Decision No. 1988/QD-BCT dated April 01, 2013 of the Ministry of Industry and Trade approving the master plan on tobacco products and tobacco developments

THE MINISTRY OF INDUSTRY AND TRADE

Decision No.  1988/QD-BCT dated April 01, 2013 of the Ministry of Industry and Trade approving the master plan on tobacco products and tobacco developments

Pursuant to the Decree No. 95/2012/ND-CP dated November 12, 2012  of the Government defining the functions, tasks, powers and organizational structure of the Ministry of Industry and Trade; 

Pursuant to the Decree No. 92/2006/ND-CP dated September 07, 2006 of the Government and the Decree No. 04/2008/ND-CP dated January 11, 2008 of the Government amending and supplementing a number of articles of the Decree No. 92/2006/ND-CP of the Government dated September 07, 2006 on making, approving and managing the master plan on socio-economic development;

Pursuant to the official dispatch No. 1689/VPCP-KTN dated March 01, 2012 of the Governmental Office on authorizing for approval of the master plan on master plan on tobacco products and tobacco developments;

At the proposal of the Director of Light Industry Department,

DECIDES

Article 1.To approve the mater plan on producing tobacco products and developing the tobacco material region in Vietnam till 2020 with the following principal contents:

1. Development viewpoint

1.1. Regarding tobacco production

a. The State holds monopoly in provision of tobacco products, including production and import, strictly control activities of tobacco business. Only State-owned enterprises already being licensed and enterprises being venture between the licensed enterprises and foreign partners, in which the State hold dominant shares are entitled to produce tobacco products.

b. Production of tobacco products is a conditional investment field. Prohibit investment in new construction, expansion of facilities producing tobacco products for domestic consumption exceeding the output allowed production of tobacco products as inscribed in license. The Ministry of Industry and Trade shall provide output allowed production of domestic-and foreign-branded tobacco products of enterprises in conformity with each period.

c. Production of new foreign-branded tobacco products for consumption in Vietnam must be in scope of the output allowed to produce of whole the tobacco industry and must be accepted by the Prime Minister.

d. Investment in plants processing tobacco raw materials must be conformable with demand on processing tobacco raw materials of plants producing cigarettes, except for case of investment in processing tobacco raw materials for export.

dd. The State will regulate the output allowed to produce but not be used all by enterprises in excess for enterprises, which used all their current output to avoid wastefulness of power sources of State and society.

e. To further organize, re-arrange enterprises producing tobacco products in concentrated and large-scaled direction; to conduct the modernization about equipment and technology to meet requirement on enhancing product quality, minimizing harmfulness, protecting environment, having high economic effectiveness, and having high competition ability.  

d. Intensive investment, renewal of equipment and technology for the modern and advanced tobacco production to restructure the product in direction of increasing product value and quality, minimizing harmfulness and  protecting environment. In which strongly restructure products in direction of increasing the medium- and high-grade products’ proportion and gradually decreasing the common tobacco’s proportion to meet the domestic consumption demand, strengthen export, and contribute in solving evils of contraband tobacco.

1.2. Regarding tobacco raw materials

a. Developing production of domestic raw materials with the aim to gradually replace import, link the processing stage with development of raw material regions, promoting the potentials of land, labor contributing in implementation of the general socio-economic objectives such as hunger elimination, poverty reduction, rural industrialization and contributing in reduction of import deficit.

b. Pushing up the scientific research, improving science and technology qualification of tobacco industry equal to the qualification of countries in region.

2. Development objectives

2.1. Overall objectives

- Step by step building and re-arranging the tobacco industry to develop in direction concentrated in focal enterprises with large scale, modern and advanced equipment and technology qualification to increase product value and quality.  Gradually decreasing content of Tar and nicotine, minimizing harmfulness for consumers and environment protection. Enhancing the competition in international economy integration, meeting the domestic market, enhancing export and gradually solving evils of smuggled tobacco.

- Developing the intensive production regions, regions growing tobacco trees with high productivity and quality meeting requirements on producing tobacco raw materials with high quality in conformity with requirements on restructuring products, gradually replacing import raw materials and pushing up export.

