ISLAMABAD: Pakistan’s fight against illicit cigarette trade is facing a serious challenge due to delays in the implementation of track & trace system.

During a media briefing here on Tuesday the experts expressed concerns over the delayed and incomplete adoption of the system, which was designed to curb illegal cigarette trading in the country.

Mona Iskandarani, Area Head of Legal & External Affairs for Asia Pacific, Middle East, and Africa (WEST) British American Tobacco Group, informed media that to control illicit trade within the country, robust enforcement and fiscal measures were required.

Ms Iskandarani stressed the need for sustained enforcement across the entire supply chain to effectively combat the illicit cigarette trade.

Asad Shah, Director of Legal & External Affairs, Pakistan Tobacco Company (PTC), highlighted the challenges faced in the implementation process.

He said the track & trace system was not a magic solution, it was a tool to aid law enforcement agencies.

“However, its effectiveness is compromised when some cigarette manufacturers resort to using counterfeit stamps and manual applications, defeating the system’s purpose,” Mr Shah explained.

He further revealed that despite a 15-month lapse since the implementation deadline, only two out of over 40 cigarette manufacturers have fully implemented the track & trace system.

“As a result, the incidence of illicit trade has risen, contrary to the system’s intended goal of reducing duty and tax evasion in the tobacco sector,” he added.

Media was informed that since its implementation on July 1, 2022, the track & trace system’s shortcomings have allowed the illicit sector to grow substantially.

Estimates suggest that the illicit cigarette market share may rise from approximately 37pc in 2021-22 to around 63pc by the end of the current fiscal year.

“This alarming increase in illicit cigarettes trade could lead to a substantial revenue loss of approximately Rs310 billion to the government in this fiscal year alone,” Mr Shah added.

He added that locally manufactured illicit cigarettes were openly flouting laws by using counterfeit stamps and applying them manually on cigarette packs while packs do not even have the mandatory graphic health warning.

Pakistani markets were also flooded with non-duty paid cigarettes originating from AJK.

Published in Dawn, November 8th, 2023