Public health groups back Laos in ending tobacco industry deal

October 28, Bangkok -- The Southeast Asia Tobacco Control Alliance (SEATCA) and various international health groups have expressed their solidarity with the Government of Laos in its commitment not to renew the Investment Licence Agreement it has held with the tobacco industry for the past 25 years.

The logos of international health groups supporting the end of the tobacco industry deal.

The government’s decision aligns with the 2016 Law on Investment Promotion, which prohibits incentives for harmful industries, and the World Health Organisation Framework Convention on Tobacco Control, which Laos ratified in 2006.
The government signed the ILA in 2001, establishing Lao Tobacco Ltd. as a joint venture between the government and the tobacco industry, expecting it to bring economic prosperity to the country.
Instead, the major beneficiary has been Imperial Brands, which holds a 53 percent controlling stake in the company. Under the ILA, the company was granted an initial five-year exemption from income and dividend taxes, along with low excise tax rates fixed for 25 years and other economic privileges.
The Investment Licence Agreement’s negative impact on Laos’ economy has been significant.
The low excise tax rates, far below those set by newer legislation, have cost the government at least 698.3 billion kip (US$31.9 million) in foregone revenue – funds that could have strengthened public services and promoted economic development.
These extremely low tax rates have also made tobacco more affordable and accessible, contributing to high smoking rates.
In Laos, up to 6,700 people die annually from tobacco-related illnesses, accounting for 15 percent of all deaths in the country, according to SEATCA.
The financial toll of tobacco use, including healthcare expenses and productivity losses, amounts to 3.6 trillion kip (US$164.2 million) each year.
Citing the Investment Licence Agreement as justification, the industry has also refused to pay the tax intended for the Lao Tobacco Control Fund, resulting in an additional loss of 16.7 billion kip (US$76.2 million) in revenue between 2018 and 2023, which has hampered tobacco control efforts.
By not renewing the licence, the Lao government is taking a decisive step to protect its citizens from tobacco-related diseases and premature death and to uphold public health.
Ending the agreement will enable the country to implement stronger tobacco control measures, reduce tobacco use, and collect much-needed funds for public health initiatives and socio-economic development.
The Executive Director of SEATCA, Dr Ulysses Dorotheo, said “The international public health community stands with the Government of Laos as it seeks to end this exploitative agreement with the tobacco industry. The health and well-being of our Lao brothers and sisters must be paramount over any commercial interests, particularly those of the tobacco industry.”
SEATCA is a multi-sectoral non-governmental alliance promoting health and saving lives by assisting ASEAN countries in accelerating and effectively implementing the tobacco control measures outlined in the WHO Framework Convention on Tobacco Control. Recognised by governments, academic institutions, and civil society for its advancement of tobacco control in Southeast Asia, SEATCA received the World No Tobacco Day Award from the WHO in 2004 and the WHO Director-General’s Special Recognition Award in 2014.
SEATCA is an accredited ASEAN entity and an official Observer to the WHO Framework Convention on Tobacco Control Conference of the Parties.

By Advertorial Desk
 (Latest Update October 29, 2024)