Sale of smuggled cigarettes up by 65 percent

RECORDER REPORT

ISLAMABAD: The sale of counterfeit, low price brands and smuggled cigarettes is rapidly gripping the domestic market, causing heavy loss to the exchequer.

Market sources told Business Recorder that the sale of smuggled cigarettes has increased by 65 percent, from 1,018 million to 1,685 million, while the overall illicit trade had reportedly increased by 10 percent in 2011.

The sale of one smuggled cigarette brand 'PINE' increased from 536 million cigarettes in 2010 to 1,016 million cigarettes 2011, causing loss of billions of rupees to the government. The massive inflow of smuggled cigarettes depicts a sorry picture of the government efforts to curb smuggling. An interesting aspect about this particular brand is that without any local presence it has been increasing its market share and supplies and is being sold as if it had an established distribution system because transporting over a billion cigarettes around the country is no small feat. It is believed that the said brand of cigarettes is having a unique strategy of creating a market with low price and tax evasion.

They are brining a cigarette brand without paying taxes or abiding by other laws like the Pictorial Health Warning Ordinance 1979 which states that "No person shall sell or offer for sale cigarettes from packets of cigarettes, or possess or sell or offer for sale packets of cigarettes on which the warning is not printed as required." According to an eminent lawyer the said brand of smuggled cigarette is making a mockery of this law by selling over 1 billion cigarettes every year which means 50 million illegal packets without the statutory and mandatory Pictorial Health Warning.

Sources familiar to the industry explained that Pine has no official distributor in Pakistan but sells its products in Afghanistan from where they are smuggled into Pakistan. Sources report that it is impossible for a product to be smuggled in such volumes without the knowledge of the manufacturer and it is believed that manufacturer is purposely pushing the product into Pakistan so that it can establish its market here. These tactics include smuggling, duty evasion and violation of Pictorial Health Warning Laws.

The government of Pakistan has taken notice of this violation and raised the issue with the government of Korea regarding sale of cigarettes without Health Warning.

Sources further opined, the said brand of smuggled cigarettes is openly sold in shops across the country without the mandatory Pictorial Health Warning. Not only does this blatant violation of national laws by the smugglers undermine the government health agenda it also depicts a poor picture of the writ of

the government which is flouted by the smuggling of these products into Pakistan and the open sale of the cigarettes in violation of Pakistani laws.

The said brand of cigarette is the most popular smuggled brand in the country and it is sold at a price between Rs. 25 and Rs. 30 per pack. If this brand was to pay all the duties and taxes and sold legally in Pakistan then it would be selling at around Rs. 70 a pack, experts added.