Cigarette companies ordered to stop price war

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Source:http://www.sun2surf.com/,2008-01-28
Multinational cigarette companies have been given two weeks to end their price war or face government intervention to determine and control the prices of cigarettes in the country.
Health Minister Datuk Seri Dr Chua Soi Lek issued the warning during a meeting with representatives of the affected companies in Malacca today.

Those who attended the meeting included representatives from JT International (JTI), British American Tobacco (BAT) and Philip Morris, the companies which control the cigarette market in the country.

"The Health Ministry views this price war seriously. The government normally imposes high tax with the hope that when prices of cigarettes go up, there will be a drop in the demand, although we understand that at some stage it will encourage smuggling.

"But of late, it looks like efforts by the government are being challenged by these companies with them drastically reducing prices, some to unreasonable levels," Chua told reporters after visiting Machang Baru health clinic here, reporrs Bernama.

For example, after deducting the cost and government tax, the price of cigarettes was only RM3 for 20 sticks, he said, adding that the price war by cigarette companies hampered the government's efforts to discourage smoking.

On the meeting, Chua said it was to convey the government's message to the cigarette companies.

"If they cannot cooperate and want to increase their cigarette sales, it is time the ministry considers taking several actions," he added.

This included making it compulsory for all cigarette manufacturers and importers to register with the Health Ministry where the nicotine and tar content in their cigarettes would have to meet the government's standards.

"With this registration, it will enable the ministry to carry out a more effective monitoring," he said, adding that currently, the issuance of licences to cigarette companies was under the jurisdiction of another ministry.

He said other actions to be taken would include the need for cigarette companies to display graphic warnings on at least 60% of the cigarette boxes.

"These graphic warnings have to be changed every year. Otherwise, they become ineffective," he added.

He said the cigarette companies' appeal to display the graphic warnings on only 50% of the box as is the practice in Thailand and Hongkong would be looked into by the ministry's technical committee.

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