Published On: Wed, Mar 9th, 2016

FDI impending Pakistan cigarette industry

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Pakistan cigarette industrySince the last three years, Pakistan cigarette industry has witnessed an increase in FDI (Foreign Direct Investment), according to Pakistan Bureau of Statistics. Despite of the high taxes in the sector, the cigarette industry has still been attracting foreign investors. $84.3 million o total foreign investment consisting of $44.5m FDI and $39.8m FPI (foreign portfolio investment) in FY13.

FDI started $92.4m of $94m total foreign investment, hence changing the pattern in FY14, with FPI of $1.6m only. In FY15, the foreign investment in tobacco and cigarettes rose to $115m, including $112m FDI and $3.5m FPI. So, in the time span of three years the Pakistan cigarette industry engrossed $293m in foreign investment.

Pakistan’s FDI fell from $6.96bn in FY07 to $851m in FY15, making Pakistan a less favorite country for foreign investors.

Pakistanis spend hundreds of billions of rupees on smoking each year. Although smoking is not prohibited in the region, the promotional advertisements of cigarettes brands are banned since many years.

Pakistan produces around 123bn cigarettes whereas according to a State Bank of Pakistan report the consumption is 65bn cigarettes a year, spending of around Rs300bn. This is highly against the global trend that has been adapted in developed and developing countries to see smoking as a criminal act.

In the meantime, the profits from the sector have doubled from $12.5m to $6.8m in first seven months of the fiscal year compared to the corresponding months in the previous year, FDI comparison stands at $50m to $60m.

The tobacco industry’s target markets are the lowland middle-income countries where the cigarette consumption is more than 80%. $744bn of retail value of cigarettes were sold in 2014, that is around 5.6 trillion cigarettes sold to more than 1 billion smokers in the world.

About the Author

- An enthusiast working in Dubai as an Assistant Operations Manager. Writing about Pakistan and the latest happenings, trends around the globe is my passion. A dreamer, learner and a major foodie.