In late 2018, Japan Tobacco, the world's third-largest publicly traded tobacco company, acquired Akij Group’s tobacco business in Bangladesh for approximately Tk124.3 billion ($1,476 million). This acquisition established JT International Bangladesh Ltd., marking the single largest private foreign direct investment (FDI) in the country's history.
Tell us about your journey with JTI and JTI in Bangladesh?
My journey with JTI began 23 years ago, after 12 years with other multinational corporations. Having lived in 15 different countries throughout my career, I have developed a deep appreciation for diverse cultures and the unique ways people interact globally.
In Bangladesh, JTI has made significant investments. In late 2018, we acquired a local company for approximately $1,476 million, and since then, we’ve invested additionally around $450 million in operational expenses. We operate three entities here: a commercial office in Gulshan, a manufacturing facility, and a leaf-processing plant. Together, these entities employ around 1,200 people directly, with thousands more employed indirectly and through our network of over 70 distributors. Our presence here vouches for our long-term commitment to Bangladesh’s growth.
How would you assess Bangladesh’s current economy in comparison to countries you’ve worked before?
Bangladesh’s economy has been growing at an impressive annual rate of around 6%, lifting millions out of poverty and into the middle or lower-middle class, which is a remarkable achievement. The country’s young and ambitious population is a key driver of this progress. With a median age of 29 to 30 years, the people here are eager for success, and that energy is palpable.
The population is growing at nearly 1% annually as multiple sources suggest, meaning it translates to a couple of million people entering the workforce every year. This demographic dividend, coupled with the country’s economic trajectory, positions Bangladesh to become a significant player in Southeast Asia and globally within the next 10 to 15 years.
What makes Bangladesh stand out to you, particularly in South Asia?
Bangladesh is distinguished by its unique blend of kindness, hospitality, and ambition. The people here are incredibly accommodating and hardworking, and reminds me of the warmth and hospitality of my home country, Greece. However, Bangladeshis exhibit a more determined pursuit of success, which I believe will benefit the country in the coming years.
What can Bangladesh do to attract more foreign direct investment (FDI)?
Investors prioritize regulatory predictability, political stability, and fair taxation as essential components for long-term planning. For example, in the US, the Trump administration's proposal of reducing corporate tax to 15% for products manufactured in the country is a green flag for investment. Predictability is crucial for fostering a favorable investment climate.
As one of the biggest investors, we are more than willing to support the government and contribute further to the economy. In return, we simply ask for a stable operating environment with fair taxation and policy. Today, for every Tk100 spent on our products, Tk83 goes to the government in tax alone.
How can JTI contribute to Bangladesh’s goal of increasing exports?
Bangladesh’s popularity in RMG export is well deserved, but the over-reliance on this sector is also a well-known challenge. Right now, the biggest task would be to diversify exports. We have made significant exports in the last few years to countries such as Belgium, Philippines, Sudan, etc.
We have the capacity to expand on tobacco export, and by continuing to invest in our manufacturing and leaf-processing units, we remain supportive to Bangladesh’s export ambitions while creating potential economic opportunities.
Globally, there’s a growing trend toward reduced-risk tobacco products. However, these are banned for import in Bangladesh. How do you see this affecting consumer and the economy?
Our philosophy is to respect consumer choices and the local laws and regulation foremost. Reduced-risk products, such as heated tobacco and nicotine pouches, are gaining popularity worldwide because they offer alternatives to traditional cigarettes for the adult smokers. In Bangladesh, however, banning the products from being legally imported will create a missed opportunity for both consumers and the economy.
What are the key challenges and opportunities facing the tobacco industry in Bangladesh?
The biggest challenge is the current tax structure. With 83% of the retail price going to taxes, it’s becoming increasingly difficult to sustain operations.
While we empathize with the government’s need for revenue generation, imposing excessively high taxes on a certain product can lead to collapse of that sweet-spot where revenue continues to be generated, consumption gradually declines and illicit remains at a check.
There are numerous examples of countries who went for similar approaches and had to dedicate significant law enforcement resources to bring back control over the situation as illicit products went as high as over 60% in some countries.
In Bangladesh, the rise of the illicit market would be a devastating economic and industry condition as you can imagine.
On the flip side, there are significant opportunities. The industry can continue to grow government revenues while gradually reducing consumption. This balance allows the government to maintain its revenue streams while addressing public health concerns.
What are JTI’s future investment plans in Bangladesh?
Our immediate focus is on addressing the current tax challenges. Once we foresee a more balanced tax structure, we can explore further investments. In the meantime, we will surely continue to sustain our operations and support our three entities in Bangladesh.
How does JTI engage with local communities in Bangladesh?
Community development is a core part of our mission. Through the JTI Global WASH initiative, we have invested over $2.5 million to improve the access to clean water, sanitation and hygiene facilities for communities in Bangladesh, benefiting more than half a million people in the country and we continue to explore impactful projects to further our mission.
We are always ready to support communities during catastrophic situations such as Covid-19 or natural disasters as well. Only recently, we donated over $200,000 in aid supporting the victims of the flash flooding in Bangladesh.
Our approach is rooted in sustainability, and we believe in taking care of all our stakeholders—employees, consumers, shareholders, and community.
Tobacco control activists often claim that large tobacco companies shift production to developing nations due to stricter regulations in richer countries. How do you respond to this?
Surely, they mean well, but it’s important to recheck their sources. JTI sells its products in over 130 markets worldwide, including highly regulated developed countries like Switzerland, Canada, and Germany.
We adhere to the highest standards of compliance and often go beyond local regulations to ensure ethical operations.
Our presence in developing countries like Bangladesh is because of its market potential and the opportunity to contribute to economic growth, where we legally operate adhering to the law of the land.
For Manos Koukourakis, the country’s young, ambitious population and welcoming culture are signs of a bright future. As he aptly put it, “Bangladesh has the potential to be a significant leader in South Asia, and we are proud to be part of this journey.”
