DUBAI, United Arab Emirates—Philip Morris International (PMI) is exploring potential investments in the Philippines that would make the country a critical component in the tobacco giant’s vision for a smoke-free future, leveraging its strong regulatory framework and attractive business environment.

Christos Kiritsis, Vice President of Smoke-Free Products at PMI, stated that the company plans to establish the Philippines as a manufacturing hub for its smoke-free alternatives.

PMI aims to position this potential expansion to strengthen not only its domestic reach in the Philippines but also its presence across Southeast Asia and neighboring regions.

While other countries are on PMI’s radar for such an investment, the Philippines remains among the top candidates, thanks in part to its progressive regulatory framework.

The Philippines is recognized as an early adopter in the transition to smoke-free alternatives, with a law already in place that establishes the legal framework for such products.

Republic Act (RA) No. 11900, or the Vaporized Nicotine and Non-Nicotine Products Regulation Act—also known as the Vape Law—sets out the government’s policy on these products, including their importation, manufacture, sale, and use.

Enacted in 2022, the law explicitly recognizes vapor products such as e-vapor, novel tobacco products including oral nicotine pouches, and heated tobacco products.

“The Philippines acknowledges, understands, and differentiates all the [smoke-free] categories,” Kiritsis told reporters on the sidelines of Technovation: Smoke-free by PMI here.

Kiritsis said this legal classification sets the Philippines apart from neighboring countries such as Vietnam, which still bans smoke-free products, and Thailand, where only nicotine pouches are permitted.

This, he said, makes the Philippines an attractive destination for investments in smoke-free products, which are now the main driver of PMI’s global operations.

PMI, a leader in the tobacco industry and the maker of the best-selling Marlboro brand, has been shifting toward smoke-free alternatives as part of its commitment to address health concerns among smokers.

The company’s smoke-free products, such as the heated tobacco device IQOS Iluma and nicotine pouch Zyn, release nicotine without burning, offering a safer alternative to cigarettes, which produce smoke laden with harmful chemicals known to cause diseases.

Smoke-free products accounted for 41 percent of the $10.1 billion total net revenues for PMI in the second quarter, a two-percent improvement from the same period last year.

Kiritsis said PMI is banking on further expansions, including potentially in the Philippines, to continue the strong trajectory of its smoke-free business.

“It's important to make sure that we make the investments in countries that recognize and understand the differentiation of smoke-free products,” he added.

Apart from regulation, Kiritsis said the Philippines is a good destination, given the government's openness to welcoming more investments.

PMI opened its ₱8.8-billion manufacturing facility in Batangas last year, which primarily produce smoke-free alternatives. According to the Department of Agriculture (DA), the company committed this investment to President Marcos in 2022.

Lastly, Kiritsis said the Philippines is ideal for substantial investment given the size of its local market, which is estimated to have over 16 million adult smokers.

He said PMI has been using the country as a pilot market for the company’s innovations, given its large smoking population.

In particular, the Philippines was chosen to test its newest heated tobacco product, BONDS by IQOS, with Filipino consumers providing much-needed insights.

For more than a decade, PMI has invested over $14 billion to create cigarette alternatives.

PMI Chief Executive Officer (CEO) Jacek Olczak said the investment was the largest in the company’s over 100-year history, reflecting its commitment to help smokers transition into a smoke-free lifestyle.

Olczak said investments could easily double to nearly $30 billion in the next decade, as the company intensifies its expansion and innovation efforts.

“The big chunk of this whole thing is the factory build-up, we still have to provide more capacity [for smoke-free],” he said.

In contrast, he said the company has not built any new cigarette factories in over 10 years, with some facilities either shut down or repurposed to produce smoke-free products.

PMI has 16 smoke-free factories worldwide, with several more already in the pipeline.