Category: Illicit Trade

  • Retailers face jail threat

    Retailers face jail threat

    South Korea’s Ministry of Gender Equality and Family yesterday announced that it would be designating heat-not-burn (HNB) tobacco products as harmful devices that may not be sold to minors, according to a story in The Korea Herald.

    Under current regulations, restrictions on the sale of vapor devices to minors apply only to electronic cigarettes.

    There are no restrictions on HNB systems.

    Once the new rules go into effect, those who sell HNB products to minors will be subject to a prison sentence of up to three years or a fine of up to 30 million won ($26,670).

  • Illegal trade boosted

    Illegal trade boosted

    The Indonesian Cigarette Manufacturers Association (Gappri) has said that tobacco excise hikes during the past three years have resulted in an increase in illegal cigarette trade in Indonesia, according to a tempo.co story.

    Gappri’s chairman Ismanu Soemiran was quoted as saying that licit cigarette production had declined in the years following the hikes. “In the past three years, it declined one percent per year,” he said.

    “If tobacco excise duty increases next year by 10.04 percent, cigarette production will drop by two to three percent. It would open up even more avenues for illegal cigarette trade.”

    In 2010, the illegal cigarette trade was said to have accounted for 6.2 percent of the Indonesian market. That figure rose to 8.4 percent in 2012, 11.7 percent in 2014 and 12.1 percent in 2016.

    Ismanu said that another cigarette excise duty increase would make more smokers seek cheaper, illicit cigarettes.

    But he said he expected the government to review its plan to increase tobacco excise duty next year.

  • Tobacco under pressure

    Tobacco under pressure

    The leader of Turkey’s main opposition party, Kemal Kılıçdaroğlu, has said that Turkey’s oriental tobacco is being eradicated, according to a story by Zülfikar Doğan for Al-Monitor.

    “In 2002, 405,882 families were making a living from tobacco,” said Kılıçdaroğlu during a CHP [Republican People’s Party, Cumhuriyet Halk Partisi] parliamentary meeting. “In 2015, that shrunk to 56,000. We gave up growing our own tobacco. Foreigners began importing, and as of 2012, Turkey suddenly became a net tobacco importer.”

    Another problem, Kılıçdaroğlu said, concerned cigarette taxation, which stood at 84 percent and which had caused a sharp rise in the number of people rolling their own cigarettes.

    The story reported that Turkey’s farmers, livestock producers and their related unions were emerging as a new and unexpected mass opposition in the country, staging rallies and marches to protest against sustained heavy economic losses.

    Meanwhile, in the tobacco sector, growers are said to have reacted with fury to threats of heavy prison sentences and fines.

    Tobacco growers have protested against new regulations restricting how, where and when Turks can produce tobacco.

    The aim of the legislation was said to be aimed at preventing tobacco smuggling.

    But the Tobacco Experts Association said that with the new restrictions, thousands of tobacco growers would be facing years in jail and heavy fines.

    The association expressed opposition also to the liberalization of electronic cigarettes and alleged that the new regulations were drafted in line with wishes of foreign cigarette companies and would soon mean the end of the local tobacco industry.

    The full story is at: http://www.al-monitor.com/pulse/originals/2017/10/turkey-farmers-protest-against-government-policies.html.

  • Illegal trade undercut

    Illegal trade undercut

    A recent study by KPMG has found that one eighth of the cigarettes consumed in Morocco last year were illegally traded, according to a story in The Morocco World News.

    Smuggled cigarettes enter Morocco from its neighbors, Algeria and Mauritania, with Algeria accounting for 65 percent of the inflow even though the border with Algeria has been officially closed since 1994.

    A pack of Marlboro cigarettes sells in Morocco for US$3.38, while a pack smuggled from Algeria sells for US$1.91 and a pack smuggled from Mauritania sells for US$1.35.

    The KMPG study found that one of the reasons for the relatively high level of illicit cigarette consumption in Morocco is that cigarettes – 38 percent of them – are sold as single cigarettes.

    It is estimated that if consumers smoked licit rather than illicit cigarettes, the government would benefit from additional tax revenue of about US$143 million a year.

    Morocco has had some success in reducing the illegal trade through increasing law-enforcement and border-security activities.

    And the introduction in 2015 of lower-priced brands that sell for the same price as illicit products has aided the decline of the illegal trade. In fact, sales of licit cigarettes increased by eight percent in 2016.

  • ‘Hypocrisy’ highlighted

    ‘Hypocrisy’ highlighted

    Canada’s National Coalition Against Contraband Tobacco (NCACT) said on Friday that it was highlighting the hypocrisy evident in Ontario’s Cannabis Legalization Enforcement Summit. The emphasis at the summit was being placed on enforcement measures to prepare for the legalisation of cannabis, it said, while calls for a similar enforcement approach to the province’s booming contraband tobacco trade had not been heeded.

