Japan Tobacco International has been consistently increasing its contribution to the Serbian economy every single year for the last 14 years. Although industry has been impacted by the pandemic in Serbia, JTI has managed to sustain its core plans and keep up with investments
Atruly challenging year is behind us, but Japan Tobacco International managed to maintain its business during the pandemic. Despite the difficult times, the company showed exceptional care for employees and adapted swiftly to the new circumstances, resulting in it receiving the prestigious Top Employer Serbia Award for the sixth year in a row. Furthermore, the company just opened the new JTI regional headquarters in New Belgrade.
“Our industry has been less affected by the pandemic than some others, but we had our share of consequences. As I speak for both the Serbian and Western Balkan markets, we noted reduced consumption and downtrading,”says Victor Veklitch, Vice President and General Manager for Adriatica at Japan Tobacco International (JTI).
However, thanks to its strong fundamentals, JTI managed to be the only tobacco company in the Western Balkans to grow its market share.
“In Serbia we managed to sustain our core plans. Having tobacco leaf production, Japan Tobacco International remains the industry’s biggest employer in Serbia, with 3,000 people engaged from the fields in Vojvodina to shops across the country,” says Veklitch.
JTI suffered no workforce reductions due to the COVID crisis and also remained the country’s fifth biggest taxpayer.
“We have been consistently increasing our contribution to the Serbian economy for the last 14 years – every year,” concludes Veklitch.
Were these results a matter of luck under the circumstances of the pandemic, or something else?
– We must primarily thank our people for these achievements. Our focus during the pandemic was on providing a safe and motivating working environment, but also on maintaining team spirit by organising virtual events and communication. Looking forward to overcoming the COVID restrictions, we just opened JTI’s new regional headquarters in New Belgrade, which is worth three million dollars! This new modern and highly flexible office space will make our work together and day-to-day tasks easier and more enjoyable.
I’m happy that JTI’s dedication during this difficult year has been recognised and that we were awarded with the certificate Excellence During Challenges, as a company that showed exceptional employee care and adapted rapidly to the new circumstances. We also received the prestigious Top Employer Serbia award for the sixth year in a row.
Are you satisfied with your cooperation with the Serbian Government; are they open to listening to the needs of business?
– The key to predictability in our industry, irrespective of the pandemic, is a stable tax policy. Our contribution in Serbia is big: excise duties on tobacco products account for 8.3% of total budget revenues and 10% of total tax revenues. I am glad to say that the Serbian Government and National Assembly extended the tobacco excise duty calendar for five more years, thus providing both predictability and further growth of tax revenues for the state budget. In five years, Serbia will attain the minimum EU standards of taxation, thus this is also an issue of harmonisation with the EU.
Illegal trade in tobacco also impacts massively on your industry and state revenues. Has this part of the grey economy changed during the pandemic? How is your company contributing to preventing illicit trade?
Illegal tobacco trade did not slow down, especially in the distribution of bulk tobacco. “Creative” smugglers have found new channels to their consumers, such as social networks and websites. It is important that the government’s taskforce on the illicit tobacco trade, led by Police Director Rebić, continues the fight against illicit trade, with intensified inspections and strict penalties.
JTI IN NUMBERS
• Tobacco industry’s biggest employer: total of 3,000 people engaged
• Serbia’s fifth biggest taxpayer: 2.6 billion dollars paid since the factory’s acquisition in 2006.
• Capital investments: more than 180 million dollars
• Value of exports: 300 million dollars since 2007
• Contribution to the Serbian economy in 2020: almost 317
JTI will continue providing satellite surveillance of tobacco fields, thus allowing the government to have a direct impact on preventing the supply of illegal tobacco. Since launch of this system in 2017, the Police have destroyed around 250 hectares of illegal tobacco fields that had the potential to damage the state financially by some 327 million euros, which is equivalent to the cost of building 30 kilometres of motorway. JTI also donated sniffer dogs to customs officers and the police , as well as supporting the Trade Inspectorate’s project aimed at preventing online sales of tobacco. An effective fight will keep the illegal share of consumption in single digits and unable to steal from the state budget.
Has the crisis changed your investment plans?
– Although this is a challenging period for the entire planet, we are very proud that we’ve been able to keep investing in our business. JTI’s contribution to the Serbian economy in 2020 was almost 317 million dollars, from capital investments to taxes and salaries.
What is your expectation from the business environment in Serbia in 2021? Do you expect the Serbian economy to recover quickly?
– It is difficult to predict anything in this time of uncertainty that’s been brought to us by the pandemic, but I hope that the new year will bring better living and working conditions. The fact that Serbia’s economic contraction in 2020 is among the lowest in Europe provides solid ground for optimism in the future. The state implemented a large fiscal package, among the largest in emerging Europe, to support businesses and jobs, and it is not unrealistic to expect predicted GDP growth of 5.5%. This progress comes from the significant efforts of President Vučić and the Government, who have done a lot to maintain the economic performance at a high level despite the difficult times.
Serbian President Vučić and Japanese Ambassador Katsumata visited one of JTI’s farms last December. How have you managed to maintain your cooperation with primary producers?
We are strategically committed to the development of tobacco production in Serbia and target 50% purchase of Serbian tobacco crops.
We are proud to be both the largest producer and the only foreign company that buys domestic tobacco. At the same time, it is a great responsibility for us – with about 3,000 tobacco growers, members of their families, seasonal workers and our employees earning from our production. We are truly thankful to President Vučić and Ambassador Katsumata for continuously supporting us and our partners. That provides great motivation to continue setting new business records.