Illicit cigarettes take toll on the economy

The Vietnam Tobacco Association (VTA) said illicit cigarettes currently remained a big challenge to the local tobacco industry. Such cigarettes came to Vietnam illegally in many ways, with the Vietnamese-Cambodian border the leading source.

Notably, a pair of cigarette brands, Hero and Jet, are being smuggled from Cambodia to Vietnam at estimatedly 300 million packs a year, contributing to the domestic tobacco industry’s loss of nearly $200 million annually.

VTA reported that 11.4 billion cigarettes were smuggled into Vietnam from Cambodia in 2011, causing the  loss of $171 million. With little being done at the border to prevent smuggling, that number jumped to 12.9 billion last year for the grand total of $193.5 million in loss for domestic cigarette producers.

A VTA analysis of the market in 2011 said smuggled cigarettes made up 18-22 per cent of 3.5-3.8 billion packs consumed in Vietnam.

British American Tobacco (BAT), which produces brands such as ARA and 555, estimated that the illicit tobacco trade from Cambodia into Vietnam generated the profit of about $16 million per year.
“The legitimate industry simply cannot compete on a level playing field with the transit brands that do not pay all their taxes in full,” a BAT spokesperson said.

In a bid to tackle the problems at the Cambodian-Vietnamese border, the VTA has asked the Vietnamese government for tougher anti-smuggling measures, while releasing information about it to the public via the press.

“In the course of working negotiations at a national level between Cambodia, Laos and China, it is suggested that [Vietnam] should pay attention to the collaboration in fighting illicit and trading of illegal tobacco through borders, especially in Cambodia,” said VTA secretary general Pham Kien Nghiep.

Cambodia’s Department of General Customs and Excise signed a memorandum of understanding in April 2011, with Vietnam vowing to put in place stronger border checks.

The World Health Organization (WHO) is also asking the Cambodian government to prevent cigarette smuggling, and trying to convince the government to increase taxes on cigarettes in order to steer people away from the habit.

“Certainly, smuggling is already contributing to the problem [of smoking], because it prevents people from making the right decision on whether or not to smoke because it is so cheap,” said Peter Van Maaren, WHO’s country representative to Cambodia.