
Smuggled tobacco funds terrorism, threatens peace and order
LAWMAKERS and law enforcement officials have sounded the alarm over the unchecked rise of illicit tobacco trade, warning that its proceeds are being funneled to terrorist groups such as the Abu Sayyaf.
During a Senate Ways and Means Committee hearing last Thursday, Committee Chairman Sherwin “Win” Gatchalian voiced concerns over the dual impact of illicit tobacco on declining government revenue and national security.
“Another consequence is that profits from illicit trade are reportedly being funneled into terrorism, making this issue not only an economic concern but also a threat to peace and order,” said Gatchalian.
Referring to an October 2023 report from the Manila Bulletin, Gatchalian cited global security expert Rohan Gunaratna, who revealed that cigarette smuggling has become a profitable venture for armed groups operating in Mindanao.
“By not curbing illicit trade, it’s funding these terrorist groups who are wreaking havoc in our southern borders,” Gatchalian warned.
Philippine Tobacco Institute (PTI) President Jericho “Koko” Nograles emphasized that while high tobacco taxes are intended to reduce smoking and discourage consumption, they have inadvertently created opportunities for illegal trade.
“The tax evader stands to gain as taxes increase,” Nograles said.
He highlighted the direct connection between smuggling and terrorism. “I found that terrorism and smuggling go hand in hand,” he said, referencing his research on the Anti-Terror Act.
“Cigarette smuggling, which has roots in Southern Mindanao, was also used for the smuggling of bombs and bomb paraphernalia. Cigarette smuggling would pave the way for other kinds of smuggling,” Nograles added.
Nograles cited Euromonitor data indicating that illicit tobacco products could make up 19% of the domestic market this year. He pointed out that in Mindanao, 51% of tobacco products sold are illegal, with some areas reporting rates surpassing 90%.
Tobacco excise tax collections have experienced a consistent decline, falling from ₱176 billion in 2021 to ₱160 billion in 2022, ₱135 billion in 2023, and ₱130 billion in 2024.
Bureau of Customs (BOC) Deputy Commissioner Juvymax Uy explained why smuggling continues to thrive in Southern Mindanao. He pointed to the porous nature of the country’s borders, where local vessels are not required to have automatic identification systems, making them difficult to track. Uy also noted that the proliferation of private ports, overseen by local government units (LGUs), has exacerbated the issue due to lax regulation.
“In the island provinces, illicit cigarettes are a common sight in Abu Sayyaf camps. Nearly all cigarettes found in these camps are illegal,” Uy said.
“The people in the southern borders do not smoke the same cigarettes as those in urban areas,” he added, highlighting the widespread availability of smuggled tobacco in remote regions.
Gatchalian urged law enforcement agencies, particularly the Philippine National Police (PNP) and the National Bureau of Investigation (NBI), to step up efforts in apprehending smugglers and dismantling networks involved in the illicit tobacco trade.
“There should be a whole-of-government approach,” Gatchalian stressed, calling on the departments of finance, trade, and health to work together on a comprehensive strategy to address the issue.
“In my opinion, enforcement is not enough. We have to look at the other causes of illicit trade in our country. We cannot ignore the theory of incentives given the significant price difference between illicit cigarettes and legitimate ones,” Gatchalian said, emphasizing the need for a multifaceted approach to tackle the problem.