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British American Tobacco presses ahead with investments

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By Claudia Ariton
Following sustained investments throughout its 20 years of operations in this market, British American Tobacco (BAT) plans to expand further its Ploiesti-based production facility and turn it into the group's second-biggest cigarette factory in Europe, in keeping with its five-year development strategy.
Over 250 million euro has been invested in the local operations, and an additional 100 million euro will be invested starting January 2017, company officials said.
At the same time, BAT has had a solid contri­bution to the state budget, pouring some 12.5 billion euro into the state coffers over the last ten years. “The same amount would be needed to finish the Bucharest - Brasov high­way or to build no less than 750 football stadiums like the one in Ploiesti, throughout the country,” explains Gemma Webb, the company’s general manager.
The investment in Ploiesti will start in 2017 with the production of “Neopods”, the most advanced technological component, which can be found in the “glo iFUSE” product. This technology allows the combination, within a hybrid product, between the traditional and the electronic cigarettes, without any diffusion of smell, smoke or ash.
“We will continue investing in our plant in Ploiesti, in our products, in our retail sector in Romania and, most importantly, in our people. After the new investments, our plant in Ploiesti will become, in 2017, the second largest factory in our group in Europe. Therefore, we will not only secure the 750 jobs we have already created in Ploiesti, but we will also create 100 more jobs next year. We chose Ploiesti, as it is a modern city, full of life, offering a competitive and suitable environment for investors and providing, apart from a very good infrastructure, access to well-trained people due to the educational facilities and technical universities here. Moreover, in order to transform Ploiesti into an even better business environment, the local authorities constantly support its development. That’s why we are here,” said Gemma Webb.
The group operates in the local market via three divisions, which are the plant in Ploiesti, the national distribution company and the services center which serves the British American Tobacco operations in all Europe. Through all these three divisions, the company is planning to offer a stimulus of around one billion euros to the Romanian economy, apart from the 8.2 billion euro representing direct taxes to the state budget. “If we maintain the actual contribution to the state budget, in the next five years we will pay over eight billion euros to the Romanian state, through taxes or VAT. With the stimulus, we are talking about a total sum of over nine billion euros,” said the general manager.
According to Gemma Webb, British American Tobacco is one of the main contributors to Romania’s state budget, its contribution amounting to around one percent of GDP, being one of Romania’s main exporters. Over 50 per cent of the company’s local production is exported to 35 countries, such as Japan, Brazil, Russia, Great Britain, Denmark and Italy. “This percentage will grow along with the de­velopment of the production capacity,”
Gemma Webb said. She added: “Romania is a good place for investment. It has a growing economy, talented and well-trained people and a competitive level of taxes. We are proud to contribute to Romania’s economic growth, which has become the strongest in the European Union in 2016. The unemployment rate has also gone down, nationwide. So, in the last three years, the number of employees at British American Tobacco has almost doubled, rising from 1,200 in 2013 to over 2,000 now. At the moment, we are planning to increase our production at the Ploiesti factory, considering the group’s recent decision to close down a plant in Germany. Therefore, through the investment that we are going to make here, and through constructive dialogue with the Romanian authorities, we wish to secure our long-term commitment to Romania.”
One threat that needs to be eradicated is the tobacco black market. “Romania has over 2,000 kilometers of borders with countries that aren’t members of the European Union. And that makes it vulnerable to illegal product trafficking. British American Tobacco is a valuable partner to the authorities in the fight against this phenomenon. In spite of all these efforts, the black market in Romania costs the state budget almost half a billion euro every year, reducing the Romanian state’s capacity to make the necessary investments in infrastructure. We believe the Government should avoid the introducing legislation that has a negative impact on the legal tobacco market, but encourages the black market, diminishing the income to the state budget and exposing consumers to products of uncontrolled origin,” emphasized the British American Tobacco
general manager.

The interview is also available in our print edition of Business Arena.

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