Tobacco.org

• Congressmen buck SICPA deal  

Congressional leaders yesterday slammed the deal for a stamp tax technology on cigarettes and alcohol products being worked out between the Switzerland-based SICPA Product Security SA (SICPA) and the Bureau of Internal Revenue (BIR), saying it is heavily in favor of the Swiss proponent.

Antique Rep. Exequiel Javier, House ways and means chair, also said the BIR could not implement the SICPA proposal through the build-operate-transfer (BOT) scheme without the approval of Congress.

"If it’s a straight regular BOT system, then there’s no need for approval of Congress. But here, there’s a variation of the BOT which needs Congress’ imprimatur," Javier said during a briefing given by the BIR on the SICPA proposal.

He stressed the SICPA contract essentially involves raising revenues, which is the sole prerogative of Congress.

"You cannot raise revenues without Congress’ approval. Aside from the excise taxes that you’re collecting, you’ll be raising revenues. You cannot do it through the BOT," Javier said.

He also rejected claims that the Swiss firm’s tamper-proof stamp-tax technology called SICPATRACE System is "necessary" in combating smuggling and monitoring product withdrawals.

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• Philippine health NGO slams tobacco expo; warns more tobacco-related deaths among Asians  

MANILA -- Members of the Philippine health NGO Framework Convention on Tobacco Control Alliance Philippines (FCAP) slammed the ongoing conference of the tobacco industry in Bangkok and warned of increase in tobacco-related deaths in Asia as the industry enhances its hold in the Asia Pacific market.

“The tobacco industry is training its guns and armor not for battle but to entice our young children to smoking addiction and lead them to suffer from tobacco-related deaths. Expect the industry to launch more sophisticated marketing and public relation gimmicks to penetrate the Asia Pacific market where governments are starting to implement stricter bans on smoking and tobacco advertising and promotions,” said Dr. Maricar Limpin, FCAP Executive Director. . . .

In the press briefing conducted by the Southeast Asia Tobacco Control Alliance (SEATCA) in Bangkok, FCAP showed to the media Philip Morris Philippines Managing Director Chris Nelson donating check to the Philippine National Red Cross (PNRC) after the typhoons that have hit the country recently.

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• WTO hears RP complaint against Thailand  

The Philippines and Thailand were given a final opportunity until December 7 to comment and respond to questions before the WTO Dispute Settlement Panel is set to issue a ruling early next year over the countries cigarette tax dispute.

Philippine Ambassador to Geneva/WTO Ambassador Manuel AJ Teehankee relayed this in an email after the panel conducted the second substantive meeting last Nov. 4 to 6 in Geneva.

The panel hearing the (DS 371 Philippines versus Thailand on cigarette customs valuation), is chaired by H.E. Ambassador Roberto Acevedo, Permanent Representative of Brazil to the WTO, and its two additional members are Alvaro Hansen of Uruguay and Richard Gottlieb of Canada.

The panel heard rebuttal arguments and fielded searching questions on the facts, claims, and defenses presented by both parties since the first substantive meeting last June.

During the meeting, Teehankee highlighted issues of transparency, discrimination, and domestic protection in Thailand's regulatory regime

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• Operation ‘Samhna’ : Potentially the largest seizure of cigarettes ever 

A multi agency operation, code named ‘Samhna’, headed up by Revenue’s Customs Service, is currently underway in Greenore Port, Co Louth, and surrounding area.

The operation, targeting the suspected criminal activities of an organised crime group operating both north and south of the border, involved the surveillance of a general cargo vessel M/V Anne Scan, which sailed from the Philippines on 15/09/2009 for Greenore Port, arriving at approximately 0600 hours on Monday, 26/10/2009, carrying a cargo declared as ‘animal feed’. Officers kept the vessel under surveillance, as they suspected that a large consignment of contraband cigarettes was concealed within the cargo.

Following the discharge of part of the cargo from the vessel earlier this morning onto awaiting trucks, which were allowed onwards to the importer’s premises, the multi agency task force, involving Officers of Revenues Customs Service and An Garda Siochana, moved in and raided several premises in the Co. Louth area, in addition to mounting an operation on the vessel itself. A large consignment of contraband cigarettes has been confirmed, estimated to be in excess of 120m cigarettes with a retail value of about €50m and a potential revenue at risk of approximately €40m. Several persons have been arrested at various locations by the Gardai for questioning.

