Lahore - Philip Morris Pakistan Limited, which had shut its cigarette manufacturing plants in the country in Feb this year, has fired its 141 employees from Purchasing and Processing Departments mainly due to increasing cost in Pakistan.
Philip Morris Pakistan, formerly Lakson Tobacco Company Limited, earlier in 2012 had also announced to reduce its production at a factory situated in Mandra, district Rawalpindi, due to heavy tax burden and high cost.
Sources in commerce ministry observed that with high taxes, it was not possible for the company to compete with brands, which evade taxes, are far cheaper, make mockery of pictorial health warning laws, are more affordable, and attractive.
The company, one of the multinationals contributing billions of rupees to tax revenue, in a mail sent to The Nation, confirmed that the decision was taken as a result of the unprecedented rise in Pakistan’s illicit cigarette trade which has seriously impacted legal tobacco sales. This reduction in legitimate sales has led to a decline in the company’s leaf purchasing and processing operations which has necessitated the reorganization.
“This exercise will affect 141 employees, all of whom will be offered generous packages that will exceed what is required by law.”
The company announced the decision to reorganize its leaf buying and leaf processing establishments as part of a strategic review to optimize process efficiencies and operational effectiveness, and to best position the company for strong and viable future growth.
Commenting on today’s announcement, Alejandro Paschalides, Managing Director PMPKL said, “This was an extremely difficult, yet necessary decision for PMPKL. Due to significant growth of illicit cigarette trade in the country, we have to review our plans and operations to ensure we are best positioned for future growth.”  
He continued, “We understand that this is difficult news for our employees, particularly those who are directly impacted. We will provide them with support and assistance during this time and we are committed to ensuring that they are treated fairly and with respect. We genuinely appreciate the contributions that each and every employee has made over the years”. PMPKL remains committed to operating in Pakistan, he added.
According to industry sources, tax-evading cigarette makers sell more than 14 billion cigarettes in Pakistan every year but are also expanding their production facilities. Given the enforcement regime in Pakistan where cheap, non-complaint packs are available; it is obvious that operating a compliant business becomes difficult, they said. FBR officials claimed that the sale of tax-evaded cigarettes is causing annual loss of more than Rs14 billion to the national exchequer.
“Difficult economic conditions, significant increases in illegal trade of tobacco and low consumer affordability have impacted the company’s volumes. As a result, it has been decided to lay off employees.”