RISE IN CIGARETTE SMOKING DOESN'T BOTHER BURMA GOVERNMENT

MANDALAY, Burma---When U Soe Thein Oo attended a concert a few months ago
by Iron Cross, the most popular Burmese heavy metal band, he got more than
just an earful of "Desert Moon," the band's hit love ballad.

Along with all the other ticket holders he received free Golden Eagle
cigarettes and a plastic lighter to ignite them. Like most people at the
concert, he smoked through the pack.

At U Hoke Ho's tea shop, in the town of Shipaw, farther north in Burma, a
haze descends each time young women flock through handing out free Golden
Eagle cigarettes and lighting them up for customers.

"They don't give them to children, but even those who don't smoke try the
cigarettes," the tea shop owner said. "People always like to get things for
free."

Across the country young people tell similar stories of how they were drawn
to cigarettes by free handouts and slick advertising tactics never before
seen in Burma as tobacco multinationals focus their powerful marketing
machines on potential smokers.

This has led to a rapid increase in smoking among young people in Burma
and in other couatries in Southeast Asia where cash-strapped goveraments
have a financial stake in tobacco sales. Tobacco companies themselves also
rely increasiagly on profits from the region's poorest countries.

Rothmans Industries of Singapore whose London brand is the market leader in
Burma, runs a factory ia a joint venture with a holding company owned by
the country's ruling military. The three-year-old venture turaed a profit
after just one year, company officials said, and there are already plans to
expand production.

Rapid sales growth ia Burma and Vietnam helped push up Rothmans' pretax
profit by 15.4 percent in the first half of 1998, despite shrinking
cigarette sales in Singapore, the company's only other market, according to
a company announcement last month.

The Burmese govemment likes dealing with multinational cigarette companies
because it can more readily collect revenue from large factories or
importers than it can from small-time producers of hand-rolled smokes like
Burma's traditional cheroots, according to Brigadier General Maung Maung,
head of the foreign investment commission.

After Rothmans, Burma's secondlargest foreign investor in cigarettes is the
Indonesiaa giant Sampoerna, followed by a small South Korean stake in
Myanmar Glacier Tobacco.

Imported cigarettes commonly available in Burma include brands produced by
British American Tobacco---including 555, Benson & Hedges, Lucky Strike and
Viceroy---along with Philip Morris's Marlboro and RJR Nabisco's Camel and
Salem.

Domestic production has increased to 4.4 billion cigarettes in the last
fiscal year, fromless than 1 billioncigarettes in 1992, to according to
government statistics.

From zero a decade ago, tobacco imports to Burma rose to more tha4 1,700
metric tons in 1996. Tobacco imports in 1995 were worth $142 million and
accounted for about 6 percent of the nation' s total merchandise imports,
according to a study by the U.S. government.

General Maung Maung said the Burmese goverament was very concerned about
the increased number of young smokers and had already begun imposing
controls, such as a recent ban against tobacco advertising on televislon.

Marlboro cowboys recently stopped riding acnzss viewers' screens, but other
brands still broadcast ads regularly on television despite the ban, and few
in Burma come in contact with cigarettepack health warnings. A pack of 20
cigarettes costs the equivalent of about one day's salary for manual
laborers, so most smokers support their habit cigarette-by-cigarette
instead of buying packs, many of which have the warnings written in
English.

The cigarette companies say their advertising is aimed at adults and is
intended to maintain brand loyalty or to entice those who already smoke to
change brands. But the young people of Burma have received a very different
message.

"My generation smokes, not my father's," said U Win Aung, a 26-year-old in
the town of Maymyo who began smoking at age 17. "Cigarettes are modern and
free-style. I am not so choosy about the brand so long as it has Virginia
tobacco."

U Win Aung said that even strong health warnings would not deter him from
smoking now. He enjoys spending one evening each weekend drinking Mandalay
rum and smoking with friends at Summer Feelings, a popular new bar along
the dusty main street of Maymyo.

"The cinema is censored, and there are no nightclubs or live shows," he
said. "Beyond smoking there is no entertainment. "

Checked-by: Joel W. Johnson