Abstract
Illicit trade carries the potential to magnify existing tobacco-related health care costs through increased availability of untaxed and inexpensive cigarettes. What is known with respect to the magnitude of illicit trade for Vietnam is produced primarily by the industry, and methodologies are typically opaque. Independent assessment of the illicit cigarette trade in Vietnam is vital to tobacco control policy. This paper measures the magnitude of illicit cigarette trade for Vietnam between 1998 and 2010 using two methods, discrepancies between legitimate domestic cigarette sales and domestic tobacco consumption estimated from surveys, and trade discrepancies as recorded by Vietnam and trade partners. The results indicate that Vietnam likely experienced net smuggling in during the period studied. With the inclusion of adjustments for survey respondent under-reporting, inward illicit trade likely occurred in three of the four years for which surveys were available. Discrepancies in trade records indicate that the value of smuggled cigarettes into Vietnam ranges from $100 million to $300 million between 2000 and 2010 and that these cigarettes primarily originate in Singapore, Hong Kong, Macao, Malaysia, and Australia. Notable differences in trends over time exist between the two methods, but by comparison, the industry estimates consistently place the magnitude of illicit trade at the upper bounds of what this study shows. The unavailability of annual, survey-based estimates of consumption may obscure the true, annual trend over time. Second, as surveys changed over time, estimates relying on them may be inconsistent with one another. Finally, these two methods measure different components of illicit trade, specifically consumption of illicit cigarettes regardless of origin and smuggling of cigarettes into a particular market. However, absent a gold standard, comparisons of different approaches to illicit trade measurement serve efforts to refine and improve measurement approaches and estimates.
Highlights
The World Health Organization (WHO) ranked tobacco use the leading preventable cause of death in the world [1]
Public expenditures came to 2,304 billion Vietnamese dongs (VND), or 121.3 million American dollars (USD), in 2007 to treat only three of the 25 diseases most closely related to tobacco use—lung cancer, ischemic heart disease, and chronic obstructive pulmonary disease [4]
As of 2010, both Australia and Malaysia were the origin of roughly 5% of cigarettes smuggled into Vietnam, and Malaysia exceeded 10% in 2008. Both methods employed by this research indicate the presence of illicit trade in the early to mid 2000s
Summary
The World Health Organization (WHO) ranked tobacco use the leading preventable cause of death in the world [1]. Illicit trade carries the potential to magnify tobacco-related costs and problems through the increased supply of inexpensive, untaxed cigarettes. This is the rationale advanced by the tobacco industry in order to oppose policy changes and tax increases. After an excise tax increase in 2006, illicit cigarette volume increased to 600 million packs in 2006, 636 million packs in 2007, and 731 million packs in 2008 [5], compared with 495 million packs in 2005 and 300–400 million packs between 1998 and 2004, as noted by a Vietnam Tobacco Association report [6]
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