2.2. Specific objectives

a) Regarding produced output

- By 2015: whole the tobacco industry will produce and consume about 5,440 million packages, the average growth during 2011-2015 will be about 1.55%/year, of which tobacco produced and consumed in Vietnam will be 4,200 million packages. The industrial production value growth of sector will attain between 16 and 17 thousand billion VND (at the price of 1994), the average growth will attain 3.5 – 4%/year; production of export tobacco will attain 1,241 million packages, export turnover will attain between 160 and 170 million USD, the average growth will attain 7-8%/year.

- By 2020: whole sector will produce and consume about 5,740 million packages, the average growth during 2015-2020 will be about 1.08%/year, of which tobacco produced and consumed in Vietnam will be 4,400 million packages, the industrial production value of whole sector will attain between 19 and 20 thousand billion VND (at the price of 1994), the average growth will be 3.3-4%/year, export production will attain 1,340 million packages, export turnover will attain 230 million USD, the average growth will attain 7-8%/year.

b) Regarding area, productivity and output for growing tobacco trees:

- By 2015: the area for growing tobacco trees of whole country will attain 28,940 ha, average productivity will attain 2.25 ton/ha, output will attain 65,300 ton. Over 50% domestic raw materials will be used to replace for import raw materials to produce tobacco with high-grade label, meeting partly the use demand of cigarette plants and export.

- By 2020: the area for growing tobacco trees of whole country will attain 31,960 ha, average productivity will attain 2.36 ton/ha, output will attain 75,500 ton. To stabilize area of raw material regions, the agricultural growing technical qualification will attain the advanced level in the world, to produce a large part of kinds of raw materials for the medium-and high-grade tobacco.

c) Regarding processing tobacco raw materials

By 2015, all enterprises producing cigarettes must use 100% of the processed tobacco raw materials.

3. Development orientations

- Intensive investment, renewal of equipment and technology in direction of modernizing equipment chain, technology and automation with the aim to improve technology in tobacco production in direction of decreasing Tar, nicotine, thrift of raw materials but not increasing the production capability.

- Developing the domestic tobacco products to contribute in enhancing effective prevention and fighting of tobacco imported illegally and tobacco with bad quality. Structuring products in direction of increasing the medium- and high-grade tobacco’ proportion and gradually decreasing the common tobacco’s proportion, pushing up production of export tobacco.

- To implement international cooperation to use capital and technology in cigarette production to improve product quality, fight against fake tobacco and smuggled tobacco.

- Concentrating in building some strong national trademarks to compete effectively in international economic integration.

- Investing in regions growing tobacco to promote potentials of land, labor, meeting partly demand of tobacco and tobacco raw material production for export. Paying attention to development of growing tobacco in mountainous, depth-lying and remote areas, contributing in hunger elimination, poverty reduction.

- Pushing up the science and technology research and application, improving science and technology qualification of tobacco industry equal to the qualification of countries in region.

- Further arranging, reorganizing the tobacco industry according to 4 focal units included Vietnam National Tobacco Corporation, Saigon Industry Corporation, Khanh Viet Corporation, Dong Nai Food Industrial Corporation; moving the plants causing pollution out city.

4. Planning production

4.1. Planning tobacco production

a) Regarding organization and arrangement of enterprises producing tobacco

Planning tobacco production in direction of organizing, re-arranging enterprises producing tobacco products into big focal units, merging enterprises with small scale and ineffective production and business. By 2017, all enterprises producing cigarettes must attain the output of cigarettes produced and consumed is over 100 million packages / year, in case of failing to attain the above output, they will be forced for merger or dissolution.

b) Regarding output

Producing cigarette products for export, producing cigarettes for domestic consumption based on effective control and prevention against smuggled tobacco. By 2015: Whole the tobacco industry will produce 5,441 million tobacco packages, of which tobacco produced for domestic consumption will be 4,200 million packages, export tobacco will be 1,241 million packages.

