Ayda A. Yurekli Coordinator, Tobacco Control Economics Tobacco Free Initiative WHO

Transcription

1 DIRECT INVESTMENT & PRIVATIZATION OF STATE- OWNED TOBACCO ENTERPRISES Ayda A. Yurekli Coordinator, Tobacco Control Economics Tobacco Free Initiative WHO World Conference on Tobacco or Health Singapore, March 23, 2012

2 DIRECT INVESTMENT & PRIVATIZATION Opening of markets resulted in increased openness to direct investment Investment in new production facilities By far the most widespread Privatization of former government owned/operated tobacco companies Joint ventures between local monopoly and multinational tobacco companies For example, PMI, BAT and Vietnam, Cambodia, Laos Source, Yurekli, Shin &Chaloupka, in press 2

3 State-Owned Tobacco Monopolies or Significant State Ownership in Tobacco Enterprises, by Region, 2010 Region Countries Europe Belarus, Bosnia-Herzegovina, Bulgaria, Moldova, and Tajikistan Western Pacific Cambodia, China, the Democratic Republic of Korea, Japan, Laos, Myanmar, Taiwan, Thailand, and Vietnam Eastern Mediterranean Algeria, Egypt, Iran, Iraq, Jordan, Lebanon, Libya, Syria, Tunisia, and Yemen Americas Bolivia and Cuba Southeast Asia None Africa None Source, Yurekli, Shin &Chaloupka, in press

4 GLOBAL TOBACCO INDUSTRY STRUCTURE 4

5 Source: Euromonitor 2012 SHARE DISTRIBUTION OF THE GLOBAL TOBACCO MARKET, 2011

6 DIRECT INVESTMENT & PRIVATIZATION Public health concerns about Foreign Direct Investment (FDI) and privatization government won t adopt higher taxes, strong tobacco control policies widespread use of sophisticated marketing practices Tobacco use will be higher than it would be otherwise Public health benefits of privatization Eliminates conflict of interest between revenues generated from production/sale of tobacco and health/economic benefits of tobacco control Source: Yurekli, Shin & Chaloupka, in press 6

7 DIRECT INVESTMENT & PRIVATIZATION Can be good or bad for public health depends on how it s done & how committed the governments are for tobacco control Source, Yurekli, Shin &Chaloupka, in press 7

8 PER CAPITA CONSUMPTION IN SELECT COUNTRIES OF FORMER SOVIET UNION Source: ERC 2009 and authors' calculation

9 PER CAPITA CONSUMPTION IN COUNTRIES WITH STATE-OWNED TOBACCO ENTERPRISES Source: ERC 2009 and authors' calculation

10 Per Capita Consumption in countries with state- owned enterprises Source: ERC 2009 and authors' calculation

11 CIGARETTE CONSUMPTION IN PRIVATIZED COUNTRIES Source: ERC 2009 and authors' calculation

12 CASE STUDY - UKRAINE PRIVATIZATION OF DOMESTIC MONOPOLY AFTER THE THE COLLAPSE OF THE SOVIET UNION 120,000 Cigarette Consumption in Ukraine 100,000 Million Pieces 80,000 60,000 40,000 20, Source: BI Economics of tobacco control Ukraine by Ross et et.al.,

13 DIRECT INVESTMENT & PRIVATIZATION Cigarette Prices, Ukraine, Nominal & Real Retail Price of Branded (Marlboro) Cigarettes in UAH Nominal Retail Price Real Retail Price 4.00 UAH Source: BI Economics of tobacco control Ukraine by Ross et et.al.,

14 DIRECT INVESTMENT & PRIVATIZATION Cigarette Prices, Ukraine, Source: BI Economics of tobacco control Ukraine by Ross et et.al.,

15 DIRECT INVESTMENT & PRIVATIZATION Cigarette Prices, Ukraine, Source: BI Economics of tobacco control Ukraine by Ross et et.al.,

16 TURNING AROUND GOVERNMENT'S COMMITMENT

17 Dynamics of changes in rates of excise tax on tobacco UKRAINE EXCISE TAX POLICY Jan Filter cigarette Specific tax, $/ 1000 cig. Sept 2008 Feb 2009 May 2009 Jan 2010 June 2010 Jan 2011 rate of growth 2010 to % Ad valorem, % Minimum tax $/ 1000 cig. Ave.Price/ pack, $ % % % Source: Krasovsky 2012

18 Dynamics of changes in rates of excise tax on tobacco UKRAINE EXCISE TAX POLICY January 2008 Sept 2008 Feb 2009 May 2009 Non-filter cigarette Jan 2010 June 2010 Jan 2011 rate of growth 2010 to 2008 Specific $/1000 cig. Ad valorem, % Minimum tax $/ 1000 cig. Ave.Price / pack, $ % % % % Source: Krasovsky 2012

19 DYNAMICS OF EXCISE TAX CHANGES IN UKRAINE Source: Krasovsky 2012

20 Source: Krasovsky 2012 UKRAINE

21 MAXIMUM RETAIL PRICES OF CIGARETTES IN UKRAINE Price, $ Source: Krasovsky 2012

22 UKRAINE AND ITS NEIGHBORS' TAXES Ukraine 2011 Russia 2011 Russia 2012 Moldova 2011 Poland 2011 Filter cigarette: specific tax, $/ ad valorem, % minimum tax $/ х 87.3 Non-filter cigarette: specific tax, $/ ad valorem, % х minimum tax $ / х 87.3 Source: Krasovsky 2012

23 Source: Yurekli et al 2011, ERC 2009 SUCCESS STORIES AFTER PRIVATIZATION

24 TOBACCO TAXES IN TURKEY, TAX INCREASES IN TURKEY EXCISE TAXES Year Ad valorem Minimum Specific/pack Total Excise Rate on Retail Price VAT Rate on Retail Price Total Tax Rate on Retail Price % 49.5% % 64.8 % % 55.3% % 70.6 % % AND 0.35 YTL % % 71.6 % 1.00 YTL 2005 ** 58.0 % Or 1.20 YTL 60.2% % 75.5 % % Or 1.20 YTL 59.4% % 74.6 % % Or 1.55 YTL 58.2% % 73.5 % % Or 1.55 YTL 58.1% % 73.3 % 2009*** 58.0% Or 2.00 YTL 58.6% 15.25% 73.9% % Or 2.65TL 63.0% 15.25% 78.25% % Or 2.90TL 65.25% 15.25% 80.3% Source: Yurekli, et al., 2010, and MoF Turkey official Gazette 2011

25 NO CLEAR RELATIONSHIP BETWEEN CONSUMPTION AND THE PRIVATIZATION OF TOBACCO INDUSTRIES Consumption has declined in some countries that have adopted strong tobacco use prevention and control measures after privatization. However, consumption is rising in other countries that have not adopted such measures, particularly those in which taxes and prices have remained low, no matter whether cigarettes are produced by Multinational Tobacco Companies or state-owned cigarette manufacturers. Source: Yurekli, Shin & Chaloupka, in press

26 DIRECT INVESTMENT & PRIVATIZATION Best Practices for public health Make no agreements with multinational tobacco companies that would inhibit government s ability to adopt strong tobacco control policies Become a Party to the WHO FCTC, adopt comprehensive tobacco control policies Regular tax increases that reduce the affordability of tobacco products Strong, comprehensive smoke-free policies Comprehensive ban on tobacco product marketing Other effective policies/programs Source: Yurekli, Shin & Chaloupka, in press 26