The massive volumes of cigarettes smuggled into the country are proving to be a big drain on the Government's revenues.

It was around 870 million packs in 2010, or 22.9 per cent of all cigarette consumption in the country, but fell to 750 million packs and 18.2 per cent last year.

Last year, it translated into lost taxes of VND3.4 – 3.6 trillion (US$163.4-173 million).

The favourite contraband brands used to be JET and HERO though ESSE Lights from South Korea has also become popular since the end of 2010. It is smuggled in through the northern border provinces of Quang Ninh and Lang Son.

Most of the smuggling otherwise occurs through southwestern border provinces.

Authorities estimate that the domestic tobacco industry loses sales of 18,000 tonnes of raw materials due to the smuggling and more than 50,000 jobs.

It also means an annual drain of $400 million in foreign currency and a major hurdle to the development of the domestic industry.

Pham Kien Nghiep, general secretary of the Viet Nam Tobacco Association, said the smuggling was focused on the southwestern region because of the long borders with Cambodia and Laos and the ease of transport from those countries.

Many local people were tempted into the illegal trade due to poverty, he said.

With Cambodia and Laos imposing low taxes on tobacco, prices there were low, and smuggling into Viet Nam was lucrative, he said.

Thus, a pack of JET fetches a profit of VND6,000-7,000 once it is smuggled into the country.

Market management forces stretched too thin to be able to cope with the smuggling besides which there is little co-ordination between various agencies.

As for the smugglers, they are using increasingly sophisticated methods, making it hard to detect them.

Source: VNS