Tobacco Industry Csr Malaysia Essay Example

Tobacco Industry Csr Malaysia Essay Example Tobacco Industry Csr Malaysia Essay Tobacco Industry Csr Malaysia Essay 1. 0 INTRODUCTION Major tobacco firms in Malaysia have begun investing aggressively Corporate Social Responsibility activities to build a positive public image and brand activities via large contributions into social programs nationwide, and to be recognised as contributors to the greater common good. Although CSR is considered as a corporate entity along standards of business ethics, tobacco industry philanthropic activities encounter much criticism and threat of a comprehensive ban on CSR atop present legislations for Tobacco Advertising, Promotion Sponsorship worldwide. Many concerns have been raised over the practice; alleging that the motives behind tobacco industry CSR are to manipulate public perception of responsible marketing practices and gain favourable position for the individual firms in Malaysia. 2. 0 CSR AND ITS STRATEGIC ADVANTAGES Holme and Watts define CSR as an ongoing pledge by corporations to conduct themselves in an ethical manner and contribute to economic growth while developing the quality of workforce livelihood and their families, and the overall local community and societies. CSR programs were developed to answer public urges for corporations to advocate ethical, environmental, health and labour regulations. The Sustainability Entrepreneurship Model by Young and Tilley, as shown in Appendix I, comprises of six decisive factors: eco-efficiency, socio-efficiency, eco-effectiveness, socio-effectiveness and sufficiency and ecological equity; for corporate sustainability which adds to the business’s social responsibilities and enhances its effectiveness, bringing higher cost savings and better profit margins. 8% of consumers said they were more likely to purchase from companies that engages in initiatives to develop society. 3. 0 TOBACCO INDUSTRY AND TOBACCO USE IN MALAYSIA Malaysia is a major cigarette-manufacturing showpiece for tobacco transnational corporations operating in the South East Asian region. Among 92 sectors, the tobacco industry ranks 5th with an economic output totaling to RM11. 7 billion or 3% of Malaysia’s GDP. The tobacco indu stry in Malaysia comprises of large corporations such as British American Tobacco, market share 68%; Japan Tobacco Inc. 17. 7%; and Philip Morris International, 15. 3%. The industry considers itself a vital contributor in developing Malaysia’s socio-economic condition of the rural population. Tobacco is Malaysia’s most largely cultivated non-food crop, with 12,148 hectares and 1,200 hectares of land solely for tobacco cultivation in Peninsular Malaysia and East Malaysia respectively. The industry’s activities range from tobacco leaf cultivation and curing, tobacco production to marketing and distribution. Records show that more than 190,000 people are employed in the industry, and 120,000 people involved in tobacco farming and curing. Smoking statistics show that 10,000 Malaysians succumb to smoking-related ailments annually, making it the top killers in the country since the 1980s. According to Global Adult Tobacco Survey based in Malaysia, 23. 1% or 4. 75 million adults currently smoke, 43. 9% (4. 64 million) being men and 1. 0% (0. 10 million) women. The study also suggested that the expenditure on manufactures cigarettes cover 3. % of the GDP in 2011, its data showing present smokers using an average of RM 178. 80 monthly on manufactured cigarettes. 4. 0 PRACTICE OF TOBACCO INDUSTRY CSR IN MALAYSIA The industry engages CSR in various methods to achieve maximum public exposure and influence. The common approach of tobacco industry CSR is corporate philanthropy in which the firms provide monetary aids in areas such as culture and arts, education, shelter, social welfare and the envi ronment. In addition, they offer support to government policies and sponsorship of events such as youth smoking prevention programs. Several firms have even established charitable foundations to fund their initiatives, such as the British American Tobacco Foundation which was set up with the aim to obtain and manage funds for education, scientific and other charitable purposes. In conjunction with National Kenaf and Tobacco Board, the foundation has rewarded over 2,000 recipients RM 1. 1 million since its initiation in 2002. Formation of alliances between tobacco firms with non-governmental organizations exist as well. Yayasan Salam Malaysia is a long-term NGO partner of Philip Morris since 2006, both supporting a variety of CSR programs concerning poverty and society’s wellbeing. Their annual partnership had revolved around building information and communication technology (ICT) centres in rural places and providing financial aids for the underprivileged. BAT is also the first local tobacco company to publish Social Reports since 2001; these reports highlighting the firms CSR activities conducted year-round, looking forward to aligning itself with other businesses that conduct CSR activities. The company had received the Malaysian Sustainability Reporting Award from the Association of Chartered Certified Accountants for BAT’s efforts in cancer research. 