The Philippines is positioning to be a production hub for heated tobacco products in the region as the government and manufacturers stepped up the advocacy for less toxic cigarette alternatives.
Trade Undersecretary Ceferino Rodolfo said that as demand for conventional tobacco products like cigarettes continued to slip annually with the emergence of HTPs, the Philippines has the potential of to be a hub for HTP manufacturing.
“The Philippines is a global player when it comes to conventional tobacco products. While its footprint is currently small, opportunities to specialize and be globally-competitive in emerging segments/high-tech products such heated tobacco products emerges,” he said in a presentation during the first day of the Tobacco Summit at Shangri-La at the Fort in Taguig City.
Given the single-digit growth of global demand for tobacco products and foreseen reduction in the local demand for the conventional cigarettes, HTPs present a viable market opportunity, as well as another means to increase government revenues.
Rodolfo said the Philippines could leverage bilateral agreements through free trade agreements where it can serve as a manufacturing hub to supply HTPs to key markets.
As a global player, the Philippines is guided by legislated policy on tobacco and tobacco products while ensuring a fair and level playing field for Philippine tobacco and tobacco products.
Close to 500,000 agricultural workers are dependent on tobacco farming, but the declining global tobacco output and area planted to tobacco endanger the livelihood of local farmers.
Despite the general global trend of decline in tobacco hectarage, designated areas in the Philippines planted to tobacco steadily increased by an average of 0.76 percent in the last five years.
Ilocos Region sustains its position as the largest tobacco farming region, contributing 66.8 percent to total output, followed by Cagayan Valley with 24.4 percent, Region 10 with 4.9 percent, Cordillera Autonomous Region with 3.3 percent and other areas with 0.7 percent.
The Philippines is the 16th largest world producer of unmanufactured tobacco at 50,931 metric tons and 21st largest exporter of tobacco products at $535.6 million or 1 percent of global exports. Globally, the tobacco market was valued at $867 billion in 2022 and is projected to grow by 2.1 percent annually until 2030.
The Philippines continues to be a net exporter of unmanufactured and manufactured tobacco with values reaching $218.6 million in 2022. Tax revenues collected from tobacco amounted to P160 billion in 2022 and the industry’s contribution to Philippine economy was estimated at P1.4 billion in 2022.
Market research firm Euromonitor said from 664.7 million sticks in 2022, retail sales of HTPs in the Philippines was expected to increase to 4.06 billion sticks by 2027 equivalent to P32.8 billion.
The top 10 export markets of Philippine tobacco are South Korea, Thailand, Singapore, Malaysia, Myanmar, Indonesia, Dominican Republic, Cambodia, Maldives and India.