The operation in the Republic of Ireland involved Officers of Revenue’s Customs Service, An Garda Siochana, The Criminal Assets Bureau, the Irish Naval Service and Air Corps and in Northern Ireland, Officers of HM Revenue & Customs and the PSNI. In addition the European Anti-Fraud Office (OLAF), which was also involved, will co-ordinate the international enquiries which will form part of the follow-up investigations. It is estimated that in excess of 150 Officers from the various Agencies participated in the field in today’s operation.

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• £45m cigarettes haul was first of five planned runs in audacious smuggling scheme  

The cargo ship seized with a record £45m of illegal cigarettes on board was on the first in a series of five planned voyages from the Philippines to Ireland, it can be revealed.

An audacious plan to land a total of £200m of cigarettes in multiple shipments at Greenore, Co Louth, was foiled when Customs officers seized the MV Anne Scan.

Nine men arrested as part of the Customs Service operation have now been released and a file is being prepared for the Director of Public Prosecutions, gardai said last night.

Security sources said last night it was their belief the shipment was a maiden run in a planned series of up to five huge shipments from the Philippines of illegal cigarettes hidden in animal feed.

“The intention of this Irish gang, with others contributing funding in return for big profits, was to move a shipment every two months, we think to flood Ireland and the UK with cheap cigarettes and make big, big money,” said one senior officer.

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• Tobacco firm sees up to 15% decline 

PROSPECTS for the local tobacco industry have become dimmer with legislated tax hikes aggravating the weakening of demand for cigarette products amid the slow economy, according to a tobacco executive.

In a chance interview, Philip Morris Philippines Manufacturing, Inc. president Chris Nelson said the total industry could go down by 10% to 15% this year, pointing out that the increase in excise taxes in January has hampered demand for tobacco products. The company is the local arm of cigarette maker Philip Morris International.

"If you look at the total market, it is already off by 30% [in the first half] ... The impact is sharper at the start of the year but tends to moderate over time," Mr. Nelson said.

Price increases for the Philip Morris and Marlboro brands following the increase in excise taxes and the weak economy resulted in a drop in consumption, he said.

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• Thai police push tax charges against Philip Morris  

Thai police have submitted a case to state prosecutors charging that the local arm of Philip Morris, the world's largest cigarette maker, evaded more than $2 billion in import taxes, an allegation strongly denied by the company.

Police Col. Thawatchai Suansida said Thursday that the Department of Special Investigation, or DSI, determined that Philip Morris (Thailand) United Co. Ltd. had underreported the value of its imports and underpaid import taxes between 2003 and 2007.

The same matter, concerning cigarettes exported by a Philip Morris plant in the Philippines to Thailand, is the subject of a trade dispute.

Manila in November last year filed a complaint with the World Trade Organization claiming that Thailand's tariffs on the cigarettes are not calculated according to internationally accepted standards. A preliminary report from the trade organization is expected to be circulated to the parties involved early next year.

The office of Thailand's attorney-general, which received the tax evasion case on Wednesday from the police, said it will decide on Oct. 2 whether to bring it to court.

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• E-cigarettes creating buzz despite risks 

MANILA - "Want to quit smoking? Try electronic cigarettes - the odorless, cancer-free, and healthy way to smoke!"

The sheer novelty of this claim is probably what attracted smokers and non-smokers alike to electronic cigarettes or "e-cigarettes," a product that has created a lot of buzz in the Philippine market in the past month. It is typically marketed as a "safer way" to smoke or quit smoking.

Marketing executive Baroy Morga, 31, is virtually the only e-cigarette user in the company he works for, and only one of a few Filipinos who are trying out the product. He has been smoking an average of 15 sticks a day for 10 years now and has been trying to quit the habit.

The e-cigarette, he said, has eased off the amount of nicotine and tar levels he used to get from real cigarettes while at the same time satisfying his cigarette cravings. . . .

Since they are not yet available in commercial establishments, these products are usually purchased online or in select stores like Cash & Carry.

"The issue with it is it's not distributed properly. It's not advertised, and not a lot of people know about it. There's a problem of accessibility," Morga said. . . .

In a statement issued on its website, FDA representatives also noted that quality control measures in e-cigarette manufacturing are nonexistent, and there is no guarantee that the products are safe.

The e-cigarette products sold in the Philippines do not come with a warning label or a list of ingredients, and the Bureau of Food and Drugs has yet to issue an approval.

E-cigarettes have been banned by Israel, Australia, Canada, and Mexico over safety issues, while the US has strictly monitored e-cigarette shipments at its borders.

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• Cigarette companies skirt advertising ban 

Now prohibited from advertising their products in the so-called "paid media"--television, radio, and newspapers--tobacco companies have found ways to defeat the ban through subtle but potentially more effective promotional activities.

