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JTIP warns of more cigarette smuggling via backdoor during holiday season

October 22, 2020

Japan Tobacco International (JTI) has appealed to law enforcement agencies to intensify its anti-smuggling efforts in the country’s regions, particularly in Visayas and Mindanao, as more contraband cigarettes are expected to enter the country’s backdoor during the yuletide season. JTI Philippines (JTIP) General Manager John Freda said key areas in Mindanao and Visayas have been traditional backdoor channels for illegal cigarettes and a series of seizures in the ports of Visayas and Mindanao over the past weeks are indicative that smuggling syndicates are stocking up. Freda noted that in recent weeks, a series of seizures and interceptions were made by the anti-smuggling team of Bureau of Customs (BOC) in the ports of Cebu, Cagayan de Oro, Zamboanga and Davao. In Cebu, the BOC hauled in a total of P148 million in illegal cigarettes during August alone followed by the interception of two containers filled with cigarette contraband worth P88.1 million in the first week of September. For the entire month of September, BOC Cebu destroyed a total of P180 million worth of smuggled goods, 36% of which were illegal cigarettes. Bacolod, Iloilo and Tacloban in the Visayas have also encountered rising incidents of cigarette smuggling in the recent past. In Mindanao, BOC teams intercepted some P96.6 million worth of illegally imported cigarettes in the port of Davao while destroying P50 million worth of illegal cigarettes in Cagayan de Oro, both happening in the first week of October. Seizures were also recently conducted by law enforcement units in the port of Zamboanga where P1.5 billion of illegal cigarettes including raw materials were destroyed.  Freda nevertheless lauded the series of successful operations made by the BOC and Bureau of Internal Revenue (BIR) in recent months as smuggling incidents became rampant amid the pandemic. “I understand that for a country with so many islands like the Philippines, it is a huge challenge to control the problem, but the deterrents need to be stronger,” Freda said. He said illegal tobacco trade is a growing problem in the country, which requires more government attention and “absolute vigilance.” “Stiffer sanctions are required. We need to see people being caught and brought to justice in a way that deters others from being part of this criminal endeavor,” Freda said even as he reiterated his call for higher penalties and sanctions against tobacco smugglers to sharpen the deterrence. He said more smuggling attempts are expected with increasing frequency during the yuletide months even with a quarantine in effect. “Syndicates will surely try to cash in on this and compete with legal and tax-paying tobacco players as the pandemic drags on until Christmas and even beyond New Year,” Freda pointed out. He stressed coastal borders and port cities in the Visayas and Mindanao must be put under tighter watch to thwart smugglers taking advantage of the current situation. Freda likewise cited a JTI global study, which showed that organized criminal groups around the world are capitalizing on the COVID-19 pandemic to operate their illicit tobacco trade. The JTI report, which covered 50 countries, also noted “a strong presence” of tobacco smugglers in the Philippines. JTI markets in the Philippines cigarette brands Winston, Camel, Mevius, Mighty and Marvels. According to the JTIP GM, illegal tobacco trade is considered a lucrative business for criminals who make huge profits with very low risk of getting caught and “insignificant” penalties. This deprives the government of collecting revenues, with both contraband and counterfeit cigarettes being smuggled without paying taxes. According to the World Bank, the global trade in illegal tobacco is already worth an estimated $40 billion to $50 billion each year. The government has also been confronted with a diminished collection from tobacco excise tax since the pandemic hit in early March. The latest preliminary Department of Finance (DOF) data showed that the excise tax take from tobacco, e-cigarettes and alcohol amounted to P140.1 billion as of end-August, down 13 percent from P161.8 billion during the first eight months of last year. From January to August, tobacco excise tax collections dropped to P95.7 billion from P111.3 billion a year ago, while those from alcoholic beverages declined to P44.4 billion from P50.5 billion a year ago. The stringent COVID-19 quarantine from mid-March to May affected both the supply of and demand for alcohol and tobacco products as factories stopped production for the local market while movement of nonessential goods was restricted, including liquor bans imposed by some local government units to discourage social drinking. At the height of the lockdown, illicit cigarette traders raked in as they took advantage of the dwindling availability of tax-paid cigarettes.

