Police of HCM City's Binh Hung Hoa B Ward check 30,000 smuggled cigarette cartons seized last Sunday. — VNA/VNS Photo

HCM CITY (Biz Hub) — Lack of cooperation between the coast guard, police, market watchdogs and local governments have all contributed to an increase in cigarette smuggling, experts have warned.

Other factors that have caused a dramatic rise in smuggled cigarettes include cumbersome administrative procedures, outdated laws, poor equipment and limited human resources.

"Cigarette smuggling is happening all around the country and has had a negative impact on the economy," said Lieutenant General Phan Van Vinh, head of the Public Security Ministry's Police General Department for Crime Prevention.

Vinh spoke at a conference held in HCM City yesterday on "Implementing the Prime Minister's Order No 30/CT-TTg on increasing the fight against smuggled cigarettes".

"This year, the quantity of smuggled cigarettes increased from 30 – 40 per cent compared with the same period last year, and it has had a very serious impact on the local tobacco industry," Vu Van Cuong, chairman of Viet Nam Tobacco Association, said.

Last year, nearly 22 billion cigarettes – about 21 per cent of market share - were smuggled into Viet Nam.

As a result, the State lost around VND6.5 trillion (over US$300 million) due to smuggled cigarettes, and this year the figure is expected to be VND8 trillion (around $380 million).

For the first 11 months of this year, sales of local tobacco dropped by over 20 per cent, particularly after tobacco companies began using highly graphic photos as health warnings on cigarette packages.

"In the past, most smuggled cigarettes were Zet and Hero from Cambodia and Laos, but for the last two years, many cheap cigarettes from China have also entered Viet Nam," Cuong added.

Local tobacco producers must pay high taxes and cannot compete with smuggled products, which are often 50 – 80 per cent cheaper.

"The quality of smuggled cigarettes, however, cannot be assured and some harmful substances are far over the permitted level," he added.

To reduce the number of smuggled cigarettes, major general Phan Anh Minh, vice director of HCM City's Police Department, said information should be shared among authorities who oversee these activities.

"We have spent a lot of time and work to restrict smuggled cigarettes but in fact, we have only caught the porters, not bosses, and don't have the capability to destroy the gangs," he said.

He also pointed out the lack of efficient co-operation among authorities as well as cumbersome administrative procedures, which do not allow authorities to punish traffickers.

"Traffickers, for example, can transport 1,490 packages, just 10 packages less than the minimum allowed by law (which is 1,500), and they will never be put in jail," he said.

He admitted that smugglers had closely supervised all activities of authorities, and were well-organised to attack police.

"I suggest we should arrest smugglers over the border in Viet Nam where they go to store their smuggled cigarettes. That would be more effective and safe," Minh said.

The Viet Nam Tobacco Association, in an effort to receive more help from authorities in stamping out smuggling, said they would increase their minimum payment of VND1,100 to VND3,500 to the authorities for each smuggled cigarette package that authorities discover.

"We have also asked the Government to change the definition of the crime of smuggled cigarettes to a minimum of 500 packages, rather than 1,500," Cuong said.

He also asked market watchdogs to increase supervision at retail markets, especially in HCM City and other cities around Viet Nam.

"Retailers don't display smuggled cigarettes publicly, they hire and sell very small quantities and it is not easy to investigate their houses," Do Huu Quang, deputy head of the Industry and Trade Ministry's Market Watchdog Department, said.

This year, the department handed out fines of VND15 billion ($720,000) and confiscated 1.1 million packages of cigarettes.

Every year, local tobacco companies contribute around US$1billion to the State budget, creating millions of jobs for local residents. — VNS