Thailand Tobacco Monopoly

The Thailand Tobacco Monopoly, known as TTM, is a state enterprise which had a monopoly in Thailand over the manufacturing and distribution of tobacco products.^[1]

The conclusion of the ASEAN Free Trade Area agreement in 1992 has since meant that foreign tobacco companies can distribute cigarettes in Thailand. Foreign companies have increased their market share in the country.^[1]

History

TTM was established in 1939, initially in collaboration with British American Tobacco, but since 1949, TTM has operated under the complete control of the Ministry of Finance.^[2]

Operations

TTM procures tobacco leaf via eight TTM offices around the country, as well as importing tobacco from international suppliers. TTM produces 19 brands of cigarettes. Sales in 2009 were 50 billion baht, including exports. Net profits were 5.8 billion baht. Export sales in 2009 were down 60% on 2008. TTM’s leading brands are Krongthip 90, WONDER American, WONDER Menthol, Falling Rain 90 and Gold City 90. At the end of 2009, TTM had 4,247 employees.^[3]

TTM is one of the most profitable state enterprises, returning substantial revenues to the state treasury.^[4]

In November 2011, TTM announced it was looking for a tie up with a global tobacco company in order to enhance TTM’s technology and management. Though TTM has a domestic-market volume share of 79%, foreign tobacco products have a 75% share of the market’s value. TTM is aiming to improve the efficiency of its operations before tobacco import duties are eliminated under the ASEAN Free Trade Area agreement and the ASEAN Economic Community is formed in 2015.^[4]

Management

TTM is managed by a board of directors and an executive team led by the managing director.^[5]

The Acting Chairman of TTM, Mr. Amnuay Preemanawong, is also the Inspector General of the Ministry of Finance.^[6]

Mr Torsak Chotimongkol is the managing director of TTM.^[4]

Corporate social responsibility

The stated mission of TTM is to deliver revenue for Thailand’s national development. TTM claims to act with social and environmental responsibility, aiming to use more environmentally friendly equipment and reduce toxic residues on tobacco leaves. TTM has provided training to help farmers to control insecticides and pesticides. TTM has been involved in tree planting and raising awareness of global warming. TTM has provided some support to education, public health services, sport, and religion.^{[7] [8]}

TTM is associated with the Thai Premier League football club, TTM Phichit F.C. which was founded by TTM employees in 1963 as Thailand Tobacco Monopoly FC.

Controversies

In August 2010, three major US tobacco merchants pleaded guilty to charges relating to the payment of bribes to officials of TTM. According to US court documents, from 2000 to 2004, subsidiaries of Dimon Inc., Standard Commercial Corp., and Universal Corp., sold Brazilian-grown tobacco to TTM. Each of the three companies retained sales agents in Thailand, and collaborated through those agents to apportion tobacco sales to TTM among themselves, coordinate their sales prices, and pay kickbacks to TTM officials in order to ensure that each company would share in the Thai tobacco market. To obtain these sales contracts, Dimon paid bribes to TTM officials totalling $542,590 and Standard paid bribes totalling $696,160, during the course of the four years. Universal admitted that its subsidiary in Brazil paid approximately $697,000 in kickbacks to TTM officials during the period.^[9]

In May 2005 Dimon Inc. and Standard Commercial Corp. merged to form Alliance One International, a leading independent leaf tobacco merchant serving the world's largest cigarette manufacturers.^[10]

References