Philippines - Tobacco Reporter

New Proposal to Tackle Illicit Trade

Joey Salceda, the chairman of the Philippine House of Representatives Ways and Means Committee, has proposed new legislation to tackle the illicit trade in cigarettes, reports the Philippine News Agency.

Among other things, the measures would address smuggling through the country’s economic zones, leakage of tobacco declared for export or transshipment, and the manufacture of fake cigarettes.

The illegal tobacco market has flourished in the Philippines recently. The government expects to miss out on PHP60.6 billion ($1.06 billion) in revenue this year if the illicit tobacco trade continues on its current trajectory.

Salceda noted that 2022 tax collections declined by 7.8 percent to PHP160.4 billion and that the government missed its 2022 target of PHP191.6 billion by PHP31.2 billion.

Salceda said that illicit cigarettes are “easy to come by” in every trade segment. “There is no challenge to buying these brands,” he was quoted as saying. “And they sell at as low as one-fifth the price of licit cigarettes. The legitimate ones don’t stand a chance. Even fakes of premium brands are becoming easier to come by. From the same online shopping sites, fakes that are half the price and supposedly of the same flavor are sold openly.

“In the meantime, the revenue base will continue to shrink, and there is a chance that prevalence might actually increase as a result of cheaper illicit alternatives. This is a serious national crisis. For better or for worse, our advocacy of higher taxes played a role in making the illicit sector more attractive. We have a responsibility to help solve this problem,” he said.

October 17, 2023

Philippines Ag Dept. Supports Intercropping

The Philippines’ Department of Agriculture (DA) and local government units in tobacco producing areas are urging intercropping on tobacco fields to give farmers extra income and to make up for lost markets caused by smoking concerns, according to the Philippine News Agency.

High-value crops, such as rice, corn, garlic, onions, tomatoes and bamboo, can be planted alongside tobacco to help expand farmer income, according to DA Undersecretary Deogracias Victor Savellano. Intercropping will also help contribute to the Philippines’ food security.

Despite changing views toward smoking and tobacco, Savellano stated that the Department of Agriculture along with the National Tobacco Administration (NTA) must sustain the domestic tobacco industry as it affects about 2.2 million Filipinos and their livelihoods.

The domestic tobacco market generates billions in excise taxes annually, much of which funds the universal healthcare program.

“The government cannot allow the tobacco industry to sunset despite changes in consumers’ attitude toward cigarettes. However, we are now focusing on the export market … to make up for any decline in revenues generated domestically,” Savellano explained.

The NTA is pressing for more strict government responses to smuggling and other illicit tobacco activity. According to Robert Ambros, NTA regulatory head, government revenue loss due to illicit tobacco trade is estimated to be over PHP30 billion ($528.2 million) by the end of 2023.

“These past years, we had seen so much change in our health policies that affected the tobacco industry,” said President Ferdinand R. Marcos Jr. in an August speech delivered on his behalf by his nephew, Ilocos Norte Governor Matthew Manotoc. “As such, we must seek ways to protect the livelihood of thousands of our tobacco farmers.”

September 25, 2023

Philippine Growers Urged to Plant More

Philippine Agriculture Undersecretary Deogracias Victor Savellano urged tobacco-producing provinces in Northern Luzon to increase production for export, according to the Philippines News Agency. The request followed a meeting with the governing board of the National Tobacco Administration (NTA).

Savellano said that the NTA and farmers should boost tobacco production without sacrificing production of other crops, like rice, corn and other high-value crops.

If the Philippines increases tobacco for export, the country can engage in barter-to-barter with Indonesia, which produces low-cost rice and fertilizer.

In 2022, the Philippines exported 53 percent of tobacco produced while 47 percent was supplied to local tobacco manufacturers.

“Aside from our aim to increase our tobacco production for export, we are also looking at the other alternative products from tobacco and its commercialization, like the tobacco dust,” Savellano said.

August 30, 2023

New Rules for Vape Supplier Imports

The Bureau of Internal Revenue (BIR) in the Philippines said it will require importers of raw materials for vaping products to seek special clearances to release their shipments.

