Experts Call for Action Against Illicit Cigarette Trade

Staff Report

Experts have called for action against illicit cigarette trade by implementing a track and trace system.

Pakistan’s battle against illicit cigarette trade is encountering a significant challenge due to delays in the implementation of the Track & Trace system.

During a media briefing on Tuesday, experts expressed concerns over the delayed and incomplete adoption of the Track & Trace system, which was designed to combat illegal cigarette trading in the country.

Mona Iskandarani, Area Head of Legal and External Affairs for Asia Pacific, Middle East, and Africa (WEST) at BAT Group, informed the media that robust enforcement and fiscal measures are required to control illicit trade within the country.

Ms. Iskandarani emphasized the need for sustained enforcement across the entire supply chain to effectively combat the illicit cigarette trade.

On the other hand, Asad Shah, Director of Legal & External Affairs at Pakistan Tobacco Company Ltd (PTC), highlighted the challenges faced in the implementation process.

He added that the Track & Trace system is not a magic solution; it is a tool to assist law enforcement agencies.

“However, its effectiveness is compromised when some cigarette manufacturers resort to using counterfeit stamps and manual applications, defeating the system’s purpose,” Mr. Shah explained.

He further revealed that despite a 15-month lapse since the implementation deadline, only two out of over 40 cigarette manufacturers have fully implemented the Track & Trace system.

“As a result, the incidence of illicit trade has risen, contrary to the system’s intended goal of reducing duty and tax evasion in the tobacco sector,” he added.

The media was informed that since its implementation on July 1, 2022, the Track & Trace system’s shortcomings have allowed the illicit sector to grow substantially.

Estimates suggest that the illicit cigarette market share may rise from approximately 37% in 2021-22 to around 63% by the end of the current fiscal year. Pakistan Suffers Over $1b Loss Due to Illicit Cigarette Trade

“This alarming increase in illicit cigarettes could lead to a substantial revenue loss of approximately Rs 310 billion for the government in this fiscal year alone,” Mr. Shah added.

He further mentioned that locally manufactured illicit cigarettes were openly flouting laws by using counterfeit stamps and applying them manually on cigarette packs, while the packs did not even have the mandatory Graphic Health Warning.

Pakistani markets were also flooded with Duty Not Paid (DNP) cigarettes originating from AJK.