Japan Tobacco Inc. (JTI) has viewed with apprehension the government’s approval of a plan allowing a Swiss-based company to negotiate with the Bureau of Internal Revenue (BIR) to track manufactured cigarettes in the country for purposes of taxation.

JTI Philippines general manager Roger Lamb said the approval was one more source of regulatory unpredictability in a country that has one of the world’s most rigorous excise-tax systems.

Lamb said JTI, along with colleagues in the industry, should soon come up with a common stand formalized as a position paper expressing their grave misgivings.

“We are very concerned of the reported approval. We were quite surprised that government, the National Economic and Development Authority [Neda] gave its approval without consulting us,” he said.

According to Lamb, allowing the Swiss firm Sicpa SA to impose its technology on locally manufactured cigarettes will add a layer of cost that could ruin their individual business plans.

Under the Sicpa proposal, new technology developed by the Swiss firm will enable the government to track and trace each manufactured stick of cigarette or cigar so that these may be taxed accordingly.

Lamb said the industry is apprehensive the technology will prove expensive, and that the cost will be passed on to the industry, forcing them to pass on the added cost to consumers as well.

“This is really what we mean when we said the local regulatory environment is unpredictable. Businessmen hate unpredictability,” he said.

Lamb stressed that while they have their reservations, this did not mean they do not understand where the government stands as far as revenue generation is concerned.

“We support the principle but we are apprehensive of how this was going to be implemented eventually,” he said.

JTI sales in the first nine months suffered a downturn, but Lamb said they should be able to report a positive number at the end of the year.

JTI, through Fortune Tobacco Corp., manufactures the Winston and Camel brands in the Philippines and undertook to distribute the products by themselves rather than through Fortune Tobacco since the start of the year.

The change has proven confusing to its sales forces and customers alike, and sales number contracted as a result.

Lamb reiterated the company should be able to post a positive sales number at the end of the fiscal year.