Rise in Cigarette Output, Exports

EghtesadOnline: A total of 54.8 billion cigarettes were produced in the last fiscal year (March 2019-20), indicating a 13.7% growth compared with the year before.

News ID: ۷۸۵۵۶۲

14 July 2020

While 154 million cigarettes were exported, which registered a 2.7% increase, the ban on imports remained in effect.

Notably, Jordan and Austria made to the list of Iran’s cigarette export destinations for the first time in the year ending March 2020, according to Ataollah Maroufkhani, the head of Industries, Mining and Trade Ministry’s affiliate, the Iranian Tobacco Planning and Supervision Center.

The decision to halt imports does not mean no foreign cigarettes entered Iran; the Industries Ministry estimates that 10.03 billion cigarettes were smuggled into the country in the last fiscal year, as 65 billion cigarettes were smoked in the country during the period, which registered a year-on-year decline of 39.2%.

Tobacco exports stood at 2,374 tons, posting a surge of 161.3% while 21 cigarette and 39 tobacco factories were active last year compared with 20 cigarette and 33 operational tobacco factories in the year before, ISNA reported.

According to the head of Tobacco Products Importers and Exporters Association, Mohammad Reza Tajdar, due to complications associated with the provision of foreign currency from the so-called secondary FX market, known by its Persian name Nima, for importing cigarette raw materials, seven cigarette and tobacco factories have suspended their operations and the remaining enterprises are working at 50% of their capacity and only one is operating at 70% of its capacity.

The Central Bank of Iran has recently changed the import category of cigarette raw materials from Group II to Group III, suggesting that importers have to meet their forex requirements from exporters who are not required to offer their forex earnings on secondary FX market rather than those who have to offer their earnings on the market like exporters of non-oil products, such as petrochemicals, steel and minerals.

Noting that Iran’s tobacco industry, which employs 50,000 people, needs imported raw materials worth €300 million annually to stay afloat, Tajdar said, “Imports account for 70% of the raw materials needed by the industry. Unless CBI allows the provision of forex from export earnings traded through Nima, the share of contraband cigarettes is bound to increase from 20-50%. Cigarette is not an essential good, no question about that, but it is consumed by 12 million people in the country.”

The government earned 17,023 billion rials ($75 million) from tax on cigarette consumption in the year ending March 2020, Fars News Agency reported.

The figure indicates a 50% rise compared with last year.

Tax on cigarette sales increased by 22.8% to reach 7,868 billion rials ($34.7 million) last year compared with 6,406 billion rials ($28.25 million) in the fiscal 2018-19.