Dec 25, 2012

Brunei - Price hike, lax enforcement open way for contraband

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THERE is a growing concern over the availability of illegal cigarettes in the country with some being sold for as low as $2 per pack.

In 2010, the Brunei government imposed a $5 duty per pack of 20 cigarettes.

The price hike was an attempt to discourage people from smoking to reduce the risk of smoking-related chronic diseases.

Two years on, a number of people observed that the availability and consumption of cigarettes has not gone down since the price increase.

However, there has been no official research done to prove this assertion.

An economics lecturer, who wished to remain anonymous, said that the price hike policy coupled with lax law enforcement created the undesirable side-effect of a booming black market for cigarettes.

"I have no doubts that the policy (of price increase) was done with the best of intentions. But the effectiveness of policies are not decided by their intentions, but the results they produce."

The lecturer elaborated, "As demand for cigarettes is high, a price increase means that consumers are forced to look elsewhere for substitutes. And where there is demand, supply will arise to meet it.

"The difference in price between taxed cigarettes and untaxed cigarettes means that there will be no shortage of those trying to make a profit from this disparity."

The lecturer asserted, "The role and ability of law enforcement is critical here to try to effectively constrain supply."

The ability to cut off the illegal supply remains questionable.

"We read in the papers all the time about court cases and the police reigning in people smuggling large quantities of illegal cigarettes. But the fact of the matter is that this may only be the tip of the iceberg."

The lecturer continued, "If law enforcement was truly constraining supply, this would transfer into a substantial price increase in illegal cigarettes. This isn't the case (in Brunei) as you can find packs for as low as $2.

"High enforcement and risk in the market is the number one reason why illegal drugs are so expensive for example."

Hamizah Hj Ismail, a concerned parent, said that the increase in the number of teenagers buying illegal cigarettes means that they are in close contact with the black market ring.

"I am sure that these suppliers of illegal cigarettes also sell other contraband goods like alcohol, marijuana or even other drugs.

"Maybe previously young kids would just get their older friends to buy them cigarettes from the local retail shops, but now they are in contact directly with a much more dangerous supplier who can offer them more damaging goods."

A 16 year-old student, who wished to remain anonymous, said his supplier gives him discount if he buys by the carton.

"He (supplier) prefers to sell by the carton, so my friends and I usually chip in to buy a carton together. He has the cigarettes most of the time, the most we have to wait is a few days.

"This is our best option as we can't afford legal cigarettes."

The student refused to comment if he had bought drugs from his supplier or if his supplier had ever tried to sell him other illegal goods.

Md Afiq Shahrun, a private sector employee, felt that the government should not remove the price increase, but look for other ways to tackle the black market more effectively.

"Scrapping the price increase would be the equivalent of conceding defeat and send out a public message that the government cannot cope with the black market.

"It would also undermine the credibility of the Ministry of Health and the law enforcement authorities who have constantly fought to discourage smoking."


The Brunei Times

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