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PMFTC highlights transformation to smoke-free future

October 7, 2020

PMFTC Inc. President Denis Gorkun unveiled their company’s bold ambition to adapt to the changing times by way of transforming its people and innovating its products grounded on a vision that is fact and science-based. Speaking at the opening of the DigiCon Omni 2020 virtual conference yesterday, Gorkun shared to attendees Philip Morris International (PMI)’s vision to deliver a smoke-free future with better alternatives to replace cigarettes for adult smokers who would otherwise choose to continue to smoke. PMFTC is the local affiliate of PMI. “There has never been such a dramatic paradigm shift at such a major organization. We are doing so much more than just evolving from an agriculture and consumer goods company to a technology company. We are a company that needs to transform in order to be successful in the new smoke-free reality,” Gorkun stressed. He emphasized that PMI’s smoke-free alternatives to cigarettes are not risk-free and the best thing for smokers is still to quit and for non-smokers to never start at all.  Explaining PMI’s transformation, he said “we are going smoke-free because it is the right thing to do, and our resources allow for it. With the support of top-in-class scientists, engineers, technicians and a state-of-the-art R&D, our bold vision is to transform our business, to replace cigarettes at the soonest possible time. To take the smoke out of smoking.”  As governments around the world take action against smoking because of its harmful effects, the company has responded with a clear vision to a smoke-free future by addressing the main cause of smoking-related diseases. He said estimates by the World Health Organization (WHO) show there will still be more than a billion smokers in 2030. In the Philippines - at a quit rate of four percent - there are 16 million smokers despite rigorous regulations implemented by the government. “What of the billion smokers who will continue to smoke then? With today’s science and innovation, there must be another, a better way, right?” “For our company, the answer is clear: we need to innovate, and innovate responsibly. By doing something that sounds easy in theory but is much more difficult in practice. And that is to take the smoke out of smoking,” Gorkun explained. PMI has invested seven billion dollars in R&D, hired over 400 scientific experts and resulted to 5,800 patents granted as of 2019. The team produced hundreds of studies that were peer reviewed or are in the process of being peer reviewed.  “This is a testament to our commitment to put science at the forefront as we continue on our quest. It also is a manifestation of our company’s conviction that responsible innovation through science and data overcome problems and result in solutions that work for our consumers,” the PMFTC executive said. The product of PMI’s research and development, a heated tobacco product, IQOS, has been recognized by the US FDA as a fundamentally different product than combustible cigarettes. And “It has been authorized to be marketed in the US under a modified exposure order, which is deemed appropriate for the “promotion of public health” and is “expected to benefit the health of the population.” IQOS is an electronic tobacco heating system, a new patented technology. Its components include a pocket charger and heating device. And this heating device is used only with a tobacco stick -- called HEETS -- that is designed to be heated and not burned, thus producing a vapor. IQOS is smoke-free. It heats real tobacco, and produces no smoke, no fire and no ash.  Today, he said, the company’s significant journey is to meet the need of consumers, equipped with a vision and a product. He cited the global success of IQOS, which today is available in 57 countries. In just five years, there are now fifteen million IQOS users globally, with 72% converting fully to IQOS. “And we’re excited by the fact that our research tells us 59% of Filipino smokers are open to trying smoke-free alternatives as long as they are commercially available and subject to certain product safety standards,” he added. PMFTC, he said, is doing its best to bring smoke-free products within the reach of Filipino adult smokers who would otherwise continue to smoke and bring us closer to our dream of a Smoke-free Philippines.

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P40M cigarettes from China seized by Customs in Mis. Or.

September 24, 2020

CAGAYAN DE ORO CITY – Imported cigarettes from China valued at P40 million were apprehended by the Bureau of Customs-10 (BOC-10) on Sept. 17, the agency said Tuesday. The contraband arrived at the Mindanao Container Terminal, a sub-port under the jurisdiction of BOC-10, in Tagoloan, Misamis Oriental, said Cris Angelo Andrade, the bureau’s regional information officer. Andrade said the cargo has no import papers and other documents, prompting the Customs to declare it as a “pre-lodged shipment.” Prior to the contraband’s arrival, the BOC-10 district office has already been alerted of the shipment by the Customs Intelligence and Investigation Service (CIIS), Andrade said. Upon arrival at the MCT, the shipment was immediately issued with pre-lodgement control order, he added. The BOC-10 then put out an alert order against the shipment for violation of National Tobacco Administration (NTA) memorandum circular no. 3 series of 2004 and NTA board resolution no. 079-2005 in relation to section 1113 (f) and section 1400 (misdeclaration) of Republic Act 10863 or the Customs Modernization and Tariff Act. Oliver Valiente, the Customs’ CIIS field station chief, said the illegal shipment was alerted to them through “Project Crocodile.” Project Crocodile is an information-sharing scheme between customs administration of member-countries notifying each other if there are movements of suspicious cigarette shipments. The information provided to the CIIS was relayed through a global database operated jointly by countries involved in international anti-smuggling campaign. In his statement, John Simon, BOC-10 district collector, has reiterated his support in the Bureau’s drive to combat smuggling in the country as he commended the vigilance and dedication to duty of the personnel instrumental in the said apprehension.   “The Port of Cagayan de Oro will remain steadfast in its mandate to protect the country’s borders by preventing the entry of smuggled goods,” Simon said. Early this month, BOC-10 led the destruction through shredding of 2,150 reams of cigarettes from China and other countries. In a previous interview, Simon said the condemned items were apprehended when the consignees failed to pay duties and taxes in violation of RA 10836.

