People's Cigarette Factory

Long ago in 1959, before Singapore launched its anti-smoking campaign, before the ban on cigarette advertisements, before smoking in public places was prohibited by law, the then Minister of Commerce and Industry, Mr J. M. Jumabhoy proposed in the Legislative Assembly that the government build a "People's Cigarette Factory" as a revenue earner for the Singapore Island (as the Republic of Singapore was known during the colonial days, before independence in 1965).

Cigarette manufacturing was considered a lucrative business venture then.

The proposal sparked off a controversial debate between the government and the established cigarette manufacturers.

The following is the reproduction of an advertisement by SINGAPORE TOBACCO COMPANY published in The Straits Times of January 27, 1959 (Page 13):

QUOTE:

Mr Jumabhoy's statement that a People's Cigarette Factory, serving Singapore Island, could make a profit of $9 million annually is open to criticism.

The figures he quotes gives the impression that the Singapore consumer of cigarettes smokes one type, or category, of cigarettes only, and this is far from the actual fact.

Mr Jumabhoy takes as the basis of his calculations just one of the higher priced lines (which, before the recent change, retailed at 40 cents for 10 cigarettes), but he ignores the lower price categories of imported brands which amount to 33% of the total sales in the Island and on which there is no profit. Also omitted is local manufacture (which benefits from the existing low rates of import duty on cut tobacco) which amounts to 21% of the total sales. Presumably, the three local manufacturers will be allowed to continue in business. Therefore, if the People's Factory caters for the "little man" as Importers and local manufacturers do at present, this would immediately and considerably reduce the unrealistic profit that has been estimated.

One cannot start up a cigarette factory overnight either at full capacity or at 100% efficiency, particularly when workers have to be trained in the specialised processing of tobacco, and the operation of complicated machinery. The preliminary period would, therefore, show no profit, and it would be some considerable time before optimum profits could be reached - no businessman would expect otherwise.

Mr Jumabhoy talks in terms of 150 million monthly, but surely profits will depend upon whether every smoker will smoke what Mr Jumabhoy forces upon him, and that either no cigarettes will be smuggled in the Island from elsewhere, or that, when smuggled in, the consumer will disdain them.

Profit Tax seems to be overlooked. If no tax is paid on the profit of the People's Cigarette Factory, the money will have to come from other sources as obviously Government revenue must be maintained.


J. C. HOSGOOD
Chairman

S'pore, 26/1/59

UNQUOTE