Only State-owned Firms Allowed to Produce, Import Cigarettes
State-owned enterprises hold monopoly in producing and importing cigarettes, reads a recent decision signed by the Prime Minister to approve an overall development strategy for Vietnam’s tobacco industry until 2010, a vision to 2020.
Under the decision, only state-run companies which have been licensed and joint ventures between a licensed state-owned firm and a foreign partner in which the state-owned firm holds a lion’s share are permitted to produce cigarettes.
State-owned companies control over the import and consumption of cigarettes as well as the wholesaling and retailing of cigarettes on the market.
The decision also specifies that cigarette is an item that is not encouraged for consumption but the domestic cigarette production is still maintained to meet the market’s demand and to limit the smuggling of cigarettes.
Under the strategy, Vietnam Tobacco Group will be established to operate as a holding company.
Currently, Vietnam has some 17 state-owned cigarette producers, who signed three business cooperation contracts with three foreign investors, namely British American Tobacco, Phillip Morris and Japan Tobacco International; a franchising contract with UK Imperal Tobacco Overseas Holdings and two joint ventures.
The tobacco sector produced 4.03 billion packs of cigarettes in 2006, of which foreign-invested entities made up a small slice of 40 million packs. In 2007, the sector plans for a production volume of 4.23 billion packs with 58 million from foreign-invested entities. (Saigon Economic Times)
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