Tobacco Asia

Volume 20, Number 1

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68 tobaccoasia / Issue 1, 2016 March / April) By Nattira Medvedeva Ranked among the world's 15 top consumers of tobacco with more than 15 million smokers, Viet- nam is considered to be one of the more smoker- friendly countries in the region as well as the world as a whole. A survey by Vietnam's Health Strategy and Policy Institute found that Vietnamese people spend about VND22 trillion (US$985 million) a year on tobacco. According to the Global Adult Tobacco Survey (GATS) in 2010, 47.4% of men and 1.4% of women (aged 15 years and up) in Vietnam are smokers. This works out to a market of more than 15 million adult smokers. Arguably the biggest challenge that Vietnam's tobacco industry has had to face is the prolifera- tion of illicit cigarette trade, which, according to Vinataba, accounts for more than 25% of the whole market, or more than one billion sticks. This equates to a loss of over VND8 trillion or revenue to the State budget. A brief summary of Vietnam's fight against il- licit tobacco trade starts in 1990 with a country- wide ban on the importation of foreign-made cigarettes. In September 2014, the Vietnamese government issued its Directive 30 on strengthen- ing the fight against the smuggling of cigarettes, and later – in December that same year – decided to destroy all seized smuggled cigarettes. However, it was also the first year that the implementation of the Law on Tobacco Hazard Prevention was fully enforced, which had a strong and direct impact on production and operations of the tobacco manu- facturers, leading to the skyrocketing of smuggled cigarettes: the number of illicit smokes increase 30-40% compared to 2013. Nevertheless, the fight against illicit cigarettes forged on, with the Vietnamese government and involved agencies, including Vinataba, increasingly intent on defeating this mutual foe. In February 2015, the Ministry of Finance raised the neces- sary funds to support a campaign of seizing and destroying smuggled cigarettes awarding from VND1,100 per pack to VND3,500 per pack of 20 sticks, regardless of their selling prices. In March 2015, the Vietnamese Ministry of Industry and Trade issued Directive 04, announc- ing the continued enforcement of testing, control- ling, and the prevention of trafficking, transport- ing, and stockpiling contraband cigarettes. Then, in November, the Vietnamese government issued Decree 124, regulating administrative sanctions for violations of commercial operations, manufactur- ing, trade in counterfeit and prohibited goods, and protecting consumers' rights. According to this De- cree, acts of trafficking and/or transporting more than 500 packs of imported illicit cigarettes (instead of the previously set limit of 1,500 packs) will be considered criminal activity will therefore be subject to criminal prosecution. If the prosecutorial author- ity decides against prosecution by incarceration, of- fenders will be subject to a fine of VND70 million- VND100 million (US$3,112-4,446). Decree 124 also states that those found to have conducted trade in illicit cigarettes will face a fine of VND500,000 to 1 million (US$22-44) when the violation involves less than ten packs of illicit cigarettes. The fine will be VND1-2 million VINATABA vs. Illicit Trade 2015 has been a good year for the Vietnam National Tobacco Corporation (Vinataba) – illicit ciga- rette trade in the country has dropped by 30% while growth in domestic market consumption has led to Vinataba increasing its domestic production as well as market share.

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