PT HM Sampoerna Tbk. Announces USD 166.1 Million Investment Realization for Production Facility of Tobacco Sticks for IQOS Under the HEETS Brand
• IQOS is an innovative smoke-free tobacco product that eliminates combustion and promotes scientific research and technology, thus reducing exposure to harmful or potentially harmful constituents by an average of 90 - 95% in comparison to cigarette smoke.
• HEETS is a brand name for the tobacco sticks exclusively designed for use with IQOS.
• The production facility, located in Karawang, West Java, is the seventh facility in the world and the second in Asia, and is scheduled to be operational by the fourth quarter of 2022, with a primary focus on supplying export markets in the Asia Pacific region.
Karawang, November 30, 2021 – PT HM Sampoerna Tbk. (“Sampoerna” or “Company”/IDX: HMSP), an affiliate of Philip Morris International (PMI), announced the realization of an investment totaling approximately USD 166.1 million for the production of the tobacco sticks for IQOS under the HEETS brand in Karawang, West Java, Indonesia.
The facility, which is scheduled to be operational by the fourth quarter of 2022 and will fulfill demands from the domestic market and focus on export markets in the Asia Pacific region, is part of Sampoerna’s commitment to create long-term economic value in Indonesia by promoting scientific and technological research methods. The facility will be PMI’s seventh factory globally and the second in Asia for the production of tobacco sticks for IQOS, as well as an expansion of Sampoerna's existing production facility in Karawang.
“This investment is a vote of confidence from Sampoerna and our parent company, PMI, in Indonesia's investment climate and realization of our commitment in supporting the national economic recovery initiated by the Government of Indonesia. Furthermore, this facility is part of PMI's global commitment to providing smoke-free products as a better alternative for adult smokers," said Mindaugas Trumpaitis, President Director of Sampoerna.
“We believe that by utilizing innovation, research, and technological adaptation in the production of the tobacco sticks for IQOS under the brand name HEETS, Sampoerna will play an active role in driving the transformation of the national tobacco industry. This is in line with the government's priority to continue to improve the competitiveness of the country's manufacturing sector in the global arena through the Making Indonesia 4.0 roadmap," Mindaugas added.
During the 108 years that Sampoerna has been operating in Indonesia, Mindaugas hopes that the realization of this investment will also increase the multiplier effect through the creation of added value, absorption of tobacco leaves from local farmers, creation of new job opportunities for highly skilled workers, increase of investor confidence in the investment climate in Indonesia.
The Indonesian government welcomes this investment, as conveyed by the Indonesian Coordinating Minister of the Economy, Airlangga Hartarto, who was present at the event.
He said, “Collaboration and cooperation between the Government and other stakeholders, including the business sector, is crucial as it can improve economic resilience and encourage Indonesia to seize the moment in which it can accelerate economic recovery.”
Meanwhile, Minister of Investment/Head of Indonesian Investment Coordinating Board (BKPM) Bahlil Lahadalia said, "We appreciate the commitment of industry players to expand their investment in the country, even amid the COVID-19 pandemic. Through this investment, we hope that Sampoerna can become one of the driving engines for the implementation of technology and innovation for the sustainability of the national tobacco products industry. This is in line with national economic recovery efforts and the government's Making Indonesia 4.0 roadmap.”
Bahlil also said that the investment expansion by Sampoerna is testament to the government’s success in creating a conducive investment climate in Indonesia, thus allowing the country to attract more investors especially export-oriented ones.
“Sampoerna’s investment expansion on export products further underlines Indonesia’s potential as an export hub in Asia Paficic region. This investment is a clear example of confidence of the private sector in the investment climate in the country. In the future, we hope that more companies will expand their investment portfolio in Indonesia,” Bahlil added.
Mindaugas added, “The opening of the tobacco sticks for IQOS factory under the HEETS brand in Karawang is a historic milestone in PMI's commitment to realizing the vision of a smoke-free future, especially for adult consumers in the Asian region who choose to continue to enjoy tobacco products."
In Indonesia, Sampoerna has conducted a limited market testing of IQOS since March 2019 through its “IQOS Club” membership program to study the market potential and response of adult smokers towards smoke-free products. Currently, IQOS and the tobacco sticks under the brand name HEETS are available in Jakarta, Surabaya, Bali, and Medan.
IQOS is one of several of smoke-free product platforms being developed by PMI to respond to the demand from adult smokers for better alternatives to cigarettes. Since 2008, PMI has invested over USD 8.1 billion behind smoke-free products, reflecting investments in research, product and commercial development, production capacity, scientific substantiation, and studies on adult smoker understanding.
IQOS heats tobacco without combustion process, so that exposure to harmful or potentially harmful constituents to the body is reduced by an average of 90-95% compared to cigarette smoke. The totality of PMI’s studies to date indicates that IQOS, while not risk-free, is likely to present less risk of harm compared to continued smoking for adult smokers who switch to it completely.
IQOS and its tobacco stick consumables were first marketed to consumers in Nagoya, Japan and Milan, Italy in 2014. As of September 30, 2021, PMI's smoke-free products have been marketed in 70 markets in major cities or nationwide, with an estimated total of 20.4 million IQOS adult users worldwide.
For more information, please visit www.pmi.com and www.pmiscience.com.
About PT HM Sampoerna Tbk. (Sampoerna)
Established in 1913, Sampoerna – an affiliate of Philip Morris International Inc. – is the leading Indonesian tobacco company on manufacturing and trading of kretek (clove) cigarettes. Sampoerna produces some of the best known kretek brands such as Sampoerna A, the legendary “King of Kretek” Dji Sam Soe, Sampoerna U, and Sampoerna Kretek. Sampoerna also distributes products from cigarette brand Marlboro throughout Indonesia under a long-term distribution agreement with PT Philip Morris Indonesia.
Sampoerna operates six production facilities located in Surabaya, Pasuruan, Probolinggo, Malang, and Karawang. Sampoerna also partners with 38 Third-Party Operators throughout Java, employing – directly and indirectly – approximately 65,000 people, mostly in the production of hand-rolled kretek cigarettes. Sampoerna distributes its products through 112 sales offices and distribution area offices across Indonesia.
Sampoerna is listed in the Indonesia Stock Exchange. Sampoerna shares are traded under the ticker symbol “HMSP”.
For more information, please visit: www.sampoerna.com.
Head of Corporate Communications
PT HM Sampoerna Tbk.
Email : email@example.com