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Exports of Korean cigarettes drop on tax hike in key markets

Exports of cigarettes, which rank top on the list of export items tracked by South Korea’s Agriculture Ministry, plunged during the first quarter of this year.

Cigarette exports totaled $210.6 million from January to March, marking a 28.3 percent drop from the same period last year, according to statistics released by the Ministry of Agriculture, Food and Rural Affairs on Sunday.

The exports were hit hard by the United Arab Emirates’ imposition of a 100 percent special consumption tax on cigarettes. The UAE is Korea’s largest overseas buyer of cigarettes.

In October last year, the UAE instituted a hefty sin tax on tobacco, soda and energy drinks, partly as a way to lower the rates of obesity and diabetes, and regulate addictive substances.

The UAE additionally imposed a 5 percent value-added tax on cigarettes in January. All in all, the prices of Korean cigarettes have doubled, leading to a sharp decline in exports. 

Cigarettes (Flickr)
Cigarettes (Flickr)

As tobacco is categorized as an agricultural product, cigarettes fall under the category of processed food. Korean cigarettes are mainly exported to the Middle East, including the UAE, and Southeast Asia. They take up the biggest portion of agricultural food export items.

Korea’s cigarette exports came in at around $1.13 billion last year, taking up 16.5 percent of total agricultural food exports.

With Saudi Arabia having implemented a sin tax on cigarettes before the UAE, and other countries in the Gulf Cooperation Council set to follow suit this year, Korean cigarette exports are forecast to slow down further.

By Rumy Doo (