The agency cited the need to impose order on an industry with many emerging players, according to media reports.

“For vape products, we are going to require them to (apply for) the authority to release imported goods for raw materials,” BIR Commissioner Romeo Lumagui Jr. said. “We are thinking of ways to regulate because there are so many vape products now. The production of vape products is a backyard industry, so we’re thinking of ways to regulate it.”

In its latest revenue memorandum circular, the BIR announced that it is now requiring importers or manufacturers of raw materials and equipment used to make heated-tobacco products and vapor products to apply for an authority to release imported goods.

“The raw materials specially used for the manufacture of heated-tobacco products and vapor products shall include but are not limited to propylene glycol, vegetable glycerin, organic sweetener, artificial flavoring and nicotine,” the circular states.

Devices used for the manufacture of these products will also include but are not limited to mechanical or electric heating elements/atomizers, circuits, cartridges, reservoirs, pods, tanks, mods and mouthpieces.

Apart from the authority to release imported goods, importers and manufacturers must also apply for a permit to operate. Lumagui said that the BIR is working on addressing the shortfall from excise tax collections, which is mainly due to illicit tobacco.

“We’re targeting to minimize that 20 percent (shortfall). Within the year, we can cut that by more than half … ultimately, I want to make sure to fully resolve that shortfall,” he said.

August 7, 2023

Filipino Smokers Have Quit Options

Adult Filipino tobacco smokers who wish to quit should be given more alternatives to help them gradually decrease their nicotine consumption, a research group said, reports GMA News Online.

ASCRA Consulting’s project coordinator, Joze Songsong, discussed tobacco harm reduction (THR) in a media forum, explaining that Filipinos need to be protected from the dangers of smoking and some need smoking cessation support.

“Through tobacco harm reduction, what we want to do is to empathize with those adult smokers who can’t immediately quit because either they use nicotine as a way to alleviate the different social circumstances that force them into this particular lifestyle or habit,” Songsong said. “What we want to do is not to advocate for a specific type of cure for these Filipino smokers but to equip them with the right information and the tools to make those informed decisions because these Filipino smokers have the right to informed choices and have the right to make choices for their own health.”

Ehsan Latif, senior vice president of the Foundation for a Smoke-free World, said that the Philippines should learn from the THR progress of other countries like Japan and the United Kingdom.

“We can’t expect people to quit smoking in just a day. The challenge is how we interact with the private sector. It’s not dependent on one sect,” said Latif.

May 5, 2023

Philippines: Seized Cigarettes Destroyed

Seized fake cigarettes, raw materials and cigarette manufacturing machines were destroyed in a fire that affected three warehouses in Porac, Pampanga, Philippines, reports The Philippine Star. The items were worth about PHP4.8 billion ($86.8 million). The fire burned for 15 hours despite efforts from firefighters.

The Bureau of Customs and the Bureau of Internal Revenue had seized the destroyed items in raids across the country over the past several years. The warehouses were used as storage for what would later be used as evidence against suspects charged in court.

The warehouses are owned by Digama Waste Management Services and Greenleaf 88 Nonhazardous Waste Disposal.

May 3, 2023

Filipinos Warned Against Disposed Cigs

The Philippines Bureau of Customs (BOC)-Port of Zamboanga has warned the public against buying cigarettes that have disposed of by the agency, reports the Philippine News Agency.

The confiscated smuggled cigarettes are sprayed with pesticides, according to Mike Lanza, the customs intelligence and investigation service chief of BOC-Zamboanga.

“Hundreds of people were waiting to salvage packs of cigarettes,” Lanza said, referring to a large-scale destruction of illegal cigarettes completed on April 28, which took place at a sanitary landfill in Barangay Salaan in Zamboanga City. “The drivers of the dump trucks had to stop to avoid accidents.”

According to the BOC, individuals will pay scavengers for each pack of cigarettes they can recover. “They sell the cigarettes to community sundry stores at cheaper prices,” said Arthur Sevilla, BOC-Port of Zamboanga acting district collector.

