Lai See
PUBLISHED : Tuesday, 19 February, 2013, 12:00am
UPDATED : Tuesday, 19 February, 2013, 4:57am

Government could save lives by raising cigarette taxes

BIO

Howard Winn has been with the South China Morning Post for two and half years after previous stints as business editor and deputy editor of The Standard, and business editor of Asia Times. His writing has also been published in the Far Eastern Economic Review, the Wall Street Journal, and the International Herald Tribune. He writes the Lai See column which focuses on the lighter side of business.
 

Readers may know that Hong Kong's poor air quality has accounted for an average of 3,200 premature deaths over the past five years. The government is finally making noises about doing something about it. But an even bigger killer is tobacco-related deaths. These amount to 7,000 deaths a year in Hong Kong, and about six million globally. Indeed as a letter from the Hong Kong Council on Smoking and Health in our august organ pointed out yesterday, one in every two smokers dies from a tobacco-related disease. This is a figure that is now accepted by the World Health Organisation. Hong Kong's record in tobacco control has not been bad over the past 20 years. But given the chilling effects of smoking on both those that smoke and those around them, from passive smoking, Hong Kong needs to upgrade its efforts to get ahead of the curve. Firstly it needs to increase the tax on tobacco. All the authorities, WHO, the World Bank and others agree that price is one of the biggest deterrents, particularly among young people. The WHO recommends that cigarettes be taxed at a minimum of 70 per cent of the retail price. In Hong Kong, the tax on a packet of 20 cigarettes selling for HK$50 is about 68 per cent, which is by far the lowest among developed countries. In Sydney, the same brand of cigarettes sells for HK$139.60, in New York HK$95.87, London HK$90.70, and Singapore HK$76.50. Another aspect of smoking is the high hospital costs of treating tobacco-related diseases, which in Hong Kong amount to HK$6 billion a year. So there are a number of compelling reasons for the financial secretary to raise the tobacco tax in his forthcoming budget.

 

Fresh air, fresh thinking

Every cloud, as they say, has a silver lining. Hence although Beijing's ghastly smog is a nightmare for its inhabitants, it is a boon for companies selling air purifiers. Some of the biggest suppliers of these products - Panasonic and Sharp - are Japanese. Japan and its products have not exactly been flavour of the month in recent times on the mainland. However, despite this lack of warm feeling towards Japan, Bloomberg reports that Sharp's sales of air purifiers on the mainland tripled last month compared with a year ago, while Panasonic's soared 50 per cent. Consumer appliance outlets in and around Beijing say that sales of air purifiers have increased tenfold in recent months. Is there perhaps the germ of a solution here to the tensions between the mainland and Japan, along the lines of we'll help with your dirty air in Beijing if you do something about the hot air around the Diaoyu/Senkaku islands?

 

Banking on Buffett

Why has Warren Buffett's pursuit of the food business Heinz pushed up food stocks on the Shanghai stock exchange? Buffett has appalling taste when it comes to food, enjoying Coca-Cola and burgers. But his instinct on stocks, while not faultless, has more often been right than wrong. His like of strong brands such as Coca-Cola and Heinz is similar in many respects. Heinz has experienced steady growth in recent years and was barely hurt during the recession. It pays out more than US$600 million a year in dividends, is one of the world's leading packaged food companies, and its brands are a bestseller in more than 50 countries. In recent years the company has made strong inroads into Asia, which is perhaps what has caught Buffett's attention. One of the sad facts of Asian development is that as countries get richer they start eating the ghastly food that has given developed countries their obesity epidemic. The Heinz deal has directed the minds of investors to these prospects and this has been reflected in the upward movement of food stocks not only in Shanghai but elsewhere, in anticipation of further movement in this sector.

 

Swiss roles least bouncy

Some cheery research from the website efinancialcareers shows that of those leaving the nine biggest banks in London, only some 28 per cent re-emerge in comparable roles. This is based on a study of Britain's Financial Services Authority Register over the past 12 months. Efinancialcareers says rates of re-employment vary according to firms, with people leaving US banks being the most likely to find new roles. However, those at Swiss and French banks appear to have the most difficulty in bouncing back.

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