Japan Tobacco (JTI) will invest $80 million to open a new tobacco processing plant in Kazakhstan’s Almaty region, Zakon.kz reported. As of now, JTI is a major investor in the Kazakh economy and one of the top ten taxpayers, having contributed about 530 billion tenge in taxes to the country over the past five years.
The investment will increase JTI’s cigarette production by about 20% while providing new jobs for at least 100 people.
Philip Livingston, Senior Vice President of JTI’s Global Supply Network, said that JTI has steadily increased its share in Kazakhstan and the global market. The modernization of the Almaty plant is important for the entire region, as tobacco products from the region will be exported to Kyrgyzstan, Mongolia, Tajikistan, Armenia, Uzbekistan and Turkey.
“The investment of tens of millions shows the importance we attach to the Kazakh market, where our share already exceeds 42 percent. This gives us the ability to strengthen our position as a cigarette manufacturer.”
According to him, the new tobacco raw material processing line will make the country self-sufficient in cigarette production and expand the variety of products for export.
However, the main problem for the tobacco market at present is smuggling and counterfeit cigarettes.
Mr Livingston said: “This is a serious and growing problem and we look at it in two ways. First, it poses a risk to the quality and health of our consumers. Second, it causes the country to lose revenue. Kazakhstan lost an estimated $63 million last year. Therefore, we provide training to representatives of government agencies and tell them how to identify counterfeit products.”
Viktor Veklitsch, President of JTI Kazakhstan, Central Asia and Mongolia, further explained that smuggling is currently the main problem facing Kazakhstan, with smuggled products mainly coming from the UAE and being sold in the local market at very low prices.
“Three years ago, illegal products accounted for 3 percent of total sales in Kazakhstan, and today they are 10 percent,” he said. Therefore, we are now trying to draw the attention of the government to this problem. Playing an important role in this issue is the implementation of a moratorium on retail inspections. Although illegal products are being sold, we are unable to take measures as inspections are suspended.”
JTI therefore recommends that consideration be given to excluding taxable goods from the inspection suspension.
JTI has now set new and ambitious targets. The company plans to be carbon neutral by 2030. In addition, it plans to switch entirely to using recyclable or reusable packaging materials.
JTI is a leading international manufacturer of tobacco products and low-risk products, with approximately 46,000 employees in 70 countries and headquarters in Geneva, Switzerland.