Why Put to Trial an Icon of Filipino Ingenuity and Productivity

With unfailing tenacity of purpose and hard work for almost seven decades, this all-Filipino enterprise, Mighty Corp. has emerged as a multibillion-peso enterprise in the mainstream economy of the Philippines.

One factor for its success is the hard work to sell a very reason-able price within reach of its target market. 
 

Why Put to Trial an Icon of Filipino Ingenuity and Productivity

In business operation under the guidelines of the Neo-classical economics doctrine, this a reward of a highly successful enterprise, operating at an economy of scale where productivity and profit are maximized and cost minimized.

This is the objective of economic governance under the national policy of “inclusive growth.”

And, therefore, Mighty Corporation must be rewarded by the Philippines Government as an “icon” of the economic achievement of the Aquino government.

BIR Commissioner Kim Henares is right that the new sin tax law has levelled the playing field and thus allow the low-priced cigarette producers to complete efficiently and eat up a large chunk of the premium and sub-premium cigarettes produced by monopolistic. Philip Morris (PM) and partner Fortune Tobacco Corporation (FTC).

“They had an advantage under the old law, but with the new excise tax law or sin tax you level the playing field. Their market was eaten up by other players” he said, at the same time quoting Henares that “their sales went down by as much as 40 percent not because of smuggling that because we have now levelled the playing field.”

MC’s gained threshold has rewarded it with a significant share of the market as reflected in its P5.4 billion tax payments in the first nine months of 2013, and BIR records showed that the amount will exceed P8 million before the year ends. This obviously irked MC’s competitor.

Herewith, the Filipino Enterprises won over the multinational corporation. Therefore, MC must be emulated and recognized so that other Filipino players in the “economics Boxing Area” are given inspiration to do better. The regulatory function of the Philippines Government must be maintained at a level playing field exacting fairness to both contending players in a situation of “price war.”

It is tantamount to graft and corruption when bureaucrats takes side in this battle of prices. It is important, therefore, that economics rights of both contending players must be respected in the exercise of the power of economic governance by the bureaucracy of a nation state.

Indeed, the position of Henares not to interfere or take sides in the market war between MC and PMFTC is commendable.

Otherwise, economic democracy is replaced by a king of economic kleptocracy, where the powers of government are used by a favored camp to protect its interest despite their uncompetitiveness and inefficiencies. This kind of situation leads to a system of market failures and create a fields nation states in the long run to compete in the global markets of the highly advanced societies.

Tiny Tobacco Firm Debunks Smear Job

The only Filipino owned and operated tobacco and cigarette manufacturer Mighty Corporation again answers accusations of unfair business practices, consistently. Mighty denies that they got away last year with P5 Billion tax evasion allegations.

 

Tiny Tobacco Firm Debunks Smear Job

 In paid ads on a broadsheet newspaper, Mighty Corporation put emphasis that they have not engaged in any form of smuggling and tax evasion and noted that they have already remitted to the government P8 Billion in excise tax in 2013.

Mighty Corporation reacted to Finance Secretary Cesar Purisima when he ordered an investigation of the Mighty for manifesting smuggling and massive tax evasion, addressing his memo to the BOC and BIR.

In another statement, Mighty’s Executive Vice President and Spokesperson Retired Judge Oscar P. Barrientos downplayed all allegations and wrongdoings that Mighty Corporation was accused of and said that these allegations are part of a smear campaign.

“There may be a bigger agenda behind the anti-Mighty smear campaign. Reforms in the excise tax systems have obviously dealt a heavy blow to PMFTC.” He said.

Mighty Corporation is owned by the WongChuKing Family that was established in the 1940s. Mighty Corp was the producer of La Campanilla, Magkaibigan, Campana Ringing Bell and other local brands.

The WongChuKing owned company feels that providing the Filipino consumers an option of lower priced but quality products is a way of giving back to their customers through the years.

Mighty Corp. Challenges PMFTC to Reveal fully its Merger or Joint Venture Agreement

The only Filipino-owned and controlled company producing low-priced cigarettes for decades, Mighty Corporation, challenged Philip Morris-Fortune Tobacco Corp. to disclose the nature of their merger.

“In particular, we challenge PMFTC to tell the public the business nature of their closely-guarded monopolistic partnership whether it was a corporate merger or Philip Morris bought Fortune Tobacco’s majority stocks in 2010,” retired judge and MC executive vice president Oscar Barrientos said.

Mighty Dares Rival to Bare Merger Terms

64% of the cigarette market was controlled by Fortune Tobacco before the merger , including the low-priced and premium brands, while Philip Morris had 30%.

Barrientos said the public should know why Fortune Tobacco, the flagship corporation of taipan Lucio Tan’s multibillion-peso conglomerates, gave up its operation and allowed itself to be dominated by Philip Morris.

“The merger is of high public interest issue requiring full transparency because it involves taxation,” Barrientos said.

PMFTC previously asked the BIR to allow the sale of 4 low-priced Marlboro brands under the its name.

Marlboro’s sales significantly decreased due to consumers transfer to low-end brands that sell at P1 per stick, particularly to Mighty Cigarette brands.

