State tobacco to suffer first time loss in history

Thailand Tobacco Monopoly (TTM) says it is expected to suffer it’s first time loss in history of a tremendous amount of 5 billion baht this year from the government’s recent excise tax increase.

TTM managing director Daonoi Suthinipaphan said the expected huge loss stemmed from the new excise tax law which became effective on September 16 last year.

She said the new excise tax resulted in higher retail prices of cigarettes produced by TTM by 3-20 baht per pack.

But on the contrary, prices of imported or foreign cigarettes which have lower production cost adjusted retail prices slightly, or some brands even lowered retail prices, she said.

This situation, she said, has affected TTM’s market share falling from 80% to 55-60% in February this year, she said.

She said the new excise tax has enabled sellers to reduce retail price for foreign cigarette to 60 baht per pack, while Thai cigarette which was earlier sold at 35-40 baht per pack instead has gone up to 60 baht, or same as foreign cigarettes.

She said TTM’s production this year was expected to be 18,000 million cigarettes a year from its full production capacity of 65,000 million cigarettes after its new factory has officially started operations.

With its huge machinery cost of over 16 billion baht, TTM therefore has to allocate it’s annual profit to pay for the machines with now has 7 billion remainder still unpaid.

She said this year TTM was committed by its contract to pay 2.9 billion baht.

Apart from the machinery cost, TTM still has to pay for the relocation of factory from Rama 4 road in Bangkok to new factory in Ayutthaya, take care of its own hospital’s expenses, buy tobacco leaves 22 baht higher than market price from farmers under the state’s subsidy programme, and 1.5 billion baht renovation for Benjakitti park, she said.

In total, initial estimate of loss was expected to be 5 billion baht this year, she said.

This would be the first time loss of the TTM’s history since it was established and began operation in 1948 or 70 years ago, she said.