Vinataba would produce 50 million packs of Pall Mall and Viceroy cigarettes a year for export and about 150 million packs of the same brands for domestic smokers. The Industry Ministry report did not specify when exports would begin.

"The cooperation marks a milestone in Vietnam's tobacco industry and it is the first time Vietnam can export high quality cigarettes and becomes one of the key exporters of the produce in Asia," the Industry Ministry said in a report.

BAT already produces and markets with Vinataba its State Express 555 brand in Vietnam, where more than 56 percent of men smoke.

Annual spending on tobacco is more than $500 million, one of the highest smoking rates in the world, according to the World Health Organization.

Health authorities in Vietnam have been trying hard to cut down smoking including banning it in public places, but law enforcement has been slow.

Source: Reuters