Cigarette smuggling

Unscrupulous cigarette traders are raking it in despite the lockdown, so say my sources.

I’m not surprised. With the production of legitimate cigarettes down, cigarette smuggling is the inevitable outcome.

Authorities are trying to step up their crackdown on this lucrative, yet illegal, business. One problem they're facing is that some people in power are playing godfathers or godmothers to illegal cigarette traders.

Earlier this month, for instance, authorities raided a warehouse in Pampanga, seizing about 600 master cases of cigarettes. One master case contains 10,000 cigarettes.

The seized products are worth P30 million, according to estimates. But members of this government bureau tasked to crack down on smuggling were surprised to hear that two lawmakers intervened.

Apparently, the business park in Pampanga — where the warehouse is located — is owned by the lawmaker's friends. The lawmaker questioned the raid, insisting that there shouldn't be a raid at this time because of the nationwide quarantine.

After the raid, it was another lawmaker, a ranking member of the House of Representatives, who called the government agency's raiding team to urge them not to seize the illicit cigarettes.

Could this explain why the agency, which always issues press releases on its enforcement actions, did not report the raid? Did the office accommodate the request of lawmakers to turn a blind eye to this particular warehouse?

This is disturbing and poses a very serious threat to President Duterte’s campaign against cigarette smuggling.

How can government raids succeed if politicians are involved either as smugglers themselves or coddlers?

It’s a vicious cycle, and as long as our dear lawmakers are playing godparents to smugglers, then the crackdown on cigarette smuggling will never succeed.

It’s the reason why cigarette smuggling continues.

Local industry hurt

Even the legitimate big players are feeling the pinch.

According to a recent disclosure by Lucio Tan-owned conglomerate LT Group Inc., the illicit trade remains a problem for the industry.

“During the first quarter of 2020, there were 24 enforcements same as in the first quarter of 2019,” said the group that jointly owns and controls the country’s leading cigarette manufacturer, PMFTC Inc., with Philip Morris.

“However, 110 machines were seized from illegal factories, 4.5 times more than the 24 machines seized in the first quarter of 2019. The 110 machines form 20 lines, with each line estimated to produce as much as three million sticks per day,” the disclosure revealed.

The company said the industry’s volume, which was estimated at 108.9 billion sticks in 2012, has already declined by 35 percent to an estimated 70.5 billion sticks in 2019. This is partly due to higher taxes and smuggling perhaps.

The industry is estimated to have declined further by nine percent in the first quarter of 2020, also partly due to the enhanced community quarantine implemented in Luzon starting March 17 and in other select cities thereafter.

Lost tax revenue

It’s also worth noting that smuggling is happening nationwide. What this really means is lost tax revenue for government — at a time when state coffers need all the boost.

Last May 5, the Bureau of Customs in Zamboanga destroyed P245.8 million worth of smuggled cigarettes at Fast Cargo Logistics Baliwasan, Zamboanga City.

The BOC also destroyed 2,183 master cases of illicit cigarettes the following week.

The cigarettes were seized up to March — a total of 2,183 master cases, which contained around 21,830,000 sticks of cigarettes amounting to P109 million.

It’s not only cigarette smuggling that remains rampant. Oil industry sources said oil smugglers are also raking it in these days with powerful businessmen involved in the illicit trade. But this is a whole different story and makes for another piece if only to give justice to this issue.

But for now what is clear is that smugglers, whether they’re smuggling cigarettes or oil, or surgical masks, are doing it with impunity and it's partly because of their coddlers in the august chambers of Congress or in Malacañang.

At this time when the whole world is facing a global health crisis because of the coronavirus disease 2019 or COVID-19, this is the last thing our country needs.

The government needs all the money it can get especially in these challenging times. Any form of corruption that would translate to lost tax revenues for the state – whether it's one centavo, one peso, one billion pesos or a trillion pesos more – is simply a grave injustice to this nation of 107 million.

Iris Gonzales’ email address is [email protected]. Follow her on Twitter @eyesgonzales. Column archives at eyesgonzales.com