Why illicit tobacco trade is a function of poor enforcement, not high tax rates - BusinessWorld Online
STOCK PHOTO | Image by Jannoon028 from Magnific The headline story of BusinessWorld’s print edition on May 19 was: “PHL loses P141B to illicit tobacco trade.” The story, authored by Isa Jane Acabal, was about a report published by the European Union (EU)-Association of Southeast Asian Nations (ASEAN) Business Council (or EU-ABC) on the growing illicit tobacco market in the region.The report, titled “Inside ASEAN’s Illicit Tobacco Market: Data Trends, and Emerging Patterns” (May 2026), did forecast that total illicit incidence (for illicit cigarettes and illicit vapes) in the region grew from 22% in 2024 (the base year) to 23.6% in 2025.
It also forecast that by 2028, the total illicit incidence would reach 27.8% of the total market for cigarettes and vapes.Illicit tobacco (both cigarettes and vapes) consists of contraband or smuggled products and local tax evasion products.
They can be counterfeits (illegally manufactured imitating registered brands), illicit white products (legally manufactured but produced for illegal markets), illicit genuine products (registered products but diverted into illegal markets), and unbranded products (non-compliant products with regard to tax stamps, health warnings and other regulatory requirements).For the Philippines, the forecast of the market share of illicit cigarettes in 2025 was 25.3% (compared to the 23.8% in 2024, the base year).
For illicit vapes, the 2025 forecast was 85.6% of the market share (compared to the 2024 base year figure of 84.5%).Among the ASEAN-6 (Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam), Malaysia had the highest illicit cigarette prevalence in 2024, equivalent to a 57.2% share of its national market.
The Philippines was a distant second at 23.8%, followed closely by Thailand at 22.6%.Rounding up the list, illicit cigarettes in Vietnam, Indonesia, and Singapore had a market share of 16.5%, 9.8%, and 5.4%, respectively. ...