Their activities range from donating to community projects to influencing the content of movies or shows to being the subject of positive news reports.

Advertising specialists told Newsbreak that these new approaches taken by tobacco companies may be "more expensive," but they sure "built relationships" with consumers and can therefore help maintain, if not expand, the tobacco market.

The Tobacco Regulation Act of 2003 stopped the elaborate marketing strategy of tobacco companies in the "paid media." Anti-tobacco advocates have reported violations of the ad ban in province-based television and radio stations, but noted that the national media have generally heeded the law.

The law, however, has been unable to prevent the invasion of "free media"--the very content of news and entertainment media--by tobacco products and brands. . . .

Tobacco companies have also maintained their presence in newspapers, particularly through their Corporate Social Responsibility (CSR) activities.

CSR activities of Fortune Tobacco made it in the news last year, for example. Major newspapers and at least one television network featured stories on the efforts of Lucio Tan, Fortune Tobacco owner, to help the tobacco farmers in the Ilocos region, where the bulk of his raw materials come from. . . .

Newspapers ran a story on Philip Morris's P2-million donation to Red Cross, which was given on Gordon's 63rd birthday in August 2008. . . .

"Promo girls" are most common in the Philippines. Pretty girls are recruited to distribute cigarettes in parties sponsored by the tobacco companies. This is the lowest level of promotional activity.

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• Effects of tobacco ad ban not yet felt 

Two years after the advertising ban on tobacco products was first implemented in the Philippines, its effects have yet to make considerable impact on the sales of cigarettes, indicating a long road ahead for the campaign to reduce the consumption of these products.

Financial reports of tobacco companies here showed that along with the decrease in advertising spending during the first year of the ban, cigarette sales also went down, but not much.

It will be too much to expect the ban to instantly make a dent on cigarette sales, say advertising specialists that Newsbreak spoke to, because the tobacco industry has saturated the mass media with their propaganda for the last 50 years.

'Miracle'

Despite strong opposition from tobacco companies and their allies in Congress, the Philippines on June 23, 2003, enacted a law banning all forms of tobacco advertising. Republic Act 9211, the Tobacco Regulation Act of 2003, regulates the packaging, use, sale, distribution, and advertisements of tobacco products.

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• Second-hand smoke victims can fight back 

Annoyed by inhaling second-hand tobacco smoke? You have the right to tell the smoker to stop smoking or carry his habit elsewhere, antitobacco advocates Monday said.

Some eight million residents of Metro Manila who are exposed to second-hand smoke weekly have expressed their frustration as reflected in a joint survey done by the government and by an international non-government organization committed to empowering governments in preventing and managing lung ailments, resulting from smoking.

However, out of the 8.7 million people living in Manila who admitted they are upset when they inhale second hand smoke weekly, only eight percent have the courage to stand up and make known their frustrations.

This was shown in a comprehensive survey, "Second-hand smoking in Metro Manila," commissioned by the Department of Health (DoH) Center for Health Development-Metro Manila (CHD-MM) and World Lung Foundation and funded by the Bloomberg initiative, a foreign funding agency aiming to reduce tobacco consumption in low and middle income countries.

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• RP loses P148B a year to smoking-related diseases, deaths  

The government's failure to impose higher taxes on tobacco products in the past four years has widened the gap between government earnings and the cost, borne by citizens, of treating diseases and of losing productivity due to premature deaths linked to smoking.

Government data showed that from 2000 to 2002, government excise tax from tobacco products averaged P18.92 billion a year. In those years, smoking's health and economic cost to the population was at P46 billion a year, according to estimates made by epidemiologist Dr. Antonio Dans of the University of the Philippines. It was more than double the amount of tobacco excise taxes collected.

In succeeding years, from 2003 to 2006, the health and economic cost increased to more than six times the excise tax collection. Government earnings averaged P23.26 billion annually, while health and economic cost averaged P148.5 billion, based on estimates by the World Health Organization.

There are no official figures available for the succeeding years, but given the pattern of health and economic cost tripling every three or four years, Newsbreak estimates that the average amount could have increased to P445.5 billion in 2007 and in 2008. That would be more than 17 times the P25.28 billion annual average excise tax collection in those two years. . . .

"Smoking decreases the productivity of the Filipino workforce once they get afflicted with smoking-related diseases. If they die prematurely due to these diseases, it will cut their future income streams," said health economist Stella Quimbo of the University of the Philippines.

"On top of this, the healthcare costs for these diseases are substantial. The aggregate cost of these diseases in terms of health care and productivity losses is the impact on the economy," she said. . . .

Chemotherapy costs a patient P12, 000 to P15, 000 every session, which is usually done once or twice a month.

