BAT, JTI express concerns over formation of new trade association

British American Tobacco Bangladesh (BAT) and Japan Tobacco International (JTI) Bangladesh have expressed concerns over the formation of a new trade association of cigarette manufacturers without the inclusion of these two major companies.

In separate letters sent to Commerce Adviser Sk. Bashir Uddin, the top two companies in the tobacco sector raised their concerns.

The letters stated that disregarding the opinions of stakeholders, a new association named as “National Cigarette Manufacturers Association (NCMA)” was approved in last December by the then Commerce Secretary.

This organization has been formed without the involvement of the country's leading tobacco companies, which is discriminatory and contradictory to the Trade Organization (TO) Act. The companies are concerned on the probable negative impact on the country’s business, trade, and foreign investment environment, as a result of such decision from the ministry.

The letters to the Ministry of Commerce mentioned that in 2001, “Bangladesh Cigarette Manufacturers Association (BCMA)” was formed with 12 member companies. However, due to the impact of the COVID-19 pandemic and the closure of many local businesses, the activities of the association became stagnant.

Subsequently, in 2022, Ministry of Commerce canceled the association’s license. In the same year, local cigarette manufacturers started forming their own organization called “Locally Owned Cigarette Manufacturers Association (LOCMA)”, and applied for a TO license from the Ministry of Commerce. BAT and JTI were not included in that organization at the time. When this was brought to the attention of Ministry of Commerce, a hearing was held in 2023, where both sides presented their views. Based on the 'Trade Organization Act-2022,' the then Director General of the Trade Organization (TO) wing of the Ministry directed to form an inclusive association ensuring the participation of all stakeholders. The representatives of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) also expressed the same opinion.

However, unfortunately, this directive from the Ministry was not followed. Furthermore, in 2024, the name clearance of the LOCMA became invalid. After this, the local manufacturers changed the name of their organization to “National Cigarette Manufacturers Association (NCMA)” and applied for the TO license. In response, the Ministry of Commerce invited BAT Bangladesh and JTI, along with the local producers, to a hearing. However, for unknown reasons, the date of the hearing was postponed multiple times. Despite being the top revenue contributors in the country, the two major companies were excluded, and on December 2 of the previous year, the hearing was held without their participation. Consequently, the former Commerce Secretary hurriedly approved NCMA’s to license application without discussing it with the two major companies.

The letter further stated that “BAT Bangladesh and JTI collectively contribute nearly 95% of the revenue from cigarette sector. Therefore, formation of any industry-specific association without our inclusion would be contrary to the Trade Organization Act. Last year, we have exported tobacco leaf worth more than $200 million from this sector. We believe that there are ample opportunities for us to work together in the future. For effective management, we believe only one trade organization representing all legitimate revenue-paying manufacturers in the cigarette sector would be appropriate. For the interest of maintaining a foreign investment-friendly environment, BAT and JTI have called for urgent steps to create an inclusive trade association through discussions with the relevant organizations and urged Ministry of Commerce to act promptly.