ASEAN customs heads join forces to stop illicit trade

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ASEAN customs heads join forces to stop illicit trade
Smuggled cigarettes and vape products intercepted at the Bureau of Customs-Manila International Container Port in May 2024. Photo from the BOC.
  • Stopping illicit trade is an urgent priority for ASEAN customs heads as the region loses billions of dollars annually
  • About 100 delegates, including customs heads from 10 ASEAN member states, along with representatives from China, Japan, Korea, and Australia tackled illicit trade at the 33rd Meeting of ASEAN Directors-General of Customs on June 4 to 6 in Vietnam
  • The concentration of illicit tobacco is most prominent in Indonesia, Malaysia, the Philippines and Vietnam, which combined for about 95% of the region’s total consumption
  • Lost government tax revenues in ASEAN due to the illicit trade in tobacco products were estimated at $2.9 billion in 2017
  • The Bureau of Internal Revenue reported losses of around P500 billion annually, P100 billion or $1.8 billion of which is due to tax evasion on cigarettes

Stopping illicit trade is an urgent priority for Association of Southeast Asian Nations (ASEAN) customs heads as the region loses billions of dollars annually due to the smuggling of tobacco products, according to an international report.

Illicit trade, including smuggling of tobacco products, is an obstruction to ASEAN regional integration by 2025, said the Transnational Alliance to Combat Illicit Trade (TRACIT) and the EU-ASEAN Business Council in a joint report.

About 100 delegates, including customs heads from 10 ASEAN member states (AMS), along with representatives from China, Japan, Korea, and Australia tackled illicit trade as a main agenda at the 33rd Meeting of ASEAN Directors-General of Customs on June 4 to 6 in Vietnam.

The TRACIT report said that the concentration of illicit tobacco is most prominent in Indonesia, Malaysia, the Philippines and Vietnam, which combined for about 95 percent of the region’s total consumption.

“Cigarettes are exported from Indonesia to several countries in the region, predominantly the Philippines through ports such as Nunukan and Tarakan,” the report said. “Further, the Philippines also receives large volume of imports from Vietnam, Cambodia and India that transit through Singapore.”

ASEAN governments lost close to $3 billion in tax revenue from illicit tobacco products in 2017 alone. In the Philippines, around P100 billion ($1.9 billion) was lost annually due to cigarette tax evasion.

Lost government tax revenues in ASEAN due to the illicit trade in tobacco products were estimated at $2.9 billion in 2017, the TRACIT report said.

Cigarette brands declared for export to the Philippines must register with the Bureau of Internal Revenue (BIR) in order to be sold legally in the country.

According to the TRACIT study, BIR reported losses of around P500 billion annually, of which they report P100 billion or $1.8 billion is the result of tax evasion on cigarettes.

A highlight of the ASEAN custom heads’ meeting was the signing in October 2023 of the ASEAN Authorized Economic Operator Mutual Recognition Agreement (AAMRA).  The agreement simplifies customs procedures for trusted businesses across the region to ensure faster and smoother trade as well as fights smuggling and trade fraud within ASEAN.

The Philippines, Brunei, Indonesia, Malaysia, Singapore, and Thailand have implemented the AAMRA program.

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