5. 0 CRITICISMS TOWARD TOBACCO INDUSTRY CSR The tobacco industry is one of the most criticised members of the modern business community. Several disputes have arisen worldwide declaring that tobacco industry products are lethal to their consumers, and the CSR activities will be unable to resolve the fundamental contradiction with ethical corporate citizenship. WHO defines tobacco industry tactics utilizing CSR as a tool â€Å"to promote voluntary measures as an effective way to address tobacco control and create an illusion of being a ‘changed’ company and to establish partnerships with health interests. † These charitable campaigns purposefully influence the perception among youths and adults that the tobacco industry is deceitful and guilty for advocating smoking among youths and adults. Tobacco companies’ internal documents have revealed the motives behind industry-sponsored programs, aimed to increase profits and stimulate company investments. It is alleged that by conducting CSR, tobacco firms aim to build favourable views regarding the industry and tobacco issues by demonstrating their responsibility and concern about the wellbeing of consumers and stakeholders. Another tobacco industry goal is to achieve political influence with the intention of obstruct government efforts to regulate tobacco control, as evident in Malaysia. These CSR initiatives also pose as protection against litigations or lawsuits. The sponsorship of tobacco firms in youth anti-smoking campaigns is claimed to be a scheme to access youths for market research, to normalise brands and to avert success of anti-tobacco campaigns. A report by the British Medical Association stated that tobacco industry CSR as a form of marketing for firms, and as such it should be prohibited under the terms of Article 13 of the Framework Convention on Tobacco Control, which calls for Parties to impose a full ban on tobacco advertising, promotion and advertising, including CSR. CSR functions in favour of the industry by creating goodwill with lawmakers and the public, crushing bad publicity for its lethal goods, and resolving conflict from tobacco control advocates. The tobacco-caused death and disease suffered by societies and families contradict the advantages of charity or sponsorship for social interests. Tobacco consumption offers zero merits to the underprivileged, and any financial aid offered by tobacco firms accountable for smoking-related ailments and financial woes of the nation fails to relieve poverty, environmental, or health problems. . 0 POLITICAL ECONOMY AND CONTROL OF TOBACCO IN MALAYSIA Advocacy for tobacco control in Malaysia had begun in the 1970s, with gradual growing initiatives to institute specific legislations to regulate tobacco manufacturing and consumption. Compliant to the FCTC, Malaysia enacts legislation compliant with the FCTC by providing extensive regulation and banning of advertising, promotion and sponsorship. Presently, Malaysia allows tobacco industry CSR, and it has been abused by the industry as a strategic tool to change its public image. Measures to undertake the Malaysian smoking epidemic is inconsistent – from one point of view, the cost of lives and health interests; while the other, the critical consequences of tobacco control on tobacco farmers and alleviating poverty. The Malaysian government is an active shareholder and advocate of tobacco. They are major partners in two of Malaysia’s largest tobacco corporations with direct financial interests in the industry. Major shareholders of BAT and JTI include statutory bodies such as the Skim Amanah Saham Bumiputera, Employees Provident Fund, and Amanah Saham Malaysia, demonstrating the Malaysian state controlled ownership of shares in the tobacco industry. A large number of Bumiputeras partake in tobacco cultivation with Bumiputera partners being of key importance in the ownership of tobacco firms. Corresponding to the government policy to promote foreign investment, BAT, Philip Morris, and R. J. Reynolds Tobacco Company have set up their subsidiaries and established manufacturing facilities within the country. 7. 0 CONCLUSION In averting the overall poor public image, weak knowledge regarding individual tobacco firms, and more litigations and restraints, the tobacco industry CSR activities are meant to improve public perception of the industry. CSR activities by tobacco firms purposefully highlight their philanthropic contributions to the society and also promote youth smoking prevention programs. As long as there is absence of major restraints and public criticism, the tobacco industry will continue to operate unreservedly, utilising CSR to promote its â€Å"responsible† marketing practices and to receive favorable ratings for individual firms within the country. The tobacco industry’s public relation efforts may possibly influence Malaysian audiences to develop further resistance against the objections faced by the industry, alleviate jurors’ negative scrutiny toward the industry, and thus deteriorating public or legislative support for tobacco control policies in Malaysia.