BELGRADE, April 24 Japan Tobacco International
(JTI) will officially start production at its Serbian plant on
Wednesday, and has plans to invest another $100 million in the
country, a company spokesman told Reuters on Tuesday.
JTI, owned by the world's third-biggest tobacco maker, Japan
Tobacco Inc (2914.T), paid $35 million euros for 98.5 percent of
Senta Tobacco Industry in May 2006, with a further $10 million
invested since then.
The plant in the northern town of Senta has a production
capacity of some five billion cigarettes a year.
"Over the next two to three years we will invest $100
million in Serbia," said JTI spokesman Andre Benoit. "The
investment will include business operations and production."
The tobacco industry has been one of Serbia's most
attractive sectors to foreign investors, with a total $1 billion
earned in privatisations of state owned factories since 2001.
The main players are Philip Morris, one of the world's top
tobacco producers, owned by the Altria Group (MO.N), with its
production facility in the southern town of Nis, and British
American Tobacco (BATS.L) with a factory in Vranje.
As part of the deals, investors in the tobacco sector were
promised protection and preferential treatment until 2009
through Serbia's high excise taxes on cigarette imports.
They were alarmed when Serbia decided to join the Central
European Free Trade Agreement last year, meaning its high excise
burden would have to be scrapped and local cigarettes would lose
their competitive price advantage over imports.
Belgrade has tried to reassure tobacco producers that it
will find a way to implement CEFTA without hurting their
interests, but has revealed no concrete strategy yet.