Philippines - Smoking curbs fail in the Philippines

MANILA - US-based tobacco giant Philip Morris International (PMI) rolled out a US$300 million tobacco factory in the Philippines in 2003, then the company's single biggest investment in Asia.

The plant, in a township south of Manila, now produces 30 billion cigarettes annually but faces growing resistance to expanding that lucrative local market.

In the same year that the plant opened, anti-smoking groups notched a major advocacy victory with the passage of the Philippine Tobacco Regulations Act (PTRA). The law, a product of around three decades of campaigning by mostly non-governmental groups on the health risks of smoking, heavily restricts the sale and promotion of tobacco, especially among youth, and legally bans smoking in all public areas.

Despite that legislation, cigarette consumption nine years later is still high in the Philippines, with over one-third of the population regularly puffing. The country has the second-highest tobacco consumption rate in Southeast Asia, lagging only Indonesia. The World Health Organization (WHO) and the Department of Health (DoH) estimate smoking-related illnesses and productivity losses cost the Philippines over 300 billion pesos (US$7 billion) per year - an estimate the local tobacco lobby has questioned.

The DoH has blamed tobacco companies' strong influence over Philippine politics, including compromised legislators, as one main reason why tobacco-control regulations have failed to deter smokers. A senior government health official in an interview with Asia Times Online accused some legislators of receiving funds from pro-tobacco lobbyists to attend committee hearings and block the introduction of new tobacco controls and taxes.

"What used to be simple committee hearings that would be run by two to three congressmen attended by no more than 20 are now having 30 congressmen in attendance," said the senior official, who requested anonymity. "They're no longer ashamed of saying that they're also paid off by the lobby," the official claimed. The health committee and the ways and means committee are the two bodies in congress that hear proposed anti-tobacco legislation.

Maricar Limpin, executive director of Framework Convention on Tobacco Control Alliance Philippines (FCAP), a non-governmental organization, said local cigarette firms conduct "direct lobbying" by approaching legislators to vote against any new anti-tobacco initiatives.

She claimed that at least one influential person who previously served as a legal counsel for a tobacco firm has blocked various legislative proposals to stiffen existing tobacco controls.

"Whenever there's a hearing, even on the committee level, they really come in full force," Limpin said, comparing the high attendance to the frequent absenteeism among legislators during regular legislative sessions. Lawmakeres from the tobacco-growing north of the country, have argued that further restrictions on the local tobacco industry would result in massive economic losses and unemployment among farmers.

Apart from blocking new regulations and taxes, anti-smoking advocates here argue that tobacco companies have failed to fully comply with the PTRA. The industry is represented in the interagency committee that oversees the actual implementation of the PTRA, which anti-smoking advocates say allows tobacco firms to influence compliance with the law. Cigarette companies are also known to employ the country's best-heeled law firms to represent them in cases related to the PTRA.

PMI, known locally as Philip Morris Philippine Manufacturing, or PMPMI, declined to answer questions - including allegations that the industry maintains influence over certain congressman - for this article. PMPMI, which merged with Fortune Tobacco company in 2010, now controls more than 92% of the country's US$1.7 billion tobacco market.

Regulatory wrangle

Anti-smoking advocates believe the industry, represented mainly by PMPMI, is now actively bidding to undermine the PTRA. Similar restrictions and lawsuits that have ruled in favor and paid massive damages to smoking victims in the United States have crippled the parent company's position there, forcing the company to seek new markets in the less-regulated developing world.

It is a business strategy that has paid huge dividends for PMI in the Philippines. In 2011, PMI president Chris Nelson noted in a local television interview that leaders from tobacco-growing areas have met with the Metro Manila Development Authority to seek clarification on the ban on smoking in public areas. The ban, similar to those imposed in many Western countries, has been highly criticized and even challenged in court by industry representatives.

PMPMI's website says: "While we support comprehensive, effective tobacco regulation, we do not support regulation that prevents adults from buying and using tobacco products or that imposes unnecessary impediments to the operation of the legitimate tobacco market. In that regard, we oppose measures such as generic packaging, point of sale display bans, total bans on communications to adult consumers, and bans on the use of all ingredients in tobacco products."

