Tobacco Industry Country Profile – Pakistan

Pakistan

The Islamic Republic of Pakistan is the world's sixth-most populous country with a population exceeding 207 million. Geographically, it is the 33rd largest country, spanning over 796,096 square kilometers.

The modern Pakistan was established in 1947 after partitioning of India under the British rule. Presently, Pakistan is comprised of four provinces (Punjab, Sindh, Balochistan and Khyber Pakhtunkhwa [KPK; previously known as the Northwest Frontier Province (NWFP)], one federal territory (Islamabad Capital Territory) and two autonomous territories (Azad Kashmir and Gilgit-Baltistan). Majority (96.28%) living in Pakistan are Muslims. It is considered a ‘young nation’, with a mean age of 23.4 in 2016. As of 2017, life expectancy at birth is 68 years for females and 67 years for males. The government of Pakistan provides free primary and secondary education, but the mean years of schooling for children is as low as 5.2 years. The literacy rates have improved over time to be 72.5% in males and 51.8% in females by 2018.

Image 1: Pakistan. Source: Google Images

Pakistan has the second-largest economy in the South Asia region, with a GDP growth of 5.8% in 2018. The structure of the economy of Pakistan has changed from a mainly agriculture to a strong service base. At present, services contribute to 58.8% of the GDP, while the same for agriculture and industry are 20.9% and 20.3% respectively.

Pakistan ranks 152nd in the Human Development Index Ranking (2018) with a HDI value of 0.56.

Tobacco Use

Pakistan is one of the biggest tobacco consuming countries in South Asia with 23.9 million tobacco users. According to the Global Adult Tobacco Survey (GATS) statistics in, 2014, prevalence of tobacco use in any form is 19.1% with 31.8% reported rate among men and 5.8% reported rate among women. Every one in ten Pakistani adults smoke cigarettes on a daily basis with a total of 15.6 million smokers in the country. Prevalence of smoking is 12.4% in total and 22.2% among men and 2.1% among women. Sheesha smoking is common in Pakistan with an overall prevalence of 3.0%. Prevalence of smokeless tobacco use is 7.7% with 11.4% rate among men and 3.7% rate among women.

Burden of Tobacco in Pakistan

Based on the Study on Global Burden of Disease by Institute of Health Metrics and Evaluation, USA, approximately 163,360 people died due to tobacco use in Pakistan, in 2017. Global Tobacco Youth Survey in 2003 reported that 2 in 5 smokers initiated cigarette smoking before the age of 10. According to the findings of the Pakistan Demographic & Health Survey 2012-13 for ever-married men and women aged 15-49, 39% of households reported daily exposure to secondhand tobacco smoke.

According to the estimates of the Tobacco Atlas, approximately 160,100 Pakistani people die due to adverse effects of tobacco usage every year. The annual economic cost of smoking in Pakistan is as high as Rs.143 billion.

Tobacco Industry in Pakistan

There are two major multinational cigarette companies in Pakistan controlling almost 96% of the legal market. Pakistan Tobacco Company (PTC), a subsidiary of British American Tobacco (BAT), is one of the oldest tobacco companies in Pakistan and controls 66% of the legal market. Philip Morris International (PMI), via its subsidiary Philip Morris Pakistan Limited (PMPKL) controls around 30% of the legal market at present.

There are some other local industries operating in Pakistan, but their market share is not significant. Some of these other tobacco companies are:

• Sarhad Cigarette Industries Ltd
• Souvenir Tobacco Co. Ltd
• Khyber Tobacco Company
• Imperial Cigarette Industry

According to a recent study done in 2018 by Fikar-e-Farda Welfare Organization (FFO), 15.9 out of 100 cigarettes smoked are from the illicit trade in Islamabad. Out of this, 10.7% cigarettes were smuggled and 5.2% were low priced or not duty-paid (Image 2).

Image 2: An image from the FFO report on illicit cigarettes, presenting the licit and illicit brands observed in the market

Role of Tobacco Industry in the Economy

Pakistan produced 117,750 tons of tobacco in 2017 and is the 8th largest tobacco growing country in the world. Although tobacco is cultivated throughout the country, more than 3/4 of the country’s production is cultivated in the Khyber Pakhtunkhwa (KPK) province. Most of this domestically grown tobacco is used for local cigarette manufacturing. Employment in tobacco farming accounts for only 0.4–0.5% of agricultural employment in Pakistan. According to the [www.ptb.gov.pk/ Pakistan Tobacco Board], the government institution in Pakistan to promote tobacco cultivation, there are 75,000 tobacco growers in Pakistan, of which around 60% are located in KPK Province. They produce 90% of the Flue Cured Virginia (FCV) tobacco leaf, the main ingredient of cigarettes, and contributed to around Rs. 89 billion in Federal Excise Duty/Sales Tax in 2013-14.

According to latest financial information declared by Pakistan Tobacco Company, its gross profit for first three quarters (Jan – Sep 2019) is Rs. 19.47 billion whereas it was Rs. 19.65 billion in 2018. Philip Morris Pakistan (PMPK) Limited reported a loss for the same period in 2019.

Corporate Social Investments

Philip Morris (Pakistan) Limited (PMPKL), an affiliate of Philip Morris International (PMI) and Pakistan Tobacco Company are very much engaged in different kinds of social activities such as working with the local NGOs to rehabilitate burn indury victims, fight against child labour, and plantation of saplings for reforestation. It also provides vocational training to women from low-income households, works on social inclusion for women with disabilities and sets up medical camps targeting vulnerable communities.