The confiscated cigarettes are drenched in water and repeatedly crushed by heavy equipment, but scavengers search for packs that may have managed to stay dry.

May 1, 2023

Philippines Government Ends Illegal Online Sales

The Philippines government is set to remove 15,000 more noncompliant electronic cigarette sellers in online marketplaces, reports The Philippine Star.

“We have monitored almost 15,000 sellers online,” said Ruth Castelo, trade undersecretary. “We’ve advised platforms to remove almost 15,000 we observed that were noncompliant. These sellers all have cases already.”

Unregistered vapor products are subject to the Vape Law, which came into effect Dec. 28, 2022, and prohibits flavors, colorful caricatures on packaging and selling products within 100 meters of schools, among other restrictions.

“If online platforms would just strictly follow, there is no need to remove the sale of this product from them,” said Castelo. “It’s already indicated which products they can’t sell, but some still evade detection.”

April 28, 2023

Philippines President Blocks International Probe of Duterte

Philippines President Ferdinand Marcos Jr. has shut the International Criminal Court (ICC) out of the country as it attempts to investigate former President Rodrigo Duterte’s War on Drugs, reports Filter, citing Reuters. “That ends all our involvement with the ICC …. At this point, we essentially are disengaging from any contact, any communication,” Marcos said.

The ICC opened an investigation into drug war killings under Duterte’s leadership in September 2021, focusing on two periods: November 2011 to June 2016, when Duterte spearheaded a similar campaign as mayor of Davao City, and up to March 2019, after Duterte became president but before he withdrew the country from the Rome Statute, the founding international treaty that created the ICC.

The ICC temporarily suspended the investigation in November 2021, stating that the Philippines was conducting its own investigation and that the court would decide how to proceed at a later point. The investigation was reopened in January 2023 after the ICC stated that the Philippines government was not conducting a serious investigation of its own. President Marcos appealed the decision, asking for another suspension, but that request was not granted.

“We cannot cooperate with the ICC,” Marcos said, “considering the very serious questions about their jurisdiction and about what we consider to be interference and practically attacks on the sovereignty of the republic.”

ICC rules dictate that it can investigate any crimes that happened in the country while it was still a treaty member.

“As of 2021, we still hear from local activists that extrajudicial killings are taking place,” said Ajeng Larasati, human rights lead for Harm Reduction International. “The Philippines in the past few months is still debating reinstating the death penalty for drug offenses as well. It doesn’t seem Marcos has taken any steps to make its drug policy better and more respectful of human rights.”

“Just the fact the ICC is reopening the case is already a good step,” said Larasati. “Although it may not end up in an investigation, it still gave the Philippines government a sense that the international community is watching.”

March 30, 2023

Philippines Industry Group: Add Tobacco to Anti-Smuggling Act

The National Tobacco Administration (NTA) expressed support for the inclusion of tobacco in the Philippines’ Anti-Agricultural Smuggling Act of 2016, reports Inquirer.net.

There are two proposals in Congress: House Bill 3917 and Senate Bill 1812. Both bills would amend Sections 3 and 4 of the Anti-Agricultural Smuggling Act, which outline the crops covered by the law and the penalties for smuggling.

“The NTA is in solidarity with the proponents of the proposed measures as these would [offer] solutions to the curbing of tobacco smuggling and illicit tobacco trading/agricultural smuggling in the country,” the NTA said.

“The proposed measures against illicit tobacco trade and smuggling were meant to protect the local tobacco industry and sustain and increase the sin tax collection for the government coffers,” the NTA said.

According to the NTA, tobacco is a high-value crop that contributes tax revenue to education, health, infrastructure and more.

“The tobacco industry is one of the strongest pillars of the country’s economy and the lifeblood of the North as it provides livelihood and sustenance to at least 2 million people, including the [600,000] tobacco farmers and their families,” the NTA said.

March 27, 2023

Tag: Philippines