1 in 10Ratio of smuggled cigarettes detected by law enforcement
LKR 22.5 BnEstimated street value of illicit sticks entering Sri Lanka annually
LKR 1 MnMaximum penalty for smuggling illicit cigarettes
LKR 17 BnEstimated average revenue loss to Sri Lanka
450 MnEstimated illicit cigarette sticks entering Sri Lanka annually
960 MnRise in beedi and illicit cigarettes since Q4 2016
The Illicit Cigarette Trade refers to any practice or conduct which relates to the production, shipment, receipt, possession, distribution, sale or purchase of cigarettes for which duty has not been paid.
The Illicit Trade undermines tobacco control policies implemented by the Sri Lankan government and results in a massive loss in government revenue, while funding of transnational criminal activities. Illicit cigarette earnings have been linked to funding narcotics, weapons, terrorist organizations, human & sex trafficking.
Illicit cigarettes pose a serious health hazard, often containing large amounts of carcinogens and other banned substances.
The Illicit Cigarette Trade is the 3rd largest cigarette supplier in the world.
Sri Lanka currently has the 2nd highest cigarette prices in the world in relation to purchasing power parity.
99% of illicit cigarettes are smuggled to Sri Lanka via the free port of Dubai, from Turkey, China and Vietnam.
Greater than 10-fold increase in illicit cigarettes from 2016 – 2017, post price hike.
Cigarette Smuggling: Low Risk - High Reward
Given that the maximum penalty for smuggling illicit cigarettes in Sri Lanka is Rs. 1 million, the low risk - high reward scenario is a major incentive for many crime syndicates to divert resources to smuggling cigarettes. The global illicit cigarette trade is now more lucrative than narcotics.
Cost of illegally importing ten, 40 foot containers of illicit cigarettesLKR 200 Mn
Street Value of each containerLKR 400 Mn
Total profit if undetectedLKR. 3.8 Billion
Fighting Illicit Trade
Abolishing illicit trade requires strong cooperation between the government, law enforcement and CTC.
CTC carries out awareness and educational campaigns throughout Sri Lanka on the topic and often serves as an expert witness for government prosecutions.
CTC is often alerted to the presence of smuggled / illicit cigarettes by area distribution representatives or tips via the Hotline.
Once a tip is received, CTC may inform the Area Police, Divisional Vice Squad, Range Vice Squad, Anti Vice Strike Force or the Special Task Force, depending on the severity of the situation.
The products seized by customs are handed over to CTC who then destroys the cigarettes under the supervision of representatives of the Department of Customs.
The Way Forward
State to actively carry out obligations of WHO Protocol to Eliminate Illicit Tobacco Trade.
Robust deterrence through increased penalties, making the illicit trade unviable.
Dedicated Customs & Police Units to tackle illicit cigarettes.
State engagement with foreign governments to stop products at origin.