Representatives of 16 Asia Pacific region Customs administrations are in Hong Kong to map out a far-reaching joint strategy to crack down on transnational cigarette smuggling activities, mainly by "merry-go-round" mode (transnational smuggling by means of circumlocutory paths).
They are now participating in the "First Meeting of World Customs Organisation (WCO) Contact Points for Anti-Cigarette Smuggling Operations in Asia Pacific Region" hosted by Hong Kong Customs and Excise Department today (June 10) and tomorrow (June 11).
The Customs administrations are Australia, Brunei, the People's Republic of China, Hong Kong China, Indonesia, Japan, Korea, Macao China, Malaysia, New Zealand, the Philippines, Papua New Guinea, Singapore, Sri Lanka, Thailand and Vietnam.
Also attending is a representative of the Regional Intelligence Liaison Office (RILO) Asia Pacific.
The Commissioner of Customs and Excise, Mr Timothy Tong Hin-ming, officially opened the meeting in Hong Kong this morning (June 10).
The "First Meeting of World Customs Organisation (WCO) Contact Points for Anti-Cigarette Smuggling Operations in Asia Pacific Region" was held based on Commissioner Tong's proposal to form a united anti-illicit cigarette smuggling front in the Region raised at the 10th WCO Asia Pacific Heads of Customs Administration Conference at Auckland, New Zealand in March, 2004.
Commissioner Tong said, "The Hong Kong Special Administrative Region is honoured to have the endorsement of the World Customs Organisation to host first time ever an event of the kind in this part of the world.
"The scene has been set for us to embark upon a far-reaching operation to combat the smuggling of a commodity with immense revenue implications to us all. This is also one of the most ambitious co-operative arrangements in which Hong Kong Customs has ever participated.
"Smuggling is a cross-boundary crime, to which the only cure lies in international co-operation. We must act in concert under the auspices of RILO Asia Pacific," he said.
Through exchanges of enforcement experience and views, the meeting aims to map out concrete enforcement actions to clamp down on transnational cigarette smuggling activities, and to speedily share confidential intelligence to identify common targets for joint investigations and conduct joint operations.
Commenting on the magnitude of the problem of illicit cigarettes activities, Commissioner Tong pointed out that although statistics were not available on the volume of the illicit trade, there were some broad indicators to show that this was a multi-billion dollar problem of tax evasion.
He said, "According to the World Health Organisation, global smoker population amounts to 1.25 billion, of which some 64%, or 800 million, are living within the territories of the 16 Customs administrations represented here today.
"Figures from the world tobacco industry however show that our consumption of cigarettes is no more than 243 billion sticks, or 18.5% of global consumption. The assumption must either be that, in the Asia Pacific Region, the average smoker smokes a great deal less than his global counterpart elsewhere. Or, if he actually smokes as many cigarettes as a smoker in Europe or America does, then the bulk of the cigarettes he burns, that is, up to 72%, might have come from dubious sources.
"On the latter assumption - perhaps a bold assumption - the potential black market for illicit cigarettes within our 16 Customs territories combined can reach 610 billion sticks per annum. When a Hong Kong person lights a cigarette, he should be paying an excise duty equivalent to 10 American cents. At this rate, the potential revenue loss calculated of 610 billion sticks of cigarettes would be US$61 billion, or HK$478 billion, every year," he said.
Commissioner Tong elaborated on the "merry-go-round" mode of operation adopted by cigarette smugglers.
Typically, at the beginning of a journey, branded cigarettes were duly declared and legitimately handled. After a few stops notably at some free trade zones, however, unscrupulous operators would alter the cargo manifest, add to or reshuffle the contents of the cargo, and sometimes mix genuine cigarettes with counterfeit ones to meet the specific requirements of a black market. The consignment would then enter its intended destination, either under a false declaration, or via a smuggler's avenue.
Commissioner Tong quoted some currently popular routes, including: the Hong Kong-Philippines-Vietnam-China-Hong Kong route; and the Singapore-Hong Kong-Malaysia-Singapore-multi destination route. In addition, Hong Kong Customs and Excise Department made one of its first encounters with culprits using the "merry-go-round" mode in 2003.
In 2003, a suspicious shipment left Busan, Korea, to travel via Hong Kong to Italy. Acting upon intelligence, Hong Kong Customs informed the Italian Customs which then staged a full scale inspection at Gioia Tauro and discovered 10 million sticks of counterfeit cigarettes.
By participating in this meeting, member administrations are expected to gain a better understanding of the cigarette smuggling trend, usual modus operandi of the cigarette smuggling syndicates, the black market situation in each Customs territory and so on.
To further strengthen regional co-operation to combat cigarette smuggling, an action plan will be drawn up by the end of the meeting for the compliance of member administrations in the Asia Pacific Region.
Commissioner Tong was confident that the meeting would attain tangible results in combating cigarette smuggling across boundaries. "I am confident that the seeds you sowed this week will bring harvest in the not too distant future."
Ends/Thursday, June 10, 2004