PTC faces export orders delay due to regulatory hurdles

ISLAMABAD: A production-related regulatory obstacle threatens to cost Pakistan Tobacco Company (PTC) one-third of its export orders for the upcoming fiscal year.

According to a company spokesman, the PTC, the country’s second-highest taxpayer and recipient of the Prime Minister’s Excellence Award, has until mid-May to deliver cigarettes to Sudan in packs containing ten sticks, but the Ministry of Health’s regulations for packaging have proven to be a barrier.

Sudan placed an export order worth $20.5 million with the PTC, requiring the item to be shipped in packets containing ten sticks of cigarettes each. PTC authorities claim that while the selling of cigarettes in small packets containing ten sticks is prohibited under Pakistani regulations, this restriction does not exist in Sudan.

Since 2019, PTC has been exporting cigarettes to several international markets, generating $156 million in revenue for the nation to date. The company plans to export $60 million in the upcoming fiscal year, but because the Ministry of Health is unwilling to change the Statutory Regulatory Order (SRO) for export, a third of the order is in jeopardy.

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The PTC received the second-highest taxpayer award from Prime Minister Shehbaz Sharif last month across all tax categories. Among the top five recipients of the highest taxpayer award in the category of all taxes, PTC was the only non-government-owned company. The high indirect taxes on tobacco used to deter smoking were one of the factors contributing to the award’s receipt.

The corporation paid Rs148 billion in sales tax and federal excise duty to the government last year; smokers were essentially responsible for this amount because smoking is heavily taxed in Pakistan. It appears that the government is merely looking to extract money from these companies and is unwilling to deal with their real economic problems.

No cigarette producer in Pakistan may produce, sell, or offer for sale any cigarettes unless they are packaged in a packet of 20 or more, in accordance with the Prohibition of Sale of Cigarettes to Minors rule.