[Intl-tobacco] Malaysia: Ministry Introduces New Policies To Restructure Tobacco Industry

[Robert Weissman]

Ministry Introduces New Policies To Restructure Tobacco Industry =96 Bernam=
a
 December 18, 2003

 Kuala Lumpur -- The Primary Industries Ministry will introduce a new
set of
 policies to restructure the tobacco industry in Malaysia, commencing
Jan 1,
 2004, its Minister Datuk Seri Dr Lim Keng Yaik announced here Thursday. He
 said that the main objective of the new policies is to ensure that the
 industry is efficient, viable and competitive when the Asean Free Trade
 Area-Common Effective Preferential Tariff (Afta-CEPT) is implemented in
 2010.

 The ministry has requested the Finance Ministry to consider the possibilit=
y
 of creating a RM60 million Special Fund to provide soft loan facilities fo=
r
 the existing tobacco curers which would enable them to become efficient
 grower-curers, Dr Lim said in a statement. Among the policies are the
 creation of a special incentive of RM2.00 for every kg of tobacco produced
 by tobacco curers and grower-curers effective Jan 1, 2004 until the
 restructuring process is completed or until 2010, which ever is earlier.

 Dr Lim said that this incentive is to be borne by the three major cigarett=
e
 manufacturers, namely British American Tobacco, JT International and Phili=
p
 Morris (Malaysia) Sdn Bhd (PMM). "However, in view of the need to alleviat=
e
 the cash flow problem of the curers and grower-curers, the three major
 cigarette manufacturers will advance a sum of RM1.50 for every kg of tobac=
co
 to be produced by the curers and grower-curers in 2004 as working capital,=
"
 he said.

 Dr Lim said that the advance will be given to them in January 2004 and the
 amount involved will be paid back to the cigarette manufacturers through
 deduction of 50 sen from the RM2.00 incentive for every kg of tobacco
to be
 produced in 2004, 2005 and 2006. Apart from that, the major cigarette
 manufacturers are to bear the whole cost of fertilizers and chemicals used
 for pest and disease control.

 The 50 sen levy imposed under Section 26 of the National Tobacco Act
1973 is
 to be revoked beginning Jan 1, 2004. The National Tobacco Board will assis=
t
 in classifying and assigning the selected curers and grower-curers to the
 three major manufacturers who will be responsible to supervise and develop
 them. "These curers and grower-curers in turn will supply tobacco to the
 cigarette manufacturers concerned," Dr Lim said

 The three major cigarettes manufacturers are required to use 70 percent
 local tobacco in the manufacture of cigarettes for domestic market. "Their
 support and full cooperation are essential because it is envisaged that th=
is
 will substantially contribute towards creating new quota for new big scale
 grower-curers who will be involved in tobacco planting," he added.