Tobacco smuggling remains leading cause of industry decline

Tobacco smuggling remains leading cause of industry decline, job losses

By: - Reporter / @zacariansINQ
/ 04:52 PM November 20, 2023

Various government agencies and experts stressed the need to address the smuggling of tobacco as it causes job losses, revenue decline, business shutdowns, and a decrease in local demand.

Candon City is home to 1,500 tobacco farmers who depend on the crop for livelihood. file photo / JEAN MANGALUZ

MANILA, Philippines — Various government agencies and experts stressed the need to address the smuggling of tobacco as it causes job losses, revenue decline, business shutdowns, and a decrease in local demand.

According to National Tobacco Administration (NTA) Deputy Administrator Giovanni Palabay in a recent forum, illicit trade of tobacco continues to cause loss of revenue, public health concerns, business closures and unemployment, market distortion, encouragement of criminal activities, and environmental degradation in the economy.


He added that illegal trade also decreased demand for locally grown tobacco, leading to lower prices and hence lower income for tobacco farmers.


“From 60,000 hectares, tobacco planting areas now only cover 27,000 hectares,” Palabay said.

Meanwhile, Agriculture Undersecretary Deogracias Savellano tagged the illegal tobacco trade as “theft,” equating it to stealing from farmers and their families, the government, and Filipinos in general, as tobacco revenues are also supposed to fund Universal Health Care.

“Illicit trade is theft, regardless of what it is called,” said Savalleno.

“Artificially lowered prices of illicit tobacco [also] lead to an uncompetitive market,” he added.

Philippines Japan Tobacco International general manager John Freda, for his part, noted how tobacco smuggling affects the entire supply chain.

“This has led to workforce reductions, and the situation could worsen,” said Freda.


“Illicit products infiltrate established distribution routes and find their way into the retail space,” he added.

Former lawmaker Jericho “Koko” Nograles shared similar sentiments but stressed that the smuggling issue transcends tobacco.

“It’s national security, it’s tax collection, it’s customs collection,” he said.

Work together against smuggling

According to NTA administrator and chief executive officer Belinda Sarmiento-Sanchez, there should be a “multilateral approach of commitment to collaboration between agencies on different levels of governance” to combat tobacco smuggling.

“Innovating strategies, advancing technologies, and encouraging information-sharing: these help interagency efforts,” she said.

READ: International firm exec tells Senate: About 73% of tobacco products in PH smuggled

Nograles said that initiatives like the inclusion of tobacco in the Agriculture Smuggling Act would give teeth to law enforcement agencies.

READ: Bureau of Customs teams up with tobacco firms to curb smuggling

“There would be light at the end of the tunnel [in the fight against illicit tobacco trade] if we synergize and work together,” said Nograles.

READ: Cigarette smuggling siphons off taxes that fund health care – solon

For Federation of Philippine Industries chair Jesus Lim Arranza, the problem of smuggling is not irreparable and is merely a “question of determination.”

“If we all fight smuggling, no one will be able to smuggle,” he said.

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“It’s a question of determination,” he added.

TAGS: Industry, job loss, Smuggling, Tobacco

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