Local budget and production lose out due to tobacco smuggling

Tuesday, Jul 21, 2020 10:03

Market watch and police officers inspect a van carrying smuggled cigarettes in southern An Giang Province on July 6. Smuggled tobacco is harming local production in Viet Nam. — Photo courtesy of the team

Viet Nam’s State budget has lost VND8.5 trillion each year due to tobacco smuggling, experts revealed at a seminar in Ha Noi.

Nguyen Manh Hung, chairman of Viet Nam Consumer Protection Association, told a seminar on tobacco smuggling late last week that as Viet Nam has a huge number of smokers, smuggling is rife.

According to a global survey, the proportion of tobacco use among adults in Viet Nam was over 45 per cent, while the number of tobacco users was constantly increasing among young people in the country.

According to data from the World Health Organization (WHO), Viet Nam is one of 15 countries with the highest number of smokers in the world, ranking third in ASEAN, after Indonesia and the Philippines.

Hung said tobacco smuggling brought high profits, after only drug trafficking, adding: “Smuggling can bring profits of up to 400 per cent while official imported cigarettes are subject to import tax of between 100 per cent and 202.5 per cent and value added tax of 10 per cent.”

Rodney Van Dooren, head of Illicit Trade Prevention for Philip Morris International (PMI) for Asia Pacific, told the seminar that: “Through smuggling, counterfeiting and tax evasion, governments are losing billions of dollars in tax revenues while legitimate businesses are being undermined, and consumers are being exposed to poorly made and unregulated products.”

Dooren said while South and Southeast Asia ranked high in terms of illegal tobacco trading with 15 per cent of the world, Viet Nam was third highest in the region with 21 billion sticks of illegal tobacco products.

He said in June, a total of 1,388 illegal heat-not-burn tobacco products were listed online, including 70 per cent on Facebook and Instagram and 30 per cent on Shopee, Lazada and other online channels.

Nguyen Tien Dat, deputy director of the Business Department from the General Department of Market Management, said: “The smuggling takes place in both inland and waterways in the country, especially in Long An, An Giang, Kien Giang, Tay Ninh provinces and HCM City in the south, Ha Noi, Quang Ninh, Hai Phong cities in the north and border areas of Quang Tri Province in the centre of Viet Nam.”

Dat said because of the high profits from smuggling, smugglers take risks and sometimes attack officials, making the situation more dangerous.

In the last five years, the market watch teams have handled more than 32,000 cases of tobacco smuggling, confiscating over 6.4 million packs of cigarettes.

According to the Tobacco Association, domestically produced cigarettes are subject to 75 per cent special consumption tax, 10 per cent value added tax; as well as funding prevention and control of tobacco harm totalling 2 per cent.

Cao Trong Quy, an official from the Industry Department, said the local tobacco industry has maintained stable production with the quality of cigarettes improving, with less tar and nicotine content.

Quy said the tobacco businesses have contributed significantly to the State budget. Over the past 30 years, the industry reported an annual increase of 11.3 per cent in contributions.

In 1989, it paid VND100.5 billion to the State budget while last year the contribution reached VND18 trillion. It also created jobs for millions of workers, including workers in production, farmers and people involved in trading of the product, he added.

Nguyen Triet, secretary of the Tobacco Association, said: “While there are more regulations and taxes applied for local production, the smuggling of the product is gaining huge profits and influencing people’s health and local production.”

Quy from the Industry Department said currently, domestic raw tobacco met only 40 per cent of local demand.

Phan Dinh Quan, an official from the General Department of Customs, also raised another matter, saying: “Smuggling raises the risk of spreading the coronavirus.”

Participants at the seminar said the fight against smuggling was difficult, with limited resources and overlaps between forces.

In this case, Triet suggested the Government spend half of its funds for the prevention of smoking on tobacco smuggling in Viet Nam.

The participants suggested the Government should create a better legal environment for local businesses to compete and have long-term production, business and investment strategies that can help them to meet the demand of local consumers.

Rodney Van Dooren said: “What we need to see is a strengthening border control and law enforcement, as well as to build appropriate regulations for novel tobacco products in Vietnam, including heated tobacco products, to protect the interests of the government, local adult smokers and legitimate producers,” adding that PMI was committed in addressing the illicit sale of their new smoke-free products.

Triet said: “The fight against smuggling will boost the local industry and protect people’s health.”— VNS

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