Key officials push for holistic approach in combating illicit tobacco trade


Government officials, industry leaders, and policymakers have called for a holistic and multi-sectoral approach to curb the rising illicit tobacco trade in the country. 

 

Agriculture Secretary Francisco Tiu Laurel.jpg

Agriculture Secretary Francisco Tiu Laurel

 

Speaking at the 2nd International Tobacco Summit organized by the National Tobacco Administration (NTA), officials stressed that a combination of policy reforms, regional cooperation, enforcement efforts and industry are all needed to address the problem of illicit trade. 

Department of Agriculture (DA) Secretary Francisco Tiu Laurel, in a speech delivered by Undersecretary Roger Navarro, underscored the need for a united front against illicit trade. 

“Protecting and supporting our local tobacco industry is crucial for the livelihoods it sustains in the countryside and the economic stability it provides,” he said.

Laurel said that collaboration among policymakers, regulators, and law enforcement agencies is critical. 

“It is imperative for our government to adopt a holistic approach to this issue. We urge all stakeholders, public and private sector, to unite in our efforts and to further strengthen our strategies against illicit tobacco trade while supporting and empowering our local farmers,” he said.

While he acknowledged the role of excise taxes in protecting public health and generating revenue, this had the unintended consequence of driving consumers toward the illicit market. 

“While excise taxes are designed to protect public health and generate government revenues, they may have inadvertently contributed to the growth of illicit trade which undermines the legitimate tobacco industry and the welfare of our farmers,” he added. 

The rise of illicit tobacco trade in the Philippines mirrors a broader regional trend. According to Jericho Nograles, President of the Philippine Tobacco Institute (PTI), the share of illicit cigarettes in the Philippine market surged from 5.4% in 2020 to 16.4% in 2024—an increase of over 200% in just four years. He shares that by 2025, illicit products are projected to account for nearly 19% of the market.

“Illicit trade is not just an industry challenge; it is a national and regional crisis. It undermines public health, weakens government revenues, destabilizes legitimate businesses, and fuels organized crime,” Nograles said.

He cited several key factors contributing to the rise of illicit trade, including the significant price gap between legal and illegal tobacco products, geographic vulnerabilities due to the Philippines’ extensive coastline, and the presence of organized crime groups engaged in smuggling and other illicit activities.

“Legal cigarettes in the Philippines cost an average of PHP 170 per pack, while illicit products are sold for as little as PHP 40 per pack. This significant price disparity encourages consumers, particularly those from lower-income groups, to purchase cheaper, illegal alternatives,” Nograles said.

Nograles emphasized that enforcement alone is insufficient in tackling the problem. He outlined several policy recommendations, including a temporary moratorium on excise tax increases to address the affordability gap, regional cooperation among ASEAN member states to share intelligence and coordinate enforcement strategies, and the implementation of advanced track-and-trace systems for supply chain transparency.

“Enforcement alone will not solve this issue. It requires a comprehensive, multi-sectoral approach that addresses the root causes of smuggling, stabilizes taxation, and fosters regional cooperation,” he stressed.

Despite the challenges posed by illicit trade, the tobacco industry remains a key revenue source for the Philippine government. From January to November 2024, tax collections from tobacco amounted to PHP 128.98 billion, while vape products contributed PHP 1.35 billion—more than triple the previous year’s collection.

Office of the Special Assistant to the President for Investment and Economic Affairs Secretary Frederick Go, in a speech read by Undersecretary Jose Guilas, underscored the industry's economic contributions. 

“Beyond tax contributions, the tobacco industry also provides livelihoods for approximately 2 million Filipinos, driving economic activity and supporting communities across the country.”

Go noted recent legislative measures aimed at strengthening the industry, including Republic Act No. 12022, the Anti-Agricultural Economic Sabotage Act. 

“We are exploring regional partnerships and free trade agreements to enhance the presence of Philippine-grown tobacco on the world stage,” he added.

Budget Secretary Amenah Pangandaman, in a recorded speech, also commended the enactment of RA No. 12022 as a crucial measure against hoarding, smuggling, and other illicit activities.

“Through this law, we will prevent the entry of smuggled tobacco, ensuring that correct duties and taxes are paid while imposing higher penalties,” she said.

National Tobacco Administration (NTA) Administrator Belinda Sanchez reinforced the need for a holistic strategy. 

“The increasing illicit trade in tobacco is a growing concern, undermining our efforts and threatening the livelihoods of countless individuals,” she said.

“We need a holistic approach to tackle this problem, one that addresses not just the symptoms but also the root causes. A multifaceted approach that combines regulation, education, and community engagement,” Sanchez added.