A security expert advised Philippine defense and security officials to collaborate on stopping the smuggling of cigarettes, primarily from Indonesia and Malaysia, to cut off a funding source for terrorist and rebel groups in Mindanao.
Prof. Rohan Gunaratna, a security studies instructor at Singapore’s Nanyang Technological University, said in a recent Makati City forum that close cooperation between the national government and the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) is crucial.
“It’s imperative that the national government work closely with the Bangsamoro Autonomous Region in Muslim Mindanao. It’s important to develop cooperation between armed forces with both the AFP [Armed Forces of the Philippines] and PNP [Philippine National Police] working together, to make sure these corrupt elements are neutralized,” Gunaratna said in discussing the security threat of terrorism and illicit trade at the PROTECT 2024 Conference at New World Hotel in Makati City on June 28, 2024.
Gunaratna, founder of Singapore’s International Centre for Political Violence and Terrorism Research, said terrorist groups such as Abu Sayyaf Group (ASG) and rebel groups were among the beneficiaries of illicit cigarette trade.
“Indonesia is a key source for the cigarettes coming in,” Gunaratna said “The Philippines is not benefitting from this revenue, because the carriers are the groups who are not recognized entities or the government.”
Delegates in the forum discussed ongoing and emerging threats such as geopolitical risks, violent extremism, climate change, cybersecurity and other disruptive technologies. Among those who attended the forum are key defense officials such as National Security Adviser Eduardo Año and Armed Forces of the Philippines (AFP) Chief of Staff Gen. Romeo Brawner Jr., along with several officials of the Indonesian Embassy in Manila.
Gunaratna said that based on Indonesian trade data, cigarette exports to the Philippines reached $137 million or nearly P8 billion in 2021. However, these exports are not reflected in official Philippine imports data.
The smuggled brands are typically not registered with the Bureau of Internal Revenue (BIR) and lack graphic health warnings, tax stamps and other regulatory compliance, he said. Common brands found in Mindanao include Gudang Baru, Oakley, Souvenir, Cannon, Bravo, New Berlin, Fort and Astro, though the total number is believed to exceed 50.
These cigarettes, frequently confiscated by authorities in Mindanao provinces, are also openly sold in stores and markets despite lacking import records or evidence of excise tax payment.
Gunaratna said smugglers used Palawan, Zamboanga, Sulu and Tawi-Tawi as entry points for illicit cigarettes from Indonesia and Malaysia, citing millions of pesos worth of seized products between 2021 and 2023.
“The emergence of numerous private ports, particularly in Mindanao, has facilitated the transport of smuggled goods from Malaysia to the southern Philippines,” Gunaratna said. “Unless these ports are monitored and regulated by the government, smuggling will continue.”
He said these areas are strongholds for the ASG and MNLF, where they invested heavily in cigarette smuggling to fund their activities. Gunaratna said that as their power has grown, these groups have secured political positions that shield their operations.
A report by the Transnational Alliance to Combat Illicit Trade (TRACIT) and the EU-ASEAN Business Council estimated that ASEAN governments lost nearly $3 billion in tax revenue from illicit tobacco products in 2017. The Philippines alone loses an estimated P100 billion ($1.9 billion) annually due to cigarette smuggling. The Bureau of Internal Revenue reported a 15.9-percent drop in tobacco excise tax collection from P160.55 billion in 2022 to P134.87 billion in 2023, representing a loss of about P25.5 billion.
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