Wednesday, June 13, 2012

PNG loses K7.2 million through illegal tobacco trade

By MALUM NALU
Papua New Guinea loses at least K7.2 million a year because of illicit tobacco products being smuggled in through the border post at Wutung in West Sepik province, according to British American Tobacco, The National reports.
Millions more, however, is lost to PNG through smuggling in of other products from Indonesia, despite the Border Development Authority (BDA) being set up at a cost of K75 million in 2009 with the purpose of dealing with development and security issues in border provinces of PNG.
BAT, in a document highlighting the seriousness of the problem given to The National, said the ease with which contraband could be smuggled in from Indonesia was indicative of a “bigger, more aggressive cancer that eats away at government revenue and the local economy”.

A range of cigarette brands smuggled into PNG from Indonesia.-Picture courtesy of BAT
“Consumers make decisions in favour of price versus quality,” according to the document.
“For instance, tobacco, a major money spinner, with flourishing markets in the hotspot areas of the country.
“There is a clear lack of loyalty to PNG-made products by our own people.
“Their continued decision to purchase illicit tobacco means a loss of K7.2 million in annual government revenue.
“Illicit tobacco places the loss of revenue at three million sticks a month, and the current excise rate of 20t per stick to the government translates to K600, 000 per month in lost taxes.
“The concern is that smuggling is also indicative of a bigger, more aggressive cancer that eats away at government revenue and the local economy: transnational crime.
“Transnational crime includes narcotics, arms smuggling, money laundering, human trafficking, counterfeit products and terrorism.”
BAT said a very clear indicator was the easy availability of counterfeit or contraband products such as pirated DVDs and music CDs, counterfeit cigarettes and other consumer goods.
“The problem is further compounded by the general acceptance of these products by local consumers, allowing for the establishment of a strong customer base,” it said.
“Enforcement continues to be a problem as the government agencies tasked to do this are under-resourced.
“Low wages and poor working conditions leave law enforcement open to corruption, allowing smugglers to buy their way out of a conviction and/or to continue to operate their businesses.
“Enforcement agencies continue to be plagued by the lack of resources and under-funding by the government.
“In an economy that is currently focussed in mining, petroleum and the resource sector, smuggling of illicit consumer products and human aliens is an area of least priority for government.
“Furthermore, entrenched corruption promoted by officers within government agencies, prominent citizens and even government officials has allowed the problem to grow unhindered.
“Illicit trade continues to flourish in PNG because of the lackadaisical attitude of law enforcement, government, consumers and the general public.
“There continues to be a lack of awareness about the impact of illicit trade on a country’s socio-economic health.
“The current situation if further inflaming the problem by providing a stable environment for illicit trade to thrive.”

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