Illicit trade of e-cigarettes ‘unhealthy’ for vape industry
COUNTERFEITING and smuggling of vaporized nicotine products or electroniccigarettes (e-cigarettes) may have significantly gone down in the Philippines, but they remain a constant challenge which, if not properly addressed, will continue to rob industry players of potential revenue and post threats to the safety and well-being of consumers.
“Fake and counterfeit products pose health risks due to low-grade ingredients. We do not really know what is put inside the e-liquids. Also, they are made with poor manufacturing standards. So we do not know the quality or the cleanliness of the places that produce these items,” RELX International Head of External Affairs (Philippines) Patrick Drilon said during their workshop held in Okada Manila last May 18, 2023 with participation from the local, Indonesian and Malaysian media.
In a sideline interview, he told the Businessmirror that this problem is still not totally eradicated, but mitigated with the help of law enforcement authorities and the Bureau of Internal Revenue (BIR), as well as the enactment last year of the Vaporized Nicotine and Non-nicotine Products Regulation Act or Republic Act (RA) 11900.
Consumer protection
ENACTED on July 25, 2022, the Vape Law, regulates importation, manufacture, sale, packaging, distribution, use and communication of vaporized nicotine products.
More importantly, it declares it as a policy of the state, to enact a policy whereby these novel consumer products are properly regulated using internationally accepted product standards in order to protect the citizens from the hazards of regulated, unregulated and substandard vaporized nicotine products.
“We support the Vape Law because it provides comprehensive regulation that will protect consumers and promote responsible trade, [while] ensuring minors and non-smokers are protected,” Philippine E-cigarette Industry Association (PECIA) President Joey Dulay noted.
Being a vaper himself, he shared his personal experience of the benefits of switching from smoking to vaping, such as improved health, reduced expenses and more choices of flavors and devices.
“However, I also recognize the need for proper regulation of this novel product to ensure the safety, quality and responsible use. The industry faced several challenges due to the lack of clear regulations, resulting in confusion among consumers and businesses alike,” he emphasized.
Notably, half of the Vape Law’s provisions are safeguards to protect minors from these products. Regarding the welfare of non-smokers, it mandates that all product communications shall contain the following: “Government warning: This product is harmful and contains nicotine, which is a highly addictive substance.” “It is for use only by adults. And it’s not recommended for use by non-smokers.”
Point of sale establishments are also required to post warnings, saying that the sale or distribution of vaporized nicotine and nonnicotine products to or by persons below 18 years of age is illegal.
“With the Vape Law, consumers will be protected from illicit and substandard products and promotes responsible trade. It provides for product standards and registration restrictions on online trade and promotional activities, and requirements for health warnings in all product communications,” said Dulay.
Healthy industry
RA 11900 also contains provisions that require the registration of vaporized nicotine products with the Department of Trade and Industry prior to its public sale, importation or manufacture. Likewise, it prohibits their public sale or distribution that does not comply with the BIR’S tax and registration requirements.
“The Vape Law, indeed, will stop the entry of smuggled products and fly-by-night operators, which can adversely affect not only the industry, but also the consumers themselves,” he pointed out.
According to him, the country’s vape industry is a growing and dynamic sector that offers a variety of products and services to consumers who are looking for an alternative to smoking. In fact, he cited a report from Statista that shows the e-cigarette segment in the Philippines is projected to grow by 2.42 percent from 2023 to 2027, resulting in a market volume of around $265 million in the next four years.
The industry is on track to achieve this given the strong market demand. Based on the 2021 Global Adult Tobacco Survey in the Philippines, the current users of e-cigarettes increased from 0.8 percent in 2015 to 2.1 percent in 2021.
“Since the Vape Law strictly requires vaporized nicotine products to be registered with the BIR, we can expect a substantial increase in government revenues through the collection of taxes, which we can expect to boost the country’s economic recovery from the Covid-19 pandemic,” he said.
As the government regulates this relatively new industry, business players are encouraged to also do their share to help protect public health and safety while supporting economic growth.
E-cigarette maker RELX International, on its part, commits to its corporate accountability to tackle the rise in counterfeits and smuggled vape products here and abroad through the Golden Shield program. One of the three pillars of its global initiative, the RELX Pledge seeks to protect minors through the Guardian Program and empower economic livelihood via Green Shoots.
The company allots a portion of its budget each month to engage international firm React, which specializes in identifying illicit products and sellers on e-commerce platforms. With it, Drilon bared that on a monthly basis, they usually take down around 1,000 sellers of bogus and smuggled Relx-branded e-cigarettes in e-commerce platforms Lazada and Shopee, and about 20 accounts of illegal sellers on Facebook.
Since the initiative’s launch in August 2019, he added that they have so far filed 10 criminal suits against counterfeiters and bogus sellers in the Philippines. These cases are still pending in courts.
Such initiatives have saved RELX from significant revenue loss. The biggest haul, he shared, was a halt of over $700,000 worth of fake e-cigarette products from reaching the Philippines, Malaysia, Indonesia and China last July 2020. In November 2022, the BIR confiscated smuggled vaping devices valued at P30 million from a local warehouse.