Local budget and production lose out due to tobacco smuggling

July 21, 2020 - 09:03

Việt Nam’s State budget has lost VNĐ8.5 trillion each year due to tobacco smuggling, experts revealed at a seminar in Hà Nội.

Market watch and police officers inspect a van carrying smuggled cigarettes in southern An Giang Province on July 6. Smuggled tobacco is harming local production in Việt Nam. — Photo courtesy of the team

HÀ NỘI — Việt Nam’s State budget has lost VNĐ8.5 trillion each year due to tobacco smuggling, experts revealed at a seminar in Hà Nội.

Nguyễn Mạnh Hùng, chairman of Việt Nam Consumer Protection Association, told a seminar on tobacco smuggling late last week that as Việt Nam has a huge number of smokers, smuggling is rife.

According to a global survey, the proportion of tobacco use among adults in Việt Nam was over 45 per cent, while the number of tobacco users was constantly increasing among young people in the country.

According to data from the World Health Organization (WHO), Việt Nam is one of 15 countries with the highest number of smokers in the world, ranking third in ASEAN, after Indonesia and the Philippines.

Hùng said tobacco smuggling brought high profits, after only drug trafficking, adding: “Smuggling can bring profits of up to 400 per cent while official imported cigarettes are subject to import tax of between 100 per cent and 202.5 per cent and value added tax of 10 per cent.”

Rodney Van Dooren, head of Illicit Trade Prevention for Philip Morris International (PMI) for Asia Pacific, told the seminar that: “Through smuggling, counterfeiting and tax evasion, governments are losing billions of dollars in tax revenues while legitimate businesses are being undermined, and consumers are being exposed to poorly made and unregulated products.”

Dooren said while South and Southeast Asia ranked high in terms of illegal tobacco trading with 15 per cent of the world, Việt Nam was third highest in the region with 21 billion sticks of illegal tobacco products.

He said in June, a total of 1,388 illegal heat-not-burn tobacco products were listed online, including 70 per cent on Facebook and Instagram and 30 per cent on Shopee, Lazada and other online channels.

Nguyễn Tiến Đạt, deputy director of the Business Department from the General Department of Market Management, said: “The smuggling takes place in both inland and waterways in the country, especially in Long An, An Giang, Kiên Giang, Tây Ninh provinces and HCM City in the south, Hà Nội, Quảng Ninh, Hải Phòng cities in the north and border areas of Quảng Trị Province in the centre of Việt Nam.”

Đạt said because of the high profits from smuggling, smugglers take risks and sometimes attack officials, making the situation more dangerous.   

In the last five years, the market watch teams have handled more than 32,000 cases of tobacco smuggling, confiscating over 6.4 million packs of cigarettes. 

According to the Tobacco Association, domestically produced cigarettes are subject to 75 per cent special consumption tax, 10 per cent value added tax; as well as funding prevention and control of tobacco harm totalling 2 per cent.

Cao Trọng Quý, an official from the Industry Department, said the local tobacco industry has maintained stable production with the quality of cigarettes improving, with less tar and nicotine content.

Quý said the tobacco businesses have contributed significantly to the State budget. Over the past 30 years, the industry reported an annual increase of 11.3 per cent in contributions. 

In 1989, it paid VNĐ100.5 billion to the State budget while last year the contribution reached VNĐ18 trillion. It also created jobs for millions of workers, including workers in production, farmers and people involved in trading of the product, he added.

Nguyễn Triết, secretary of the Tobacco Association, said: “While there are more regulations and taxes applied for local production, the smuggling of the product is gaining huge profits and influencing people’s health and local production.”

Quý from the Industry Department said currently, domestic raw tobacco met only 40 per cent of local demand. 

Phan Đình Quân, an official from the General Department of Customs, also raised another matter, saying: “Smuggling raises the risk of spreading the coronavirus.”

Participants at the seminar said the fight against smuggling was difficult, with limited resources and overlaps between forces.

In this case, Triết suggested the Government spend half of its funds for the prevention of smoking on tobacco smuggling in Việt Nam.

The participants suggested the Government should create a better legal environment for local businesses to compete and have long-term production, business and investment strategies that can help them to meet the demand of local consumers.

Rodney Van Dooren said: “What we need to see is a strengthening border control and law enforcement, as well as to build appropriate regulations for novel tobacco products in Vietnam, including heated tobacco products, to protect the interests of the government, local adult smokers and legitimate producers,” adding that PMI was committed in addressing the illicit sale of their new smoke-free products.

Triết said: “The fight against smuggling will boost the local industry and protect people’s health.”— VNS