What is illegal trade?
Specific products are traded without the official permission of the relevant government departments. Action may be taken against the sale of unregistered, taxable goods. Often, goods imported or exported from another country are traded illegally.
During the Masala (Burma Socialist Program Party) period, some specific goods were not allowed to enter Burma legally, and this created a black market for these goods, with Burmese citizens wanting to buy smuggled goods across the Thai-Burmese border.
Today, even though the government has officially registered and allowed the import and export of certain products in accordance with the regulations, there is still a black market for some products, for example, rare and endangered wild animals and their parts (eg ivory, tiger skin etc,) and certain brand of foreign made alcohols and cigarettes. The most obvious reason is to avoid paying taxes.
Cigarettes on the black market
If there is a product to be imported and sold from abroad, the trader has to make a formal application and registration at the relevant Ministries and Departments for obtaining permission and obtaining a license for a fixed fee. Sales taxes and duties are levied on goods. When sold in a local store, each item may be sold individually (for example, a single bottle of foreign liquor or a single pack of foreign cigarettes).
If you want to import a cigarette produced by a well-known foreign brand, you must first apply for a permit to import the product. The consumer buys at the market price, and the importer buys and sells in accordance with the regulations and laws, and the state receives the license fees and taxes.
But when the sellers of these type of cigarettes smuggle them across the border, they no longer have to pay the registration fee and tax, which saves capital. They smuggle non- taxed (unlabelled) cigarettes and sell them at the same price as legally imported cigarettes, leaving the sellers with huge profits. Cigarettes are being traded on the black market because consumers are willing to buy them. Sometimes, for some reason or no import at all, these foreign brand cigarettes may be out of stock and the price may go up if the illegal seller raises the price.
Similarly, when a factory is set up in the country to produce cigarettes and resell them abroad, the black market sells them at a loss without any revenue owed to the state.
Therefore, it is important to eliminate the black market for tobacco products, including cigarettes. It is important to ensure that sanctions are imposed on the transit route from the country of origin of the smuggling of cigarettes and other tobacco products for smuggling, as well as international destinations.
WHO FCTC Protocol to Eliminate Illicit Trade in Tobacco Products
The Protocol to Eliminate Illicit Trade in Tobacco Products is the first protocol to the WHO FCTC. It was adopted by consensus on 12 November 2012. The Protocol was negotiated by the Parties to the WHO FCTC over several years and entered into force on 25 September 2018.
The Protocol to Eliminate Illicit Trade in Tobacco Products is ‘an international treaty with the objective of eliminating all forms of illicit trade in tobacco products through a package of measures to be taken by countries in cooperation with each other. Illicit trade poses a serious threat to public health because it increases access to – often cheaper – tobacco products, thus fuelling the tobacco epidemic and undermining tobacco control policies. It also causes substantial losses in government revenues’.
According to a study in 2007,11.6% of the world's cigarettes were traded on the black market, and it is estimated that the government lost about US $ 40.5 billions in tax revenue.
Tackling Illicit tobacco during COVID-19 Pandemic
At a time when there is a pandemic, it is important to prevent the smuggling of tobacco products, including cigarettes. Eliminating cigarette smuggling and black market may lead to reduction of smokers who are more vulnerable to severe symptoms of COVID-19. It will also prevent loss of revenue which can be used for management of COVID-19.
Dr. Tara Singh Bam, Asia Pacific Regional Director at the International Union Against Tuberculosis and Lung Disease remarks that ‘smoking and use of tobacco products is entirely preventable. The tobacco epidemic is manmade and tobacco industry propelled epidemic. Eliminating illicit trade of tobacco products is an absolute imperative for the Endgame of tobacco agenda.’
Black Cigarette Market in Myanmar
In any country that is a Party to the Protocol, it is illegal to sell cigarette packs that do not have pictorial health warnings, including graphics, occupying a specific space on the packaging accordingly. And they must also be labelled as a taxable item.
In Myanmar, cigarettes are smuggled across the borders. Also, not only cigarette but also other tobacco products like
E-cigarettes, heated tobacco products etc, are advertised and sold online.
According to one study, the smuggling of cigarettes in Myanmar increased by 14.2% in 2017 as compared to 2016, but the total trade volume was less than 1%.
Some smuggled cigarettes are being exported from Myanmar to neighbouring countries, especially to India and Bangladesh. Both foreign and domestic cigarettes are being smuggled.
Between 2016 and 2018, the Indian Customs Department seized large quantities of cigarettes smuggled from Myanmar.
In addition to cigarettes, there is also the illicit trade in other tobacco products. In 2018, in addition to 50 foreign-branded cigarette cartons imported from Myanmar on the Thai-Burmese border, Thai authorities seized 720 packs of tobacco grown in Myanmar and 99,200 tins of chewing tobacco.
According to another survey, it is estimated that 46 million cigarettes were bought from the black market in Myanmar, accounting for 0.6% of the total consumption. The loss of tax revenue was 600 million kyats (365,000 USD) in 2017.
As a consequence of illicit trade in tobacco, in addition to the rise in the number of smokers due to the low-cost of smuggled cigarettes, it has led to an increase in premature deaths, and in loss of government venue. Therefore, relevant departments, local and international organizations, media, and individuals should join hands to eliminate the illicit trade in tobacco.
