KARACHI: The Overseas Investors Chamber of Commerce and Industry (OICCI) has recommended to the government to impose a ban on the import of cigarettes lacking health warnings, as part of a strategy to deter the rampant smuggling of tobacco products.
In its proposals for the budget of 2019/2020, the OICCI underscored the importance of aligning the import policy on cigarettes with local health warning regulations. This, they argue, would not only discourage the consumption of smuggled cigarettes but also contribute to reducing the associated health risks.
Citing the first quarterly report for 2016/2017 issued by the State Bank of Pakistan (SBP), the OICCI highlighted an alarming 40 percent of the total market demand for cigarettes being met by illicit consumption in Pakistan. The resulting loss of government revenue was estimated to be up to Rs 40 billion rupees, a significant portion of which was attributed to smuggled cigarettes entering the country, primarily from the Afghanistan border.
The OICCI pointed out a critical issue arising from the lack of harmonization between local health warning regulations and import policies. This gap allows the legal importation of cigarettes without local health warnings, creating a gateway for smugglers to exploit the system.
The chamber emphasized that due to the existing non-alignment, law enforcement agencies confiscate illicit cigarettes, which are subsequently auctioned. This auctioning process, according to the OICCI, generates documentation that is then utilized to smuggle more contraband cigarettes into the country, perpetuating the cycle.
To address this issue, the OICCI proposed the synchronization of import policies with local health warning regulations. This move, they argued, would render cigarettes without the required health warnings illegal in the country. Additionally, if such smuggled cigarettes were seized, they should be destroyed rather than auctioned, removing the legal cover that currently facilitates the cycle of smuggling.
The rationale behind these proposals, as stated by the OICCI, lies in the exploitation of the existing gap between import policies and health warning regulations. This gap not only facilitates the entry of illicit cigarettes into the market but also provides a legal loophole through which smugglers can continue their operations.
The OICCI’s recommendations aim to close this regulatory loophole, enhance government revenue, and safeguard public health by discouraging the consumption of smuggled tobacco products. By advocating for a comprehensive and synchronized approach, the chamber envisions a more effective strategy in curbing the detrimental impact of illicit cigarette trade in the country.
