From: Pakistan Observer
Saturday, January 12, 2013 – Islamabad—A recent market study has stated that; smuggled cigarettes were a rare sight for many years. It comprised of Less than 1% of the total cigarette trade in Pakistan. It was favored by a select few of the elite circles who seek ‘imported’ products. However, the last two years, have seen a twofold increase in the volume of smuggled cigarettes. The ‘imported’ appeal now extends to the lower socio-economic strata with a rapid influx of very low priced smuggled cigarettes.
The study reveals that two key factors explain the rising sales of smuggled cigarettes; the introduction of pictorial health warnings in Pakistan. (effective September 2010) and the ever–increasing taxes on local cigarette producers. These two preventive measures enforced to curtail smoking, are now ineffective due to the cheap, smuggled alternatives available to the consumers. Although taken with the right intentions, these measures stand no chance of benefitting the society without effective enforcement. The Government is hit hard with revenue losses too.
This increase in smuggling can also be attributed to our porous borders with Afghanistan and Iran. This illegal trade is expected to grow further unless the Government takes drastic actions to stop the inflow of brands like Pine, Silk Cut and Esse, which commit multiple regulatory violations.
Despite preventive measures at the retailers’ level, the rampant availability of smuggled brands indicates the existence of a resilient supply chain network, comprising of almost 100 known warehouses, all over the country, whereby one out of every four cigarettes beings sold in the country is illicit.
Targeted raids and arresting violators is the need of the hour, to restrict this illegal trade. Regulatory control over this trade can yield millions of dollars in revenue to the Government. An effective enforcement crackdown on 100 warehouses can ensure this robust revenue stream for the national exchequer. The absence of stringent measures towards curbing the elicit trade of cigarettes alone is expected to cause the government, a loss of at least 100 billion rupees during the next five years, besides causing flight of capital from this high yielding local industry.