At the LCP, the Philippine Charity Sweepstakes Office shoulders the hospital fees and medicines of indigents.

Healthcare costs for lung cancer amounted to P403 million in 2003, according to WHO.

Chain Effect

Aside from treatment expenses, many lung cancer patients missed more days of work . . .

Deaths from lung cancer, especially at a young age, deepen productivity losses. With the country's life expectancy of 67 years, a lung cancer patient who dies at 40 loses 27 potential years when he could have earned more than P2.4 million. . . .

SEATCA'S Dorotheo explains the chain effect of getting sick from smoking: "If a smoker gets sick, there is not only the huge cost of healthcare borne by the patient and his family, but also the income lost by the patient who is unable to work, the income lost by family members who need to watch over the patient, and the use of human and other resources of the healthcare provider, such as government hospitals, that could have been focused on other patients' needs instead for a highly preventable disease."

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• RP loses P148 B a year to smoking-related diseases, deaths 

The health and social cost of smoking is six times more than government revenues from cigarettes

The government's failure to impose higher taxes on tobacco products in the past four years has widened the gap between government earnings and the cost, borne by citizens, of treating diseases and of losing productivity due to premature deaths linked to smoking.

Government data showed that from 2000 to 2002, government excise tax from tobacco products averaged P18.92 billion a year. In those years, smoking's health and economic cost to the population was at P46 billion a year, according to estimates made by epidemiologist Dr. Antonio Dans of the University of the Philippines. It was more than double the amount of tobacco excise taxes collected.

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• Cigarette smuggling in RP more blatant now 

Tommy Chui, a former director of a Hong Kong cigarette distribution company, was set to testify against his former colleagues and implicate members of the infamous criminal group, the Triad, along with corrupt Customs officials.

That company, Giant Island Ltd. (GIL), was a major distributor of the British American Tobacco (BAT) in China and Taiwan, and was believed to have organized a smuggling network for BAT cigarettes. GIL was reported to have transported cigarettes from Singapore and Subic Bay in the Philippines from freighters to fishing boats in the South China Sea.

Documented by the International Consortium of Investigative Journalists (ICIJ), the case “reveals the dark underbelly of a billion-dollar business fed by international corporations and operated by organized crime,” its report published in 2001 says.

Links to Manila

Though based in Hong Kong, the operations had links to Manila through a GIL official named Hung Wing-wah, the company’s founder and majority owner, whom Chui had a disagreement with. . . .

BOC officials say that most of those in the super green lane category are multinational companies or companies that belong to the Top 100 corporations of the country with outstanding records. They say that random checks are still made on these shipments if intelligence information directs them to do so.

Customs officials, however, say that because cigarettes are classified as “high risk commodities,” these are always channeled to the red lane, where inspections are mandatory. Likewise, whenever shipments come in from countries on the BOC watch list—China, Hong Kong, and Vietnam, among others—they are automatically assigned to the red lane.

Smugglers know this and find means of circumventing customs checks. They either take pains to hide cigarettes in their 20- or 40-footer container vans that may not be as thoroughly checked by customs inspectors or, as previously mentioned, resort to circumlocutory routes so that goods come from countries not on the BOC watch list. They also alter the documentation of their shipments while in transit, or they simply mis-declare contraband cigarettes or bribe customs officials.

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• Philippines a haven for cigarette smugglers 

(First of two parts) . . .

Fisherman Lino Bocalan became legend in the 1950s to 1960s after he chanced upon an alternative and more lucrative profession: cigarette smuggling. . . .

Before long, Bocalan built a fortune and a name in an industry that grew in Tanza, aided in part by the presence of Sangley Point, a former American base where blue-seal cigarettes were sold and taken out from its commissary. He eventually traded directly with Borneo, cut the southern connection, and became a millionaire.

Decades later, the Tanza cottage industry has evolved into a lucrative national, and even a global, industry. The southern backdoor, where traders of smuggled cigarettes used to taunt law enforcers, has become an outmoded entry point. Smugglers have become more brazen, preferring direct payoffs to willing takers. . . .

There are only five major players in this highly protected industry. Lucio Tan’s Fortune Tobacco and Philip Morris Philippines Manufacturing Inc. corner over 90 percent of the local market. The smaller players include Mighty Corp., La Suerte Cigar & Cigarette Factory, and Associated Anglo-American Tobacco Corp. . . .

International organizations and groups working to stop the tobacco black market and curb cigarette smoking are sounding alarm bells because the illegal trade is believed to finance criminal syndicates that engage in drugs, trafficking, terrorism, and money laundering.

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