The Illicit Tobacco Trade in Southeast Asia

January 2020

By Chander S Jeena, Secretary, Authentication Solution Providers Association

Eliminating illicit trade (especially in ‘sin’ products) is becoming an essential element for countries to achieve socio-economic progress. South Asian and ASEAN countries, collectively with China, play an essential role in this, given that they are the world’s largest tobacco consumers and producers.

Given the importance of this region, we thought it would be a good idea to run a series of articles on the illicit tobacco trade situation, current developments, and critical measures taken by the countries making up the south and southeast Asian region. Although we will try to cover all countries, the key ones will include Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam, Afghanistan, Nepal, Bangladesh, India, Sri Lanka, Hong Kong, and Mongolia.

Let’s begin our journey, however, with a  general  overview.

In the last decade, several countries in this region have made progress in addressing illicit trade, although this progress has not been significant enough to control the tobacco supply chain. Like other parts of the world, the region classifies tobacco products and alcoholic beverages as excisable goods and has adopted the use of tax stamps and track and trace to varying degrees and with some interesting developments.

For example, countries like Indonesia (1970s), Vietnam (1999), Bangladesh (2000), Nepal (2003) and Myanmar (2007) have been using tax stamps for a number of years, but are yet to implement track and trace features. In addition, Singapore uses fiscal marking on individual cigarette sticks, and Brunei Darussalam – although one of the most advanced countries in the region in terms of tobacco control – does not currently have a mechanism in place for excise tax stamps or track and trace systems – maybe because it doesn’t produce tobacco products itself.

In most cases, fiscal markings/tax stamps in the region are not part of the track and trace mechanism. However, a few countries, such as Cambodia, Malaysia, Philippines and Thailand, have access to partial track and trace information such as the manufacturing facility, intended market of retail sales, and product description, which are embedded in the stamp.

Similarly, the region has licensing systems covering some parts of the supply chain. Thailand, Singapore, and Vietnam are enforcing more control over the supply chain, including almost all sectors (such as growers, producers, exporters/importers, wholesalers and retailers), enabling the government to more effectively monitor and regulate the tobacco industry.

In 2019, 12 countries in the region were using tax stamps, and one is using fiscal marking for tobacco (see table below). The region is, however, facing increasing problems with smuggling and illicit trade in tobacco products, and countries will need to review their policies and enforcement strategies, including the introduction or enhancement of tax stamp and traceability mechanisms.

Also in this issue:

  • Maine Negotiates with New Vendor for Marijuana Track and Trace
  • Tech Revolution Can Fast-Track Tax Stamp Growth in 2020
  • Are Tax Stamps Still Part of Russia’s Plans for National Track and Trace?
  • Security Document Summit Shows Considerable Growth
  • How Ramón Chozas Increased Tax Stamp Productivity by 15%
  • Perspectives on the WCO 2019 Illicit Trade Report – Alcohol Products

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