Around 40 countries worldwide at present legally require locally sold cigarette packs to include often graphic picture warnings depicting the risks of smoking. Similar warnings were ordered by the Philippine DoH in 2010, but tobacco companies have challenged the order in court. Two local courts have issued a restraining order on the picture warnings while another has decided in favor of the industry. Tobacco companies also demanded the removal of then health secretary Esperanza Cabral, who issued the order and is a known anti-smoking advocate.

Legislation that aims to increase taxes for tobacco products, meanwhile, is still being debated in congress. Seven different versions of the "sin" tax reform have in recent years been proposed but dissenters have stalled the legislation's approval and implementation.

At the same time, the tobacco industry has gone into public relations overdrive. Protobex Asia and Inter-Tabac Asia 2012, reportedly the largest international tobacco trade fair ever to be held anywhere in the world, will take place in Manila at the state-run Philippine International Convention Center (PICC) later this month. FCAP has protested the move and asked the government to cancel the event, arguing that under the WHO's Framework Convention on Tobacco Control a government facility is not allowed to hold such an exhibit.

To be sure, the tobacco lobby was strong even before PMPMI came to dominate the local market. Research by the University of Sydney in 2004 referred to the Philippine tobacco industry as the "strongest lobby in Asia". The report described how tobacco firms took advantage of a corruption-plagued government to advance their interests and thwart anti-tobacco legislation by making political donations. More recent studies by anti-tobacco advocacy groups have underscored and updated the 2004 report's academic findings.

Death and taxes

At the same time, it is debatable how big an impact tougher anti-tobacco regulations would have on the wider Philippine economy, as some legislators have warned. The website of the National Tobacco Authority, a government office, estimates the current number of tobacco farmers at 43,960 and about 300, 000 members of their families as dependent on the tobacco industry. The figure represents a tiny share of the country's estimated 40 million workforce.

On the other hand, the WHO and DoH estimate smoking-related diseases and related productivity losses at over 300 billion pesos per year. Smoking-related deaths are also high, with 10 Filipinos dying of lung cancer, cardiovascular diseases and stroke every hour, according to the WHO. The government currently earns around 25 billion pesos per year in taxes from the industry, an amount that proposed sin tax hikes would aim to increase substantially.

Lucio Tan, owner of Fortune Tobacco, the Philippines' largest tobacco company until its February 2010 merger with PMI, is among the country's best politically connected businessmen. Since the merger, Tan and PMPMI have devised more aggressive measures to market their tobacco products. Critics say a move to sell half-sized packages, reduced from 20 to 10 sticks per pack, aims to make cigarettes more accessible for cash-strapped youth. Already cigarettes are sold on a per stick basis by informal vendors on Philippine street corners.

Former health undersecretary Alexander Padilla believes that Philippine tobacco firms are now less concerned with targeting adult smokers and have refocused their marketing on youth as "replacement smokers because they will be the future moguls and businessmen who will buy their products".

Cigarettes are comparatively cheap in the Philippines, with a pack of 20 sticks costing roughly 28 to 35 pesos. (Higher taxed packs in the US now sell for five to 10 times as much, depending on the particular state.)

Those low prices - and high tobacco company profits - are directly related to the exceptionally low taxes imposed on Philippine tobacco products. The present tobacco tax is anachronistically based on 1996 retail prices, when cigarettes cost a mere 5 pesos per pack, way below the current 35-40 peso per pack rate. Anti-tobacco lobbyists have continually and so far unsuccessfully pushed for tax reforms, as measures taken by other countries prove that higher taxes and cigarette prices encourages smokers, especially students, to quit the habit.

The WHO estimates that the Philippine government could generate revenues as high as 100 billion pesos annually from higher taxes on cigarettes. Advocate Limpin said President Benigno Aquino, a smoker himself but sympathetic to anti-tobacco measures, has suggested the government could use revenues generated from higher tobacco taxes for his proposed universal healthcare plan.

Tobacco firms, however, are fighting back against higher tax bills and greater legal liability. In one well-publicized case, a lower court last year issued a restraining order against the Metro Manila Development Authority from apprehending people caught smoking in public areas, including transport terminals. In a direct challenge to the PTRA, a PMPMI office worker and a security guard filed two separate cases against their arresting officers. Although they were both charged with smoking in a public place in their personal capacities, PMPMI paid their legal fees.

Cher S Jimenez

Asia Times

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