Vietnam’s state budget revenues face huge deficits annually due to increasing smuggling in tobacco.

Destroying the contraband

The illegal tobacco trade has been estimated to add between VND3.4 trillion and VND3.6 trillion (USD162.44 million-USD172 million) per year to the deficit.

Illegal tobacco imports have risen sharply in recent years. Currently somewhere around 800 million packs are being smuggled in, compared to around 300 million ten years ago.

According to Vietnam Tobacco Association (VTA), Vietnamese smokers consume up to between 4.5 billion and 4.8 billion packs of cigarettes a year. Of which, domestic producers account for around 3.6 billion or 4 billion packs.

Illegally imported cigarettes account for 21% of the Vietnamese market share. Ho Chi Minh City takes the lead in smuggled cigarettes, representing 53% of its market, followed by the southern region with 37%, the central with nearly 9% and the north with 3%.

Last year, customs authorities busted nearly 15,300 cases of smuggled tobacco, up from 9,600 cases in 2007. Only between one and 1.2% of the seized tobacco is destroyed; much lower than the requirement of between 10% and 15%.