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Customs bureau seizes P20-M smuggled cigars

September 12, 2020

THE unrelenting anti-smuggling operation of the Bureau of Customs-10 (BOC-10) has resulted to the confiscation and destruction of P20.7 million worth of illegally imported cigarettes last Wednesday, September 9. Among those seized bore the brand names Union, Bravo, Famous, Farstar, Septwolves, YS, San Marino, Cannon. John Simon, BOC-10 district collector, said the contraband consisted of 2,150 reams or 188,824 of various brands. The cigarettes entered the port of Ozamiz in Ozamiz City and Mindanao Container Terminal sub-port in Tagoloan, Misamis Oriental on two occasions, on August 25, 2020 and Sept. 1, 2020, Simon said. “We don’t want cigarettes that are illegal and are sold here in Northern Mindanao,” Simon said. The confiscated cigarettes were destroyed through a shredding machine at the Greenleaf 88 non-hazardous waste disposal facility in Barangay Bayabas, this city. Simon said the items were confiscated as the consignees failed to pay duties and taxes and in violation of Republic Act 10836 or the Customs Modernization and Tariff Act. The BOC-10, however, has yet to identify the names of the consignees, but Simon said they will be facing charges once their identities are established. Oliver Valiente, chief of the BOC-10’s Customs Intelligence and Investigation Service, the contraband came from China and neighboring Asian countries that entered through the Zamboanga Peninsula. According to the Department of Finance, consignees use a new smuggling scheme to sneak the illegal cigarettes into the country. Citing a report from BOC Commissioner Rey Leonardo Guerrero, Finance Sec. Carlos Dominguez III said P53 million-worth of cigarettes contained in two container vans that were recently confiscated in the port of Davao on July 12, 2020 came from Ningbo, China and was declared as tissue paper. When the cargo reached its final destination in the port of Davao, Guerrero said “the containers of smuggled cigarettes were not included in its inward foreign manifest despite other customs documents proving the existence of the shipment.”

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IQOS stores open in Metro Manila

September 4, 2020

Philip Morris International opened today its first four IQOS stores in Metro Manila offering Filipino adult smokers 21 years old and above a smoke-free alternative to cigarettes.   Located at the Eastwood Mall in Libis, Quezon City, SM Mall of Asia in Pasay City, SM Southmall in Las Piñas City, and Estancia Mall in Pasig City, the stores carry IQOS devices, heat sticks and accessories.  IQOS devices use a patented heat-control technology that precisely heats tobacco-filled sticks wrapped in paper, without the burning, to release a water-based aerosol – not smoke. “Opening the first IQOS stores in the Philippines is a significant step towards achieving our vision of a smoke-free future. PMFTC’s vision is to help adult smokers who would otherwise continue to smoke to move away from cigarettes as quickly as possible and switch to a better alternative,” PMFTC’s President said Denis Gorkun, President PMFTC Inc., the local affiliate of PMI. “We see smoke-free products as an opportunity to reduce the smoking incidence in the Philippines for the benefit of the public health and society at large,” Gorkun said. There are an estimated 16 million smokers in the Philippines, and globally, despite strict tobacco control measures, the World Health Organization estimates that there will still be a billion smokers in 2025, the same level as today.  PMI invested more than USD$7 billion on research, development and production capabilities to create smoke-free products. Recently, the United States Food and Drugs Administration (FDA) authorized the marketing of IQOS and heat sticks in the US with a reduced exposure claim, adding that its issuance of such order is appropriate for the promotion of public health.  IQOS is the first heated tobacco product to receive that exposure modification order in the US. “The US FDA decision shows that IQOS is a fundamentally different tobacco product compared to cigarettes and a better choice for adults who would otherwise continue smoking,” said Gorkun. To ensure that only legal age consumers 21 years old and above will have access to the store, the e-commerce website and the tobacco products, Gorkun said, “We are implementing age verification and access restriction. Presentation of a valid government-issued ID is required before any product is handed over to the consumer.”  “The best thing a smoker can do is to quit cigarettes and nicotine products entirely. But the hard reality is there will be adults who would continue to smoke. For those who don’t choose to quit, we now have a product that does not burn tobacco,” PMFTC Communications Director Dave Gomez said. “Public health experts agree that burning or combustion is the main problem in people getting sick from smoking. Nicotine although not risk-free and is addictive, is not the main cause of smoking-related diseases. It’s the smoke,” Gomez added. PMFTC research showed that 60 percent of current Filipino adult smokers are willing to try smoke-free alternatives as long as they are made commercially available and meet quality production standards. Unlike cigarettes, IQOS does not burn tobacco and therefore produces no smoke and no ash. IQOS HeatControl™ Technology heats tobacco instead of burning it to deliver the true taste of real tobacco. Gorkun said when using IQOS, the aerosol dissipates more quickly than cigarette smoke. “As IQOS produces less lingering smell than cigarettes, it is less likely to bother people around you,” he added.  Last 24 April 2020, HEETS for use with the IQOS device, were made available to legal age users 21 years old and above through select tobacconists/retail stores such as FUMA, Lighters Galore, Green Puff and DJ Shop in Metro Manila.  Last August 7, 2020, the heat sticks were also made available in select 7/11 branches in Metro Manila. On June 5, 2020, the IQOS.COM website was launched where the IQOS devices, as well as the heat sticks and device accessories, were offered.  Committed to ensure that access to the IQOS devices and heat sticks is only limited to adult consumers 21 years old and above who wish to continue using tobacco products or other nicotine-containing products, the IQOS stores practice age verification and adhere to the Good Conversion Practices which is a global standard observed across PMI.

