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Last updated: Friday, July 21, 2017

 

Intensifying Cigarette Smuggling Prevention

Posted: Wednesday, March 29, 2017


Global economic integration and competition is posing many challenges for Vietnamese enterprises, and the tobacco industry of Vietnam is facing its biggest challenge: cigarette smuggling. Therefore, in order to curb this challenge, the Executive Committee of the Vietnam Tobacco Association hosted a meeting in Ho Chi Minh City to review its operations in 2016 and set out directions for 2017. The association sent recommendations to the Government, related ministries and departments on tackling cigarette trafficking.
The Vietnam Tobacco Association has always been very active and collaborative with authorities throughout the country in the fight against cigarette smuggling. Since the Government issued Decision 2371/QD-TTg dated December 26, 2014, the association has actively supported relevant forces to capture and destroy the smuggled goods. It assisted the capture of 10,147,156 packs of cigarettes in 2015 with a budget of VND30.3 billion, and 6,815,873 packs in 2016 with a support budget of VND21.6 billion. It timely commended and encouraged central and local anti-smuggling forces in dealing with serious cigarette smuggling. On September 20, 2016, the association paid a timely visit to the family of Officer Nguyen Kim Danh of Long An Provincial Market Agency, who died in his mission, to console them for their loss and finance the schooling of his second daughter until her age of 18. Since January 1, 2017, the association has raised the support for destruction of smuggled cigarettes from VND3,500 a box to VND4,500 (as stipulated in Circular 306/2016/TT-BTC issued by the Ministry of Finance on amendments and supplements to Circular 19/2015 on this support rate). In 2017, the association will unanimously end business ties with agents found selling illegally imported cigarettes.
 
In 2016, seeing that cigarette smuggling was on the rise with increasingly complicated developments and numerous sophisticated tricks, the association’s members adopted many solutions on the management, marketing and export of cigarettes, thus export revenue and tax payment was still on the rise in the face of shrinking output compared with the previous year (domestic sales dipped 3.5 per cent; exports climbed 3.1 per cent; and tax payment reached VND18,740 billion, an increase of VND1,083 billion, or up 6.8 per cent). To effectively prevent illegal trade in cigarettes in 2017, the Vietnam Tobacco Association has recommended the Government and relevant ministries seven solutions to tackle the issue.
 
The association has asked the Government to direct the National Steering Committee 389, the Local National Steering Committee 389, central and local authorities to drastically implement Directive 30/CT-TTg of the Prime Minister while coordinating with relevant bodies to launch action plans in cigarette smuggling hot-spots. In particularly, the Ministry of Industry and Trade has directed the Market Surveillance Agency and local market watchdogs to resolutely fight, promptly unearth and handle illegal acts of trading, transporting and storing smuggled cigarettes, and the display and sale of smuggled cigarettes at smoke shops, restaurants and hotels. In addition, the association has recommended that the Government submit to the National Assembly the amendments to the Law on Tobacco Harm Prevention, allowing the transfer of tobacco control funds to the Ministry of Finance for proper operation. At the same time, 50 per cent of the funds will be spent on supporting budget, equipment, means and personnel for smuggling prevention.
 
The association has also suggested that the Government submit to the National Assembly the amendments to Penal Code 100/2015/QH13, accordingly not applying the base value of cigarettes transported and traded to determine crimes and punitive frames, but criminalising those acts in case smugglers handle more than 500 packs of cigarettes and match with Decree 124/2015/ND-CP on imposition of administrative fines in production and trade of fake and prohibited goods. Specifically, Clause 1, Article 190 (crimes of making and trading of banned goods) should define criminal sanctions on acts of illegally importing 1,500-3,000 packs of cigarettes, or 500-1,500 packs in case of being previously charged with similar crimes, or intentionally storing and transporting prohibited goods stipulated in Article 191 of this Code. Furthermore, the association has suggested the Government direct the complete destruction of confiscated smuggled cigarettes to prevent the return of seized items as stated in Decision 2371/QD-TTg dated December 26, 2014 and add the provision of cigarette destruction to the amended Decree 67/2013/ND-CP. At the same time, the Government and ministries should consider increasing personnel and instruments for police, border guard, customs and market management forces; finance budgets, equipment and personnel for direct control of cigarette smuggling. Moreover, the association has proposed the Government permit the construction of facilities for burning smuggled cigarettes for better environmental protection (plan and design suggested by the association).
 
In 2015, under the direction of the Government, relevant authorities drastically executed Directive 30 and Decree 124/2015/ND-CP, thus reducing cigarette smuggling by 30 per cent over 2014. Nevertheless, cigarette smuggling rebounded complicatedly in 2016. Trafficked cigarettes were estimated to grow by 10 per cent over 2015 and accounted for 20 per cent of the market share, resulting to a loss of VND8,000 billion of taxes to the State Budget. Tricks used by smugglers were increasingly sophisticated and daring, and they used modern devices to challenge authorities. For example, on September 15, 2016, smugglers perilously fought against market forces in Long An province to take back evidences and kill an officer named Nguyen Kim Danh. Counter-smuggling loosened in 2016, resulting in a drop of 53.5 per cent of criminals charged and a decline of 30 per cent in burned cigarette (6.81 million packs, compared with 10 million packs in 2015).
 
Expansive cigarette smuggling was attributed to high excise tax and rising extracts for Tobacco Harm Fund. The inconsistency of legal documents relating to handling of smuggling behaviour, such as provisions of Penal Code 2015, Decree 124/2015/ND-TTg, Official Letter 06/TANDTC-PC of the Supreme People's Court, the Law on Commerce, and the Law on Investment among others, gave rise to difficulties and congestion in determining crimes of trading, transporting and storing smuggled cigarettes, thus losing the sharpest weapon of the law. At the same time, it reduced the resolution of authorities in preventing cigarette smuggling because they could only capture it, not handle it. Illegally imported cigarettes did not have health warning signs on the pack cover or tar and nicotine contents, thus drawing the interest of smokers. Jet and Hero brands accounted for over 70 per cent of smuggled cigarettes. The lack of firm resolution of many localities and competent authorities in the fight against cigarette smuggling was also a cause of the re-emergence of cigarette smuggling in 2016.
 
Van Luong








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