 Asia Pulse - The Ministry of Finance and Economy will submit
to the National Assembly this fall a bill to liberalize cigarette
production and marketing from early next year, ministry officials said
Friday.

Under the current law, only Korea Tobacco and Ginseng Corp. can engage in
the manufacture and sale of cigarettes under prices set by the government.

Prices of cigarettes are likely to skyrocket next year with hefty excise
taxes expected to be added onto the relatively low current rates.

After the bill passes, anyone can produce cigarettes after securing
meeting government requirements on liquidity and production facilities,
the ministry said.

The measure will effectively end the tobacco monopoly next year.

Cigarette manufacturers need only report price increases to the
government, presently they needed government approval. The government
hopes the liberalization will raise the market value of the Korean Tobacco
and Ginseng Corp. and help its privatization efforts.

Cigarette taxes are expected to jump to 130 won (US$0.12) per pack,
pushing prices much higher than they have been.

Under the current pricing scheme, Korea Tobacco and Ginseng Corp.
typically loses 13 won per pack on each sale, including its popular "This"
brand.

(Yonhap)