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Law enforcement agencies boost capacity on illicit trade prevention

August 28, 2020

The Philippine Tobacco Institute (PTI) initiated a series of forum in the regions to raise the level of awareness and information on the adverse impact of illicit trade of counterfeit products in the community and economy. The undertaking was in collaboration with various government law enforcement agencies. It also focused on ways to prevent and restrain the entry and proliferation of fake products that pose major economic threat against legitimate products. PTI stressed its commitment to its stakeholders towards regaining revenue loss, curbing the proliferation of illicit cigarettes, and promoting fair and sustainable business practices. A two-day capacity building and forum was recently conducted with the Bureau of Customs (BOC) in Davao City, attended by personnel belonging to customs intelligence, enforcement and security, assessment and examiners. Davao Port Collector Dino Austria said the discussion boosted the region’s customs intelligence in watching out for illicit products, especially on smuggled and fake cigarettes, citing that the illegal activities heightened even during the pandemic period.  Austria extended his full support in curbing illicit cigarettes, saying he will not allow the entry of spurious products that deprive the government of customs duties and taxes. He is looking forward to more partnership with the private sector particularly on intelligence and technical support in curtailing entry of illicit cigarettes. During the current lockdown period starting in March, there were a total of 38 law enforcement actions through raids, seizures, confiscation of smuggled and counterfeit cigarettes, including the closure of illegal warehouses and factories and destruction of machines and equipment used by the unlawful traders. A similar event was held in Butuan City in collaboration with the Criminal Investigation and Detection Group (CIDG) led by Caraga Regional Chief Choli Jun Caduyac. The CIDG chief stressed to his men the importance of safeguarding their jurisdiction and putting a stop to the rise of illicit cigarettes in the region as he cited the two illegal cigarette factories that were foiled by the team in 2018. The capacity-building initiative shall help participants which include intelligence operatives and provincial CIDG heads in gaining technical skills in the detection of illicit actions for successful enforcement and eventual filing of cases against the perpetrators in the courts. The CIDG team were provided an overview of the legal framework on enforcement actions, which include items and documents to watch out, red flags and inconsistencies that could be checked on incoming contrabands. In the Province of Cebu , a Basic Product Authentication training was conducted with the Lapu-lapu City Police Office attended by police officers of the different stations upon the instruction of Police Colonel Clarito C. Baja. The law enforcers were given an overview of the illicit cigarette trade and the prevalence of the unlawful business operations in the Visayas region. They were trained on how to spot a counterfeit cigarette product to boost their knowledge and confidence in their enforcement. PTI emphasizes that the lack of tax stamps and graphic health warnings is a sure sign that cigarette products are illicit.   Untaxed cigarettes should removed from the domestic market to protect much needed government revenues.  For the January-to-June period, excise taxes collected on tobacco products reached P61.5 billion.

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