The tobacco industry has raised worry about regulators’ lax enforcement methods,
which have failed to prevent the sale of inexpensive, smuggled cigarettes that are sold even without health warnings.
In an interview with the media on Saturday, Pakistan Tobacco Company (PTC) spokesperson Sami Zaman stated that illegal cigarettes would overtake the legitimate business in the next quarter with a market share of more than 50%.
“Smuggled cigarettes do not pay taxes, which is why they are cheap; they also do not have the mandatory health warnings required by Pakistani law and are sold in loose packaging,” Zaman explained.
He also chastised health campaigners for failing to speak out against smuggled cigarettes and unregistered cigarettes produced in the country.
The industry had previously stated that it would buy 85 million kg of raw tobacco from farmers, but only 72 million kg are currently available. Because of the scarcity, tobacco prices have risen this season.
Investors entered the tobacco market, raising the price to Rs1,400 per kg from the minimum tobacco support price of Rs310 per kg. The price has now been reduced to Rs1,000 per kg.
The PTC official stated that tobacco was the sole crop protected by law, but a lack of enforcement mechanisms to prevent unlawful tobacco purchases resulted in price manipulation.
Tobacco costs $2.96 per kilogram in Bangladesh, $1.5 per kilogram in the Philippines, and $4.75 per kilogram in Pakistan.
“Price uncertainty has restricted exports of processed tobacco from Pakistan,” Zaman noted, adding that PTC shipped processed tobacco to cigarette producers in numerous nations.
He indicated that the cigarette sector was expecting 42 million kg of exports, worth around $100 million in the current fiscal year.
Due to unrestricted smuggling of cigarettes into Pakistan, and despite a 160% rise in tariffs in February 2023, the government has failed to meet the Rs180 billion income collection target from the cigarette business.
Following the increase in duties, the government increased its revenue target to Rs249 billion, including an additional Rs70 billion in revenues. However, the actual collection in fiscal year 2022-23 was Rs174 billion.
Cigarette production by the legitimate industry fell 44% in June 2023 and 28.4% in the fiscal year from July 2022 to June 2023.