By 2020: Whole the tobacco industry will produce and consume 5,740 million packages, of which tobacco produced for domestic consumption will be 4,400 million packages, tobacco produced for export will be 1,340 million packages.

c) Regarding structure of tobacco products consumed domestically

To concentrate on production of medium-and high-grade tobacco kinds, gradually decreasing proportion of common tobacco.  To diversify products such as producing tobacco with light taste, wrapping and designing in diversity and conformity with preferences of consumers, reducing weight of fibers in cigarette by advanced technical methods with the aim to meet demand and contribute in protecting healthy of consumers.   Structure of tobacco products as follows:

d) Regarding roadmap of Tar and nicotine reduction

To implement Law on tobacco harm prevention, to research measures to gradually decrease content of Tar and nicotine in cigarettes, from the present time to 2020 as follows:

4.2. Planning the development of regions growing trees for tobacco raw materials and plants processing tobacco raw materials

a) Planning the development of regions for tobacco raw materials (detailed in Annexes I and II enclosed with this Decision)

- To concentrate on development of tobacco raw materials in regions with potentials of land, socio-economic and pedagogical conditions suitable with tobacco trees to develop regions of tobacco raw materials with quality, meeting requirements on processing and preparation of the cigarettes and export to become the intensive-cultivation regions in producing tobacco raw materials. Gradually decreasing regions growing raw materials that have low productivity and quality and dispersal.

- Area, productivity, output of domestic tobacco raw materials by 2020 as follows:

b) Planning the processing of tobacco raw materials (detailed in Annexes III enclosed with this Decision)

From now to 2020, not invest more plants processing tobacco raw materials (for separating fibers), except for case of investment in processing tobacco raw materials for export.

5. System of solutions and policies in implementing master plans

a) Management solutions

- To further complete the policy mechanism and manage the tobacco production and business operation to develop tobacco industry in accordance with orientation, control consumption about quantity, quality; avoid loss of the State budget.

- To strengthen inspection, supervision of use of trademarks, labels, design of products, combat against contraband goods, counterfeits, goods with bad quality with the aim to ensure benefits of consumers and enterprises.

- To regulate the output allowed producing but not be used all by enterprises in excess for enterprises which used all their current output to avoid wastefulness of power sources of State and society.

- To strengthen investment in domestic and international market investigation, research and forecast to have sufficient and exact market data supporting for enterprises in sector to capture market as well as opportunities for exporting products.

- To facilitate for organizations, individuals to invest in development of regions growing tobacco raw materials with the aim to replace import and meet the export demand.

b) Solutions about market and products

- To elaborate strategies on business and market development. To study market, preferences of customers to have solutions meeting demand, keeping firmly and developing share of market. To consolidate and reorganize reasonably the system of distribution, through big focal centers in each region, master the wholesale market, toward to control of retail system.

- To conduct selective investment to form and develop key products in each segment, each market. Gradually remove small products with the aim to concentrate power source and market on key products.

- To develop potential labels of export cigarettes, expand the export market to new markets through cooperation or processing for export of tobacco labels for foreign partners.

- To consolidate and strengthen the competition of medium-and high-grade products in market, units should have key medium-and high-grade products, produce cigarette products with high quality, reduce harmfulness under the roadmap to meet domestic demand and export.

c) Solutions about investment

- To invest essentially in fields that replace the old and obsolete machines, equipment by machines, technological equipment with high technological and automatic level, minimize environment pollution; to combine with renewal of technology, equipment, application of solutions on saving energy and raw materials.

- To invest in science research and foreign technology application in several fields such as raw materials, cigarettes, quality control of products, ancillary materials; gradually invest in production of fiber tobacco, cigarettes abroad for markets exporting products with the aim to bring higher added value.

- To re-arrange the facilities of tobacco production and business to promote the general power, increase competition of tobacco with international label produced in Vietnam compared to foreign tobacco imported illegally.

d) Solutions about science research and technology transfer

- To push up research, application and improvement of technology imported from foreign countries based on expanding international cooperation, to serve timely and effectively for tobacco production.   To improve the science and technology level in tobacco production equal to level of countries in region.

