Business News

Illegal Tobacco in PNG

by Vasinatta Yama – EM TV, Port Moresby

A report by an independent firm, KPMG, for PNG British American Tobacco shows more than 10% of cigarettes consumed are illegally smuggled into the country.

This has resulted in government losing more than K26 million excise revenue every year.

According to BAT, the issue can only be resolved if hard penalties are put in place. According to the report in 2013, 11% of the cigarettes consumed in PNG are illicit products.

Not only is it burdening the government’s revenue, but is also a health hazard to consumers, as the source of manufacturing is unknown.

Vanimo, Madang, Lae, Banz in Jiwaka Province and Western Highlands Province are the ‘hotspots’ where illegal tobacco is sold.

Most of the illegal or counterfeit cigarettes are smuggled in from Indonesia from the Batas market.

Home grown ‘Brus’ represents 58% of the tobacco market in PNG.

If taxed, it would generate the government K102.8 million each year.

PNG BAT has taken steps to identify local Brus farmers in certain parts of PNG to make them commercial sellers, by marketing their fresh grown brus to the company.

Meanwhile, PNG BAT General Manager, Michael Penrose said BAT is the legitimate business trading in PNG and he’s urging the government to protect their operations and contribution to the country.

Currently, the penalty for smuggling illegal tobacco into PNG is K2,000. The enforcement of the penalties is still unstable which allows smugglers to bring in illegal cigarettes.

Mr Penrose wants the Government to impose harsh penalties, and strengthening border controls while resourcing enforcement agencies.

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