Specific products are traded without the official permission of the relevant government departments. Action may be taken against the sale of unregistered, taxable goods. Often, goods imported or exported from another country are traded illegally.
During the Masala (Burma Socialist Program Party) period, some specific goods were not allowed to enter Burma legally, and this created a black market for these goods, with Burmese citizens wanting to buy smuggled goods across the Thai-Burmese border.
Today, even though the government has officially registered and allowed the import and export of certain products in accordance with the regulations, there is still a black market for some products, for example, rare and endangered wild animals and their parts (eg ivory, tiger skin etc,) and certain brand of foreign made alcohols and cigarettes. The most obvious reason is to avoid paying taxes.
Cigarettes on the black market
If there is a product to be imported and sold from abroad, the trader has to make a formal application and registration at the relevant Ministries and Departments for obtaining permission and obtaining a license for a fixed fee. Sales taxes and duties are levied on goods. When sold in a local store, each item may be sold individually (for example, a single bottle of foreign liquor or a single pack of foreign cigarettes).
If you want to import a cigarette produced by a well-known foreign brand, you must first apply for a permit to import the product. The consumer buys at the market price, and the importer buys and sells in accordance with the regulations and laws, and the state receives the license fees and taxes.
But when the sellers of these type of cigarettes smuggle them across the border, they no longer have to pay the registration fee and tax, which saves capital. They smuggle non- taxed (unlabelled) cigarettes and sell them at the same price as legally imported cigarettes, leaving the sellers with huge profits. Cigarettes are being traded on the black market because consumers are willing to buy them. Sometimes, for some reason or no import at all, these foreign brand cigarettes may be out of stock and the price may go up if the illegal seller raises the price.
Similarly, when a factory is set up in the country to produce cigarettes and resell them abroad, the black market sells them at a loss without any revenue owed to the state.
Therefore, it is important to eliminate the black market for tobacco products, including cigarettes. It is important to ensure that sanctions are imposed on the transit route from the country of origin of the smuggling of cigarettes and other tobacco products for smuggling, as well as international destinations.
WHO FCTC Protocol to Eliminate Illicit Trade in Tobacco Products
The Protocol to Eliminate Illicit Trade in Tobacco Products is the first protocol to the WHO FCTC. It was adopted by consensus on 12 November 2012. The Protocol was negotiated by the Parties to the WHO FCTC over several years and entered into force on 25 September 2018.
The Protocol to Eliminate Illicit Trade in Tobacco Products is ‘an international treaty with the objective of eliminating all forms of illicit trade in tobacco products through a package of measures to be taken by countries in cooperation with each other. Illicit trade poses a serious threat to public health because it increases access to – often cheaper – tobacco products, thus fuelling the tobacco epidemic and undermining tobacco control policies. It also causes substantial losses in government revenues’.
According to a study in 2007,11.6% of the world's cigarettes were traded on the black market, and it is estimated that the government lost about US $ 40.5 billions in tax revenue.
Tackling Illicit tobacco during COVID-19 Pandemic
At a time when there is a pandemic, it is important to prevent the smuggling of tobacco products, including cigarettes. Eliminating cigarette smuggling and black market may lead to reduction of smokers who are more vulnerable to severe symptoms of COVID-19. It will also prevent loss of revenue which can be used for management of COVID-19.
Dr. Tara Singh Bam, Asia Pacific Regional Director at the International Union Against Tuberculosis and Lung Disease remarks that ‘smoking and use of tobacco products is entirely preventable. The tobacco epidemic is manmade and tobacco industry propelled epidemic. Eliminating illicit trade of tobacco products is an absolute imperative for the Endgame of tobacco agenda.’
Black Cigarette Market in Myanmar
In any country that is a Party to the Protocol, it is illegal to sell cigarette packs that do not have pictorial health warnings, including graphics, occupying a specific space on the packaging accordingly. And they must also be labelled as a taxable item.
In Myanmar, cigarettes are smuggled across the borders. Also, not only cigarette but also other tobacco products like
E-cigarettes, heated tobacco products etc, are advertised and sold online.
According to one study, the smuggling of cigarettes in Myanmar increased by 14.2% in 2017 as compared to 2016, but the total trade volume was less than 1%.
Some smuggled cigarettes are being exported from Myanmar to neighbouring countries, especially to India and Bangladesh. Both foreign and domestic cigarettes are being smuggled.
Between 2016 and 2018, the Indian Customs Department seized large quantities of cigarettes smuggled from Myanmar.
In addition to cigarettes, there is also the illicit trade in other tobacco products. In 2018, in addition to 50 foreign-branded cigarette cartons imported from Myanmar on the Thai-Burmese border, Thai authorities seized 720 packs of tobacco grown in Myanmar and 99,200 tins of chewing tobacco.
According to another survey, it is estimated that 46 million cigarettes were bought from the black market in Myanmar, accounting for 0.6% of the total consumption. The loss of tax revenue was 600 million kyats (365,000 USD) in 2017.
As a consequence of illicit trade in tobacco, in addition to the rise in the number of smokers due to the low-cost of smuggled cigarettes, it has led to an increase in premature deaths, and in loss of government venue. Therefore, relevant departments, local and international organizations, media, and individuals should join hands to eliminate the illicit trade in tobacco.
Editor-in-Chief, Health Digest Journal, Myanmar
April 2021
April 2021
(published in The Standard Time, Myanmar)
