Determined to Prevent Cigarette Smuggling

Vietnam is a major market of smuggled cigarettes in Asia. Particularly in 2013, about 17 billion cigarettes were smuggled into Vietnam market; in the first 2 months of 2014, smuggled cigarettes increased 43 percent over the same period in 2013. These warning figures were put forward at the recent meeting between the Ministry of Industry and Trade, the Vietnam Tobacco Association and the Market Surveillance Agency regarding the prevention of the cigarette smuggling.

According to Pham Kien Nghiep, General Secretary of the Vietnam Tobacco Association, the cigarette smuggling took 20 percent of the market share of the domestic cigarettes, causing a loss of production materials of 18,000 tonnes per year (equivalent to 10,000 hectares of tobacco plants). In 2012, smuggled cigarettes caused losses of the state budget of US$6,500 billion. Besides, the cigarettes smuggling caused job losses of 5 million farmers per year, a job loss of 600,000 workers per year and hundreds of thousands of workers and employees in related trade and service industries.

 

Cigarette smuggling has also caused negative impacts on public health problem. For example, it does not comply with any provision of the health warnings with pictures, food safety and reduction of tar and nicotine in progress and the requirements of quality control.

 

Trinh Van Ngoc, Deputy Director of the Market Surveillance Agency, said that recently, due to high profits for the smugglers, the smuggling of the foreign cigarettes has taken place on the Vietnam's borders with China, Laos and Cambodia. The smuggling of foreign cigarettes is particularly serious in the provinces between Vietnam and Cambodia. And some provinces in the South West and South East, particularly Ho Chi Minh City, are considered warning areas.

 

Smuggling and trading cigarettes has become more tricky, with sophisticated and diverse methods. The smugglers established the inter-province and cross-country linkages. In the domestic market, although the smuggled cigarettes is no longer sold openly as before, they are still sold internally with remarkable amount. The inspection of warehouse and transportation of cigarettes on the road is very difficult because the house inspection notices always come after the smuggled cigarettes are dispersed or it is hard to stop the car being transported.

 

Responsible authorities have decisively followed up the guidelines of the Government and the ministries to inspect and handle the transportation of smuggled cigarettes over the borders and inland. In the first 3 months of 2013 and early 2014, they found and confiscated 6 million smuggled cigarettes and 19,836 kilograms of material; in 2013, the market surveillance team captured 1,064,384 boxes and 5,357 kilogrammes of tobacco materials.

 

Pham Kien Nghiep said that the current tobacco industry of Vietnam is operating in the most rigid regulatory environment in the world, beyond the policy recommendations of the Framework Convention on Global Tobacco Control (FCTC). The 50 percent of the domestic cigarette box must be covered by a warning image and 1 percent over the excise tax is contributed to the fund of prevention of harm of tobacco, increased to 1.5 percent from May 1 2013 and to 2 percent in May 2019. In addition, the tobacco industry will follow the roadmap of reducing tar and nicotine; the inputs and production are stringently controlled; the advertising and promotion of any kind are banned and comprehensive licensing requirements (including retail) are included.

 

Vu Van Cuong, Chairman of the Vietnam Tobacco Association, said that the revenue of cigarette smuggling is high, the excise tax will increase the profitability of the cigarette smuggling, leading to the increase of cigarette smuggling. The Vietnam Tobacco Association fully agrees with the measures to increase tax revenues for the state budget and reduce tobacco consumption. "However, the tax increase should be considered appropriate at the time in order to avoid the adverse effects of not achieving the objectives of increasing the sate budget nor reducing consumption, while creating additional difficulties for the industry," said Vu Van Cuong.

 

Deputy Minister of Industry and Trade Do Thang Hai shared his same perspectives and high consensus on the recommendations of the Vietnam Tobacco Association and the Market Surveillance Agency in terms of tax increase and anti-contraband cigarettes. Accordingly, the Ministry of Industry and Trade will report to the government on this issue to delay the increase of the excise tax and to boost the campaigns against the cigarette smuggling into Vietnam markets, which helps to increase the revenue for the state budget. After preventing the significant amount of smuggled cigarettes, the government will consider increasing the tax rate in the progressive route, in accordance with the actual situation. In the coming time, the Ministry of Industry and Trade will draft and submit to the Government for approval of the project of prevention of the smuggling, transporting storing and selling illegally the imported cigarettes on the Southwest border.