ASEAN-wide rules sought to curb illicit tobacco trade

Insider Spotlight

• JTI Philippines is pushing ASEAN to align export requirements with the regulations of destination markets to close cross-border loopholes used by tobacco smugglers
• The Philippine government lost an estimated P141 billion in revenues from illicit tobacco trade over the past two years
• Illicit tobacco incidence across the region is projected to reach 27.8 percent by 2028, up from 23.6 percent in 2025
  
  
  
  

JTI Philippines is calling on Southeast Asian governments to harmonize export rules for high-risk goods as illicit tobacco trade increasingly exploits regulatory gaps between the Association of Southeast Asian Nations (ASEAN) markets.

The tobacco company wants exported products to comply not only with rules in their country of origin but also with the fiscal, packaging, labeling, tax-marking and other requirements imposed by their destination market. The approach is intended to prevent legally manufactured products from being diverted into illicit channels.

Why it matters

Illicit tobacco is taking a growing toll on government revenues. A Euromonitor study cited by JTI estimated that the Philippines lost P141 billion in revenues over the past two years, while one in four cigarettes sold in the country was illicit.

Across six ASEAN markets covered by the study, governments lost an estimated $13.1 billion, or about P739 billion, between 2024 and 2025. Indonesia recorded the largest losses at $5.6 billion, followed by Malaysia and the Philippines at $2.5 billion each.

What they're saying

“Illicit tobacco trade is a regional problem that requires a coordinated regional response,” JTI Philippines director for fiscal and regulatory affairs Mario Zinampan said in a press release.

“As ASEAN becomes more economically integrated, weaknesses in one jurisdiction can create vulnerabilities for neighboring markets. Harmonized rules, stronger information-sharing, and more consistent enforcement can help protect government revenues, legitimate businesses, consumers, and farmers,” Zinampan said.

The proposal

JTI is advocating an “ASEAN Declaration on Harmonizing Rules to Combat Illicit Trade in High-Risk and Sensitive Goods,” backed by guidelines covering export integrity, customs cooperation, interoperable track-and-trace systems and intelligence sharing.

Member states could also tighten proof-of-export requirements, share information on illicit routes and diversion schemes and improve real-time monitoring of goods crossing borders.

The company stressed that the initiative would not harmonize individual countries' domestic tobacco policies or override national regulations.

The bigger picture

JTI also cited a United Nations Office on Drugs and Crime report linking illicit tobacco smuggling with organized criminal and terrorist networks. Maritime routes used for tobacco smuggling within ASEAN are also exploited for drugs, weapons and human trafficking.

“Because the problem crosses borders, the solution must also cross borders. A resilient ASEAN economy must be able to resist the spread of illicit trade,” Zinampan said. —Vanessa Hidalgo| Ed: Corrie S. Narisma