    “A co-ordinated, multi-stakeholder approach to enforcement will be an important component of the province’s effort to address cannabis, which makes the need for a similar initiative for Ontario’s well entrenched contraband tobacco market all the clearer,” said Gary Grant, the national spokesperson for the NCACT. “The participation of multiple stakeholder groups and different levels of government in this discussion is something we’ve been advocating for in relation to the country’s illegal cigarette problem, which is by far the worst in Ontario.”

    The NCACT said Ontario had the worst contraband tobacco market in Canada, with more than one in three cigarettes sold in the province being illicit, a rate that had barely budged for several years.

    ‘In Northern Ontario, the contraband rate is more than 60 percent,’ the NCACT said in a press note. ‘Illegal cigarettes are cheap and readily available costing as little as $8 for a baggie of 200 cigarettes, $70 or more less than legal product. They are available directly from smugglers or hundreds of unlicensed retail smoke shacks. The RCMP has identified 175 criminal gangs involved in the contraband trade, which use the revenues to fund guns, drugs and human smuggling.’

    “The approach Ontario has taken to addressing the illegal marijuana market – enforcement and acknowledging impact of price – is the same that would be effective against illegal cigarettes,” said Grant. “We hope we can count on the government to give both of these issues the amount of the attention they deserve.”

  • Latvia sucks in illicits

    Latvia sucks in illicits

    Contraband products account for 25.2 percent of Latvia’s cigarette market, according to a story in The Baltic Course citing a report by Latvia’s main information agency, LETA, which, in turn, was based on a survey by AC Nielsen.

    Latvia is said to have the highest contraband-cigarette activity of the Baltic states. The share of contraband on Lithuania’s cigarette market, for instance, is reckoned to have been 19.8 percent during the third quarter of this year.

    Within Latvia, the highest share of contraband cigarettes, 52 percent, was recorded in Daugavpils, in the southeast of the country close to its borders with Belarus and Russia.

    In the Latvian capital Riga, the share of contraband cigarettes was 23 percent.

    The chairman of the Latvian Chamber of Commerce and Industry, Janis Endzins, said that despite the efforts of law enforcement agencies, which seized millions of contraband cigarettes almost every day, Latvia still had the highest share of cigarette contraband among EU member states.

    And Endzins added that an ill-considered excise-tax policy was likely to boost contraband instead of bringing additional revenue to the state budget.

    Belarus is said to be the source of 66.5 percent of the contraband cigarettes entering Latvia, while Russia is in second place with 10.7 percent.

  • Funding applications sought

    Funding applications sought

    Philip Morris International said on Friday that it was calling for funding proposals under PMI IMPACT, its US$100 million global initiative to support third party projects dedicated to fighting illegal trade.

    ‘Proposals can come from private, public, or non-governmental organizations, and interested organizations must submit their applications by November 15, 2017,’ the company said in a note posted on its website.

    ‘For this second funding round, PMI IMPACT will focus on initiatives that address converging forms of illegal trade and related crimes, such as corruption, money laundering, and organized criminal networks.

    ‘The projects can be implemented anywhere in the world, but should have an impact in one or more of these geographic areas: Eastern Europe, Middle East, North Africa, Tri-Border Area in South America, Central America, South and Southeast Asia.

    ‘As highlighted by expert speakers from public institutions, law enforcement, the private sector, and civil society at a two-day conference on Combating Illicit Trade, held in London earlier this week with the support of PMI IMPACT, illegal trade takes many forms – ranging from the smuggling and counterfeiting of goods to human trafficking, and the trade in drugs, arms, and wildlife. Illegal activities are frequently interlinked and converge, as criminals exploit the same large-scale trafficking routes and modes of operation.’

    PMI said the PMI IMPACT Expert Council would review and select the projects for funding.

    “We are looking forward to receiving cutting-edge proposals that will help private and public organizations improve their knowledge and efficiency in the fight against this growing concern worldwide,” said Alain Juillet, a member of the PMI IMPACT Expert Council.

    Information on how to apply for the second funding round is at: http://www.pmi-impact.com/Apply/How.

  • Well-off using illegal trade

    Well-off using illegal trade

    Forty-eight percent of UK smokers earning less than £6,000 a year buy tobacco from illicit sources, according to the report of a poll commissioned in June by the TMA, the trade association for the UK’s tobacco industry.

    More surprisingly perhaps, 40 percent of smokers who earned more than £60,000 also buy tobacco from illicit sources.

    The TMA said that the June poll, conducted nation-wide among 12,065 adult smokers, was commissioned so as to help it understand smokers’ ‘awareness, behaviour and attitudes towards illicit tobacco’.

