Published:  12:21 AM, 16 March 2019 Last Update: 12:22 AM, 16 March 2019

Impacts of JTI's Investment in Bangladesh cigarette market


In this capitalistic world, while any large investment in a crude commercial sense is beneficial, it is also crucial to analyze its impact from the other side of the spectrum. It is pertinent to consider the geopolitical, socio-economical, cultural and health impact of it. Tobacco-related investment is something with entangles the other factors mentioned above in a massive manner.

Bangladesh is one of the largest cigarette markets ranking at number eight in terms of consumption and manufacturing of tobacco-related products. Being such a large market, a number of laws have been put in place by the government to govern the sector. Mostly, these laws and taxes have been instituted in place basically as an attempt to control and reduce the consumption of tobacco in the entire country.

In August 2018, however, Japan Tobacco Inc. purchased Akij group for approximately 1.5 billion dollars. At the time, Akij was the country's second-largest tobacco company with a 20% share of the market. The move proved that the market is still viable despite the several laws and taxes installed in place to manage the sector. The entry of the company has raised some serious concerns as regards to the effects that the company might have on the existing law, the government and the social well-being of citizens.

The procurement of Akij signifies an aggressive push by the company into new markets as sales of its products within the Japanese market are shrinking especially considering the high at which people in the country are quitting the habit of cigarette smoking. Furthermore, the investment definitely contradicts Bangladesh's government agenda in making the country tobacco-free by 2040. In actual fact, JTI's traditional markets are shrinking due in part to new regulations that are quite unfavorable to tobacco companies.

The growing pressure, especially from the health workers, is also another major cause for concern. For that reason, JTI is clearly competing with its competitors to gain footholds in newer markets especially where regulations are more likely less restrictive. In that respect, Bangladesh's large market perfectly suits their intentions in boosting their profitability.

Under the Foreign Private Investment (Promotion and Protection) Act 1980, the government may in the view of promoting foreign private investments authorize such establishments with foreign capital for any given industrial undertakings and which does not exist within the country and that the establishments prove quite desirable. In addition, the establishments may not be available in the country at a scale adequate enough to accommodate for the economic and social needs of the country.

To larger extents, the establishment may prove more likely to positively contribute to the development of capital, technical and managerial resources in the country and in this case for the overall welfare of the Bangladesh citizens. In this regard, the investment may offer increasing employment opportunities for the citizens or to the overall economic development of the country as a whole.

It is however arguable as to whether the JTI's investment fulfils the criterion as mentioned under the Act, and even if it does so, whether considering the adverse effects of such an investment the source of approval and in this case from the government.

It has been considered that JTI will introduce new cigarette brands in Bangladesh. Their products will suite a wider range of markets since more people are subscribing to the habit of smoking. It is estimated that there will be a consistent 2 per cent rise in tobacco consumption of tobacco yearly. This will be reflected in illnesses such as lung cancer, stroke, and heart disease. Bangladesh is still a third world country that is still developing.

The health facilities in hotspots of advanced tobacco consumption are not well developed to handle such cases to the required standards. In areas where there advanced medical  facilities, the affected citizens are required to part with huge amounts of money, which to the detrimental of many may prove unaffordable. As a consequence, this will definitely lead to increased premature deaths of citizens closely associated with the negative health effects tobacco has on the human body.

In Bangladesh, many young adults and the youth still in school are considered to be smokers. Those addicted to smoking within learning institutions may have poor performance since cigarette smoking has been linked to the reduction of activity in the nervous system and the brain.

Cigarette smoking has also been perceived as a gateway to the use of other drugs such as heroine, Phensidyl, cannabis, sedatives and Yaba. These drugs are linked to increased criminal activates leading to the youth being killed through mob justice and other ending up in jail for abuse of illegal substances. The use of these drugs also leads to many of the young citizens to drop out of school.

JTI has a very high demand for tobacco to satisfy its market. The entry will most certainly give rise in farming activities to quench the needs as regards to raw materials of the company.

There will be an increase in deforestation to plant tobacco. Clearing the land for tobacco is mostly done by burning which generates huge air, water, and land pollutants. Tobacco is also considered as one of the most chemically intensive crops. Farmers use inorganic fertilizers to promote growth in conjunction with herbicides to control weeds. Most of the herbicides and pesticides used are banned or restricted but are still being used despite their many environmental effects.

The venture of JTI had negative effects on the local firms. The profits of the existing cigarette firms have been dwindling with increased competition. It is feared that some companies may be completely knocked out of business as JTI will continue to establish its dominance. With companies being at the brink of closure, there is a fear that there might be widespread unemployment as a significant number of the citizens depend on these firms for employment.

In conclusion, the entry of JIT into Bangladesh is perceived to be disadvantageous to the citizens and the country in general. This is met with criticism since the entry has been very advantageous to some people. Farmers are getting more income due to the rise in demand for raw materials. There has been a rise in employment as people are needed for their services in farming activities, manufacturing, and transportation. The government is also making a lot of revenue from taxes from tobacco-related products which have recently become more elaborately defined.

Although some people are facing the negative effects and others positive, this is subject to change over time as the company gradually becomes part and parcel of the country. Furthermore, such massive investment in this sector is a clear testament to the proliferation of tobacco consumption in Bangladesh. Hence the hazardous impact in regards to health issues outweighs the economic development.

Sayed-Ul-Haque Dinar, a Barrister-at-Law from Lincoln's Inn, is Advocate, Supreme Court of Bangladesh. Faisal Mahmood Anabil, also a Barrister-At-Law from Lincoln's Inn, is an Accredited Mediator, Adr-Odr International, UK

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