Chinese Cigarettes seeking to enter the Sri Lankan Market

In May 2019, addressing a press briefing, Minister of Finance, Mangala Samaraweera announced the government’s willingness to entertain applications from cigarette importers. He also declared that the government is considering a proposal to import Chinese cigarettes. Minister further justified this action by stating it would raise the tax revenue from cigarettes and meet the demand of Chinese workers in the country. He argued that the Chinese expats smoke cigarettes in large quantities and they prefer cigarettes originating from China over Sri Lankan brands.

The Chinese Ambassador was involved in the incident, too. Minister Samaraweera continuously claimed that the proposal was brought because Chinese Ambassador highlighted the issue and brought his attention to it. The Chinese ambassador to Sri Lanka Cheng Xueyuan publicly expressed his unhappiness on restrictions in purchasing Chinese cigarettes in Sri Lanka stating it is a non-welcoming gesture towards Chinese tourists. As of 2019, Sri Lanka’s foreign debt is estimated at $ 55 billion approximately. China holds 14% of the total Sri Lankan debt (approximately $ 7.7 billion), thus, Sri Lanka is frequently identified as a ‘victim’ of the Chinese debt trap.

A range of criticism emerged against the decision to open the Sri Lankan market to Chinese cigarettes. Tobacco control advocates pointed out that this decision would open the Sri Lankan cigarette market to new tobacco companies possibly leading to increased availability, affordability and accessibility. Further they elaborated that due to an absence of a transparent and rational tobacco taxation mechanism the government lost Rs. 100 billion over the past five years. If the aim of the minister is to increase the revenue for the country, government could easily do that by applying a rational tax policy for the existing cigarette brands. Minister of Health Rajitha Senarathna publicly criticised the proposal saying that he would leave the government if it’s implemented. He further stated that the application for the Chinese cigarette import license was made by a leading alcohol manufacturer in Sri Lanka. The governing board of the National Authority on Tobacco and Alcohol (NATA), the government authority to control tobacco and alcohol in Sri Lanka, announced that they would resign from the NATA Board if the proposal is implemented.

In the presence of strong opposition, Minister of Finance Managala Samaraweera decided not to allow importing Chinese cigarettes.

 

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