PMFTC, government to curb illicit cigarette trade

MANILA, Philippines - Philip Morris Fortune Tobacco Corp. (PMFTC) has vowed to work closely with government and other market players to curb illicit trade in the cigarette industry.

“We will continue to work together with the government to combat contraband and counterfeit, which have a direct impact on prices and the subsequent taxes,” PMFTC president Roman Militsyn said.

“It is a big challenge that we need to work together as an industry together with government agencies,” Militsyn said.

Militsyn said the other challenge is how to create a level playing field in the face of increasing sale of contraband and counterfeit tobacco products.

“It is definitely a growing concern for us,” he said.

Illicit cigarette consumption in the Philippines accounted for 19 billion cigarettes consumed in 2014, accounting for nearly a fifth of total consumption, according to a recent study by UK-based research group Oxford Economics.

Total tobacco consumption fell three percent for a second consecutive year, but the share of illicit cigarettes to total consumption rose to 19.4 percent last year, the highest level since 2012.

“One in every five cigarettes originated from illegal channels,” the Oxford report added.

International Tax and Investment Center and Oxford Economics were contracted by Philip Morris to study the illegal cigarette market in 14 Asia Pacific region countries which include Australia, Brunei, Cambodia, Hong Kong, Indonesia, Laos, Macao, Malaysia, Myanmar, Pakistan, Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

Meanwhile, the PMFTC chief executive said that the sin tax law provides reasonable predictability for the industry.

“We think that it is a good roadmap for the fiscal environment for the industry going forward.”