July 11, 2024
MANILA – With billions of dollars lost in collective tax revenue, the Association of Southeast Asian Nations (ASEAN) member-countries and its partners have jointly committed to a strong coordinated regional response that could urgently address the growing threat of illicit trade, including the rampant smuggling of tobacco products.
A hundred delegates including Customs leaders from 10 ASEAN member states (AMS), along with ASEAN partners including China, Japan, Korea, and Australia gathered from June 4 to 6 for the 33rd Meeting of ASEAN Directors-General of Customs in Phu Quoc, Vietnam to forge enhanced customs cooperation, tackle illicit trade activities and boost regional trade.
According to a report by the Transnational Alliance to Combat Illicit Trade (TRACIT) and the EU-ASEAN Business Council, addressing illicit trade remains an urgent priority for the region as it could thwart its goal of regional integration by 2025.
ASEAN governments lost close to US$3 billion in tax revenue from illicit tobacco products alone in 2017. In the Philippines, around P100 billion or US$1.9 billion are lost every year because of cigarette tax evasion.
Thailand, meanwhile, reported tax losses of THB7 billion in 2021, or US$202 million, with an illicit incidence rate of about 10 percent.
“The concentration of illicit cigarette consumption is most prominent in Indonesia, Malaysia, the Philippines, and Vietnam, which collectively accounted for about 95 percent of the region’s total illicit consumption in 2017,” the TRACIT report said.
“Cigarettes are exported from Indonesia to several countries in the region, predominantly the Philippines, through ports such as Nunukan and Tarakan. Further, the Philippines also receives large volume of imports from Vietnam, Cambodia, and India that transit through Singapore,” it said.
Multiple news reports have confirmed that areas in the Philippines such as Palawan, Zamboanga, Sulu, and Tawi-Tawi have been identified by local authorities as critical entry points for cigarette smuggling, with illicit products entering from Indonesia, Malaysia, Cambodia, and Vietnam.
The TRACIT report also notes that other tobacco products such as smokeless tobacco are also vulnerable to illicit trade. Bans on e-cigarettes in Singapore and Thailand have contributed to an increase in the smuggling of vaping products from neighboring Malaysia, a major producer of e-cigarettes.
In Thailand, the TRACIT report found that “brands that are exported from Vietnam and Indonesia and that appear to have consignees based in Singapore, Hong Kong, Malaysia, and the United Arab Emirates are likely considered goods in transit which receive less scrutiny by Customs. These same brands are seized during law enforcement efforts in the Thai market; whereas Cambodia has exported brands destined for Thailand that are not sold legally in the market.”
The meeting updated recent progress in ASEAN customs integration, including the signing of the ASEAN Authorized Economic Operator Mutual Recognition Agreement (AAMRA). The agreement not only streamlines customs procedures for trusted businesses across ASEAN to ensure faster and smoother trade but also combats smuggling and trade fraud within the region.
Six countries—the Philippines, Brunei, Indonesia, Malaysia, Singapore, and Thailand—have implemented the AAMRA pilot program.
A recent Joint Customs Control (JCC) operation resulting in the seizure of massive quantities of illegal tobacco products including 1,250 kilograms of dried tobacco leaves and over 50,000 packs of illicit cigarettes emerged successful due to the collaborative efforts of the Philippines, Malaysia, Singapore, Thailand, and Vietnam.
Noting that illicit traders now use online platforms to distribute counterfeits and illegal products, ASEAN countries also committed to work on developing guidelines for better information exchange between customs authorities and e-commerce operators to curb these activities.
The meeting also focused on discussing issues, including programs and solutions to complete the goals identified in the ASEAN Customs Development Strategy Plan for 2021-2025, with emphasis on exchanging electronic documents through the ASEAN Single Window and implementing the ASEAN Customs Transit System (ACTS) which simplifies customs procedures for goods moving between countries.
Vietnam Customs Director General Nguyen Van Can, ASEAN Customs Chair for 2024-2025, emphasized that it was time for ASEAN customs to “join hands for a new journey with higher targets on integration and connectivity,” to successfully realize the ASEAN vision of “One Vision, One Identity, One Community.”