Barrientos said PMFTC has registered four P1-per-stick Marlboro brands despite of accusations that Mighty Corporation could not make a profit out Mighty's P1-per-stick cigarettes.

Philip Morris HQ tells investors Mighty Corp is Dodging Taxes

Philip Morris Fortune Tobacco Corp (PMFTC) has openly accused its local competitor Mighty Corporation of tax-dodging. In its recent report and presentation to investors on February 6, Switzerland-based Philip Morris International (PMI) said Mighty Corp is underdeclaring its production to allegedly cut the excise taxes needed to be paid. 

Based on the  presentation to media and investors, PMI (NYSE: PM) said it estimates that Mighty is declaring only half of its production "for tax purposes."

"Retail price of Mighty brand increased to PHP1.50.stick but Marvels brand still sold at price lower than combination of excise tax and VAT [value added taxes]," PMI said.

PMFTC claimed that the act is down-trading and has "impacted" the company market share and profitability. 

According to PMI's full-year and fourth-quarter earnings press release, total sales of the local cigarette industry fell 15.6% to 86.3 billion units last year. It attributed to the decrease implementation of the "disruptive" reform in the excise tax system on the so-called "sin products", which are tobacco and alcohol.

The tobacco giant also blamed the "surge in the prevalence of domestic non-duty paid products," for the drop in the sales.

For 2013, PMI's shipment volume plunged 26.2 % to 68.5 billion due to the sin tax hike and the "under-declaration of tax-paid volume by PMI's main local competitor."

The report said that PMI's market share was cut by 11.4 points to 79.3%, mainly because of the "down-trading to competitors' brands."

The market share of PMI's best-selling brand, Marlboro, dipped 4.2 points to 16.7% while Fortune's share also dropped 17.8 points to 31.6%, which was partly offset by gains from PMI's other local brands.

"In the fourth quarter of 2013, the total estimated industry cigarette volume of 25.0 billion units decreased by 8.9 percent, reflecting a partial, but insufficient, improvement in declared tax-paid volume by PMI's main local competitor as well as government tax enforcement," PMFTC said.

On an earlier news, the sin tax supporters said that Mighty Corporation has been accused of technical smuggling.

Citing a report from the Department of Finance Task Force, the group led by Action for Economic Reforms said there is "substantial unaccounted raw materials" that should have been exported and that there is "potentially huge revenue leakage" that accounted for Mighty cigarettes' low selling price, even below the break-even rate.

In a statement, Mighty Corporation said these allegations are part of the "continuous and unrelenting" smear campaign against it by competitors.

“Mighty Corp. continues to be vilified for having stood up to the industry giant. Since last year, the smear campaign has been nothing more than a rehash of the same lies and allegations,” executive vice president and spokesman Oscar P. Barrientos said.

“It is puzzling and alarming that our critics have resorted to rehashing old issues against us. And we have to ask, why?,” he added.

The Filipino and only local cigarette manufacturer said its "strong performance" in the past 13 months seemed to have "unsettled" PMFTC ,which used to control as much as 90% of the market but dwindled by end-2013.

"Our competitor has thrown everything including the kitchen sink at us and we have just become stronger and better. Obviously Mighty Corp. has proven that even a small local company can go toe to toe with a giant monopoly like PMFTC. But is their smear campaign really just their way of dealing with their failures in the market or is there something more to it?,” Barrientos said.

The company official said there might be a bigger agenda behind the "anti-Mighty" campaign since PMFTC is known to be against the passage of Republic Act 10351 or the Sin Tax Reform Law since this meant the company would lose its monopoly.

“This could be a reason why they are now trying to pin us down, so that they can say the sin tax law doesn’t work,” he added.

On other news, Bureau of Internal Revenue chief Kim Henares earlier said that PMFTC's labor problems would not have happened if the company had agreed from the start to keep the government's original intent of implementing a unitary tax system for the industry.

Mighty Corporation Denies Plant Shut-Down

The Filipino owned market leader in manufacture of low-cost cigarettes, Mighty Corporation, slams it's competitors by telling them to observe ethical standards in doing business said by Executive Vice President and Spokesperson Oscar P. Barrientos during the reports that the company has shutdown its operations was a lie.

Mighty Corporation Executive Denies Plant Shut-Down

The retired judge said the company operations were on track and new equipment and facilities have been installed to make the work flow more efficient.
“Our business operations are normal and on track. It is business as usual for the company,” Barrientos said.

As one of the pioneers in the tobacco industry, Mighty Corporation has become the leading low-cost cigarette manufacturer in the country. Mighty Corporation has two major facilities in Malolos City, Bulacan.  

The rumors of company shutdown was started by MC's  recent comprehesnive maintenance work and installation of new equipment on its plant in Mololos, thus, its competitors used the alleged shutdown to attack the company’s image. 

“Rehashed issues that had no basis in fact” but the rumors were disturbing because it appeared to signal “a new low in the mudslinging campaign.” as the retired judge said about the criticism they have received.

“Efforts to cast Mighty Corporation in a bad light, to the point of resorting to outright lies, are pathetic and lamentable,” Barrientos said. 

“Instead of focusing on improving their business processes, our competitors have resorted to waging a smear campaign against us. This is not good coporate practice,” he added.