BATBC expanding export market using duty free facility

British American Tobacco Bangladesh Company (BATBC)’s annual cigarette sales growth has been increasing despite the rise in tobacco product prices in the domestic market.

To accelerate its sales growth in the international market, it continued to expand its Savar factory’s production capacity taking advantage of zero export duty on tobacco products, according to its latest annual report.

For boosting its exports, BATBC invested heavily in its Savar factories to rev up the production facilities. In the last one and a half years, it invested more than Tk 1,000 crore in the factories in Savar, according to its filings with the Dhaka Stock Exchange.   

In fiscal 2017-18, the National Board of Revenue had increased the export duty on tobacco items to 25 per cent from 10 per cent but relived the factories, set up in the Export Processing Zones or EPZs, of the taxes.

As per the implementation plan, the multinational tobacco manufacturer is set to set up a manufacturing plant in EPZ, Savar, Dhaka. It will cost Tk 322 crore.

“The company has extended the manufacturing facilities in Savar to explore export opportunities of cigarettes in the world market and to meet the local demand,” said BATBC Chairman Golam Mainuddin in its latest annual report.

However, the BATBC’s move was criticised by the anti-tobacco organisations and campaigners saying the government wants to
reduce the consumption or sales of tobacco products by imposing higher taxes but, on the other hand, it offered zero tax on export duty.

Bangladesh Network for Tobacco Tax Policy (BNTTP) Project Manager Hamidul Islam Hillel said, “The government raises cigarette taxes in every budget to make the country tobacco-free by 2040.  On the other hand, the budget is giving additional benefits to the tobacco manufacturers on exports.”

The government must stop giving such benefits to tobacco manufacturing companies, said Hillel.

BATBC did not respond to texts and phone calls for comment.

BATBC’s brand portfolio consists of Benson & Hedges, John Player Gold Leaf, Pall Mall, Capstan, Star, Pilot, Derby and Hollywood.

According to the company’s latest report, its net profit stood at Tk 1,497 crore in 2021, up by 37.5 per cent from Tk 1,089 crore in 2020.