    The poll’s questions were said to have been devised after the receipt of input from HM Revenue and Customs and other stakeholders.

    Among the key findings: 72.5 percent of UK smokers buy tobacco from sources where UK taxes aren’t paid, including illicit tobacco and that from abroad, and overall 41 percent of smokers buy tobacco from illicit tobacco sources.

    Eighty-eight percent of smokers think that tobacco prices are too high, while two percent think they are too low.

    Twelve percent of smokers who knew of illicit tobacco in their local area reported it to the authorities, down from 20 percent in 2016.

    In announcing the poll’s findings, the TMA said tobacco on which UK taxes was not paid was a major issue for law enforcement and taxpayers, with £3 billion of tax lost to the illegal trade and cross border shopping in 2015-16.

    The link between high tobacco taxes and the illicit market was acknowledged by many leading independent institutions including the Royal United Services Institute, the TMA said, before adding that government taxes accounted for up to 90 percent of the price of a pack of cigarettes in the UK.

    ‘The regulatory changes to the UK tobacco market this year – the ban on small packs and the introduction of plain packaging – may make the problem worse, with 45 percent of smokers saying they are more likely to purchase illicit tobacco because of the changes,’ it said. ‘Moreover, smokers are increasingly buying larger amounts of untaxed tobacco, with 53 percent saying they buy 200 cigarettes or more from non-taxed sources…

    ‘Overall this survey confirms that the government’s policies do not have the support of smokers and are likely to be a large contributing factor to the high level of illegal tobacco in the UK.’

    Responding to this year’s findings, TMA director general, Giles Roca, said the results revealed the true extent of how the government’s high tax policy, in creating some of the highest tobacco prices in Europe, had continued to push smokers to buy from non-UK-duty-paid and illicit sources.

    “High taxes have cost the treasury billions of pounds in lost revenues whilst giving a boost to the criminals who are behind the illegal trade,” he said. “There is also worrying evidence that children are increasingly accessing tobacco from these illicit sources.

    “The regulations that came fully into force this year banning small tobacco packs and introducing plain packaging are making the problem worse by pushing smokers towards the illicit market rather than encouraging them to quit.

    “There is a real risk that the problem could be made worse if the government decides to increase tobacco duty for a second time in nine months in the upcoming budget. These findings suggest the government needs to completely re-think its tobacco taxation policy.”

  • Pack size matters

    Pack size matters

    While Malaysia has been debating long and hard over whether to reintroduce 10-piece packs of cigarettes, in part to help combat a rising illegal trade, illegal traders have been busy introducing 25-piece packs to the market, according to a story in The Independent Singapore.

    The chairman of the Malaysia-Singapore Coffeeshop Proprietors General Association (MSCSPGA) Ho Su Mong was quoted as saying that these bigger packs had been

    gaining converts, which could mean that smokers of illicit cigarettes were now smoking more than they used to do.

    The MSCSPGA was said to have lambasted the authorities for closing their eyes to the illegal trade in cigarettes. It was quoted as saying that while the authorities squabbled over how to curb sales of illicit cigarettes, more young people were being drawn toward these cheaper products.

    The association says the government should allow the sale of 10-piece packs of cigarettes as a pragmatic tool to address the illegal cigarette trade and reduce smoking overall.

    In addition, the association is urging NGOs to take into consideration that the authorities, including the Ministry of Health, have said that the incidence of smoking, especially amongst young people, had gone up over the years due to the widely-accessible and affordable illicit cigarettes.

    “By not addressing this reality, NGOs are only helping the illegal cigarette trade to continue to flourish and harm the very people they want to protect,” said Ho.

    “If we truly want to reduce overall smoking and accessibility, we need to fight the real threat which is illegal cigarettes.”

  • Marijuana poses a challenge

    Marijuana poses a challenge

    The president and CEO of Imperial Tobacco Canada, Jorge Araya, is to address media representatives on the challenges faced by the tobacco industry, including that caused by ‘inconsistencies between proposed regulatory approaches for tobacco and marijuana’.

    In a press note, Imperial, which is the largest tobacco company in the country, said it had run its business in an increasingly complex and challenging marketplace since 1908.

    ‘Today it faces government expropriation of its branding, aggressive competition from a contraband tobacco industry that comprises more than 30 per cent of the market in Ontario, and a soon-to-be-legalized marijuana market,’ the note said.

    ‘Mr. Araya will discuss these challenges, and particularly the concern that an absence of legal tobacco branding is likely to result in consumers migrating to contraband products.

    ‘He will also discuss the company’s enthusiasm for less-risky tobacco and nicotine products, and the inconsistencies between proposed regulatory approaches for tobacco and marijuana.’

    The media luncheon at which Araya will speak is being hosted by the Empire Club of Canada in Toronto on September 28.