Government urged to impose stiffer penalties vs cigarette smugglers

MANILA, Philippines — Japan Tobacco International (JTI) has called on the government to impose stiffer penalties against illicit cigarette traders as it warned of a possible increase in illegal tobacco consumption globally amid the pandemic.

In a statement, JTI Philippines general manager John Freda said illegal tobacco trade is a growing problem in the country, which requires more government attention and “absolute vigilance.”

“In my previous role, I had seen situations where if the issue is not mitigated early, things can go badly wrong like Malaysia where over 60 percent of the cigarette market is illegal,” Freda said.

“I understand that for a country with so many islands like the Philippines, it is a huge challenge to control the problem, but the deterrents need to be stronger,” he said, adding that “stiffer sanctions are required. We need to see people being caught and brought to justice in a way that deters others from being part of this criminal endeavor.”

Under the National Internal Revenue Code, cigarette smugglers face a P50-million minimum cash fine and a possible jail time of eight to 12 years.

According to Freda, illegal tobacco trade is considered a lucrative business for criminals who make huge profits with very low risk of getting caught and “insignificant” penalties.

This deprives the government from collecting revenues, with products of legitimate businesses being copied and smuggled without paying taxes.

Freda also warned that counterfeit and contraband cigarettes are not subject to any quality controls.

“Our factory in Batangas, for example, ensures all products pass rigid quality checks before they are released in the market. If you see the factories these illicit makers are using, you will be surprised how they treat their products and where they store them. We have done tests on these products and they have been found to contain animal feces, plastic materials, dirt and high levels of lead.”

In a report,  JTI warned that organized criminal groups would further exploit public demand for cheap goods and capitalize on dwindling buying power amid a global recession due to the coronavirus pandemic.

The report also said there is an emerging trend in illicit tobacco trading, including significant seizures of illegal factories in Western European markets, and the increased use of technology to enable the sales of illegal tobacco products even amid strict lockdown measures.