Japan Tobacco International Philippines, the local unit of Japan Tobacco International, asked the government over the weekend to impose stiffer penalties against people or groups found involved in illicit tobacco trade.
JTI Philippines general manager John Freda said in a statement the problem of illegal trade in tobacco was a growing one and required more attention. He said while the government was striving hard to stamp out the problem, the situation required absolute vigilance.
“Illegal tobacco makers are directly stealing from the state. As legitimate businesses, we are a very effective tax collector and clearly we can’t do that if there is an illicit problem. Illegal trade cheats everyone―governments, consumers and legitimate businesses,” Freda said.
“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,” he said.
Freda said for a country with so many islands like the Philippines, it was a huge challenge to control the problem, but the deterrents needed to be stronger.
“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,” he said.
“The illegal tobacco trade is a feast for criminals who make huge profits often with very low risk of being caught and insignificant penalties. A lucrative business indeed for anyone who has the logistics in place and can copy our products and import without paying the taxes, which is unacceptable,” Freda said.
Freda said with JTI products, quality was assured throughout all stages of sourcing, manufacturing, storage and distribution in full compliance with regulatory and legal requirements.
He said JTI’s factory in Batangas ensured that all products passed rigid quality checks before they were 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,” Freda said.
JTI earlier published a report entitled “The Gathering Storm” showing how the illegal tobacco trade were operating during the COVID-19 global pandemic and preparing to reap the rewards in the economic aftermath that will follow.
Law enforcement agencies around the world also welcomed the report, which was based on 63 field studies, conducted across 50 countries including Russia, Canada, Malaysia and the Philippines where tobacco smugglers have a strong presence.
JTI intelligence found that the global public health crisis and financial downturn created the conditions for a “perfect storm” where organized criminal groups would further exploit public demand for cheap goods and capitalize on dwindling buying power in the impending global recession, particularly in countries with high tax regimes.