- To further research the technical process, assay the new foreign tobacco varieties to select varieties that are suitable with climate and pedagogical conditions of Vietnam. To use biological technology to create tobacco varieties with high productivity and quality, able to anti pests, suitable with each region growing tobacco of Vietnam to meet the demand of replacement of raw materials imported from foreign countries.

- To improve activities of international cooperation, information exchange and receive technology transfers in production of tobacco and tobacco raw materials and ancillary materials.

dd) Solutions about development of raw material production

- Centrally invest in regions of raw materials with quality, able to replace a part of import raw materials and serve for export. To focus on concentrated investment in regions growing yellow tobacco with high quality; to research production or cooperate in production of leaf tobacco raw materials with high quality in serve for domestic production and export.

- To select productivity and quality potential varieties suitable with land and pedagogical conditions of each region; to improve and implement strictly the technical processes such as sowing, planting, harvesting, drying and grading to create products with high quality, and so on

- To strengthen venture or association for investment in growing tobacco in serve for domestic production and export; to strengthen relation and cooperation with foreign partners to calling investment in production of tobacco raw materials in Vietnam.

e) Solutions about human source

- To further renew policy on managing human source from the recruitment, arrangement of jobs, wage policies, assessment on effectiveness of jobs; strengthen the vocational training for laborers, especially laborers in tobacco raw material field.

- To elaborate and carry out program on training human source; to further improve skills in management and executive of managers in  enterprises in the modern and professional management direction.

g) Solutions about environmental protection

- To invest in renewal of technology, machines and equipment of chains processing raw materials, fibers, chain of machines and equipment for producing cigarettes with the aim to raise product quality and overcome dispersal and pollution at discharging sources.

- To use technology processing tobacco smell through system of purging, cooling and biological filtering, cleaner production technology to prevent pollution and improve environment.

Article 2. Implementation organization

1. The Ministry of Industry and Trade shall assume the prime responsibility for, and coordinate with other Ministries, relevant sectors, localities in announcing, propagating, guiding, implementing the master plan; examining, supervising implementation of master plans; proposing to competent authorities for adjusting mechanisms, policies to be suitable with actual status during implementing the master plan.

2. Other Ministries and sectors of: Planning and Investment, Finance, Science and Technology, Agriculture and Rural Development, Natural resources and Environment, Public Health and the State bank of Vietnam shall, within their assigned competent and functions, coordinate with the Ministry of Industry and Trade in organizing implementation of this master plan.

3. People’s Committees of central-affiliated cities and provinces shall coordinate with the Ministry of Industry and Trade and Ministries, sectors in concretizing the master plan in provinces, cities in conformity with the local master plan on socio-economic development. Coordinate with the Ministry of Industry and Trade in examining and supervising implementation of the master plan.

4. Vietnam Tobacco Association shall coordinate with the Ministry of Industry and Trade, localities in propagating, popularizing the master plan; guiding enterprises in Association to comply with the master plan and other provisions of law.

Article 3. This Decision takes effect on the signing date.

Article 4.Ministers, Heads of ministerial-level agencies, Government-attached agencies, presidents of municipal/provincial People s Committee shall implement this Decision. 

The Minister of Industry and Trade

Vu Huy Hoang

ANNEX 1

PLANNING ON DEVELOPMENT OF REGIONS GROWING RAW MATERIAL TREESFORDRIED-YELLOW TOBACCO BY 2020
(Issuedwith the Decision No. 1988/QD-BCT dated April 01, 2013 of the Ministry of Industry and Trade)

ANNEX 2

PLANNING ON DEVELOPMENT OF REGIONS GROWING RAW MATERIAL TREES FOR BURLEY AND BROWN TOBACCO BY 2020
(Promulgated together with the Decision No. 1988/QD-BCT dated April 01, 2013 of the Ministry of Industry and Trade)

ANNEX 3

PLANNING ON PROCESSING RAW MATERIALS TILL 2020
(Promulgated together with the Decision No. 1988/QD-BCT dated April 01, 2013 of the Ministry of Industry and Trade)