Perspective from Malaysia's Consumers Association of Penang on the Tobacco Settlement
While the tobacco settlement in the US is termed, "a landmark agreement once unimaginable" and a "turn around" we here in Asia cannot remotely share in the rejoicing. On the contrary what it means is we have to brace ourselves for a further onslaught of more aggressive marketing of American cigarettes here.
With the settlement, diminishing markets at home and regulations tightening around them, the industry has only one way to go -- EAST! Already nearly half of US cigarette exports land in Asian hands.
In Malaysia even though the news on the settlement was well reported, however as far as the tobacco company companies are concerned, it is business as usual here. They are unfazed by the incriminating developments in the US.
For the record no cigarette company has been taken to court here in Malaysia. Up till now the companies enjoy good support from the Malaysian government. They have taken full advantage of our tolerant and non-confrontational nature and effectively lobby against promotional bans.
Smoking is increasing at the rate of 2% per annum in Malaysia. According to a 1995 survey 51% of the men and 5% of women above 20 years smoke. While smoking is still taboo among women, the 95% of women who do not smoke just simply means an untapped market for the industry.
Recently Rothmans of Pall Mall through the Peter Stuyvesant brand is spending US$3 million sponsoring a local rap group for 15 concerts around the country between May to August. This tour is reputed to be the biggest in South East Asia. This rap group is a clever choice for the cigarette company as it is popular among teenage girls in Malaysia.
The cigarette market in Malaysia is dominated by foreign companies: Rothmans of Pall Mall, RJ Reynolds and Malaysian Tobacco Company (subsidiary of BAT). Together they produce 18.5 billion cigarettes a year which works out to 1000 sticks for every Malaysian. Between them they spend US$160 million a year in advertising.
As far as promotions are concerned these companies have been on a step-mode here in Malaysia. Loss of market in the US means a greater push here in Malaysia and Asia.
Even while the tobacco industry was till in negotiations with the US authorities RJ Reynolds (M) the second largest cigarette producer in Malaysia already announced its plans for expansion in May. They are going to increase their uotput from 5.2 billion sticks a year to 15 billion sticks.
The company has allocated US$60 million for expansion. US$30 million will be spent on the purchase of machinery and for advertisements. A more significant part of the announcement was its plans to introduce "an unspecified number of new brands" in addition to its current 10 brands in the country.
While the US government is concerned for its youth and waging an all out war against smoking unfortunately it has not been as responsible or as caring when dealing with the same product and the same companies outside the USA, especially here in Asia.
In the past the US government has helped its tobacco companies use arm-twisting methods to prise open markets in several countries in Asia to allow in American cigarettes. Victims who succumbed to this tactic are Japan, South Korea, Taiwan and Thailand.
Today USA remains the world's largest exporter of tobacco and its government continues to fiercely protect its business overseas in the name of free trade and economic fairness. It is only fair to expect the US govenment's new position on tobacco to be reflected in its dealings overseas.
However based on ruthless double standards of the past and the apparant difference in worth between American lives and Asian lives in the eyes of the US government, the tobacco settlement is indeed bad news for us. What is bad for the American public must surely also be bad for the rest of the world. If a settlement is reached should it not also benefit the rest of the world especially since the same companies operate all over the world selling the same product?
As far as CAP is concerned it is difficult for us to see the rationale behind the settlement. A bad business cannot be exonerated nor sanctified with any payment. From this end it looks like a win-win situation for the tobacco industry. The consumer ultimately pays for everything. So the settlement will be born by the the consumer by increasing the price and the companies get to continue with their business anyway, with bearable restrictions in the US and business as usual in Asia.
We are recommending the phasing out of tobacco cultivation and production, among other preventive measures for a long term plan to arrest this 21 Century epidemic. Considering the extent of the horrifying damage, suffering, disability and deaths caused by this single product, there is no place for negotiation and settlement.
S M Mohd Idris, President
Consumers Association of Penang
- 109 Tobacco