Cigarette consumption in Vietnam rose to 4.17 billion packs in 2012 from 3.98 billion packs in 2010, according to new industry association report; 2.76 billion packs consumed in first eight months of 2013

Nevin Barich

HANOI, Vietnam , October 23, 2013 (Xinhua News Agency) – Vietnam's cigarette consumption has been on the rise, from 3.986 billion packs of cigarettes in 2010 to 4.174 billion packs in 2012 and 2.760 billion packs in the first eight months of 2013, according to a report from the Vietnam Tobacco Association (VTA).

Smuggled cigarettes caused big headache for relevant agencies, reported the association on Wednesday, adding that some 900 million cigarette packs were illicitly brought to Vietnam in 2012, accounting for 21.6 percent of the domestic cigarette consumption in the year.

According to VTA, JET and HERO brands account for 90 percent of the smuggled products. Since 2012 they were joined by ESSE, complicating the domestic market further.

The smuggled products caused huge financial damage to the country. With some 800 million cigarette packs smuggled on an annual basis, the state budget loses up to 4.2 trillion VND ( roughly 200 million U.S. dollars) worth of taxes.

The illicit products also cost the tobacco growing areas 17,000 tons of materials and 39,000 jobs of local growers, who also lose some 170 billion VND (some 8 million U.S. dollars) of earnings per year.

Vietnamese cigarette makers also lose up to 250 billion VND (11. 8 million U.S. dollars) of profits due to the smuggled products every year.

Insiders said the problem is not because local products are of lower quality than the illicit counterparts. It is because of the exorbitant special consumption tax of 65 percent, plus other high taxes, which makes domestic products less competitive as they bear higher prices.

Forces to fight against smuggled products are funded up to 9 billion VND (426,540 U.S. dollars) a year, but not so many cases have been detected.

The seized and destroyed products only account for 1 percent of the real amount of cigarettes illegally brought to the country, according to the tobacco association.

This is because demand for smuggled cigarettes remains high, while authorities do not have the means to curb the sophisticated tricks of the smugglers, reported VTA.

Each year, Vietnam's tobacco sector earns 14 trillion VND ( roughly 664 million U.S. dollars) and provides jobs to 20,000 factory workers and another 200,000 tobacco growers.

However, about 40,000 people die of tobacco-related diseases each year in Vietnam, reads the report.

(c) 2013 Xinhua News Agency

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