Cigarette manufacturer Philip Morris is budgeting $21 million or P882 million in the next three years to upgrade machinery and equipment as it expands in the Philippines.

This brings to $65 million or P2.7 billion the firm’s total investments on machinery and equipment from 2005.

In a presentation at the Department of Finance, Philip Morris officials said $6 million or P252 million has been set aside for tobacco processing and packaging.

The firm operates a $300-million cigarette factory at the First Philippine Industrial Park in Tanauan, Batangas.

It also maintains a $600,000 regional leaf warehouse in Subic Bay Freeport, which services the needs of its Asean operations as well as its other production facilities worldwide.

Next year, the cigarette maker is allotting $7 million or P294 million for machinery replacements and upgrades. In 2009, the firm will enfuse $8 million or P336 million for tobacco processing and filter makers.

The company has also increased its flue-cured tobacco purchases from local tobacco farmers from more than 2,000 packed tons in 2005 to nearly 3,000 tons in 2007.

Philip Morris officials said the company has been expanding its Philippine operations since 2003 and remains bullish on business prospects in the country.

The cigarette manufacturer’s Subic facility, which is a rented warehouse, has a leaf storage capacity of six million kilograms. It was made operational in November last year.

For the next phase, the company will use a new warehouse to be built by a Subic Bay Metropolitan Authority locator on a 60,000-square-meter lot inside the Freeport.

The warehouse, which will have a leaf storage capacity of 25 million kilograms, will be operational by end-2009.

Philip Morris officials said the consolidation of its tobacco leaf in one location would result in logistic efficiencies for the company.