U.S. tobacco giants ... Philip Morris ... and Japan Tobacco International are considering building plants in South Korea. The two companies announced the plan in Seoul Wednesday. South Korea lifted its ban on foreign tobacco companies producing cigarettes in the country in July. Until then, state-run Korea Tobacco & Ginseng Corporation was the only company with permission to manufacture cigarettes.
In 19-88, the government opened the market to imported cigarettes, which were tariff-free until this year. British American Tobacco, the world's second largest cigarette maker after Philip Morris, is already building a one hundred million dollar plant in South Korea. When completed by late next year, the plant will be able to produce four hundred million packs a year. South Korea, the world's ninth largest cigarette market, began levying a 10 percent tariff on imported cigarettes this year and plans to increase the rate to 40 percent by 2004, prompting foreign tobacco giants to consider producing cigarettes locally.