Thailand is losing nearly Bt30 billion in tax revenue each year as the illegal tobacco market expands, with illicit products now accounting for around a quarter of total tobacco consumption. A new policy report highlights the growing scale of illicit trade and its impact on government income, lawful businesses and consumer safety.

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The findings come from a report by the EU-ASEAN Business Counciltitled Driving ASEAN Action Against Illicit Trade: A Strategic, PED-aligned Blueprint for the Philippines’ 2026 ASEAN Chairship. It warns that illicit trade is intensifying globally, particularly in Southeast Asia where expanding trade and logistics networks have created more opportunities for smuggling operations.

While trade liberalisation has supported economic growth across the region, the report says it has also enabled illegal networks to grow alongside legitimate commerce. Illicit trade is now considered a strategic risk to the ASEAN economy, with potential consequences for economic development, governance and regional security.

Beyond tobacco, illegal trade also affects consumer goods, medicines, alcoholic beverages, agricultural products and oil. However, tobacco is among the fastest-growing illegal markets in several ASEAN countries and is causing significant economic losses.

In Thailand, the report notes that illegal tobacco products make up about 25% of the market. The widespread availability of smuggled cigarettes undermines tax collection, weakens legitimate supply chains and creates unfair competition for businesses selling properly taxed goods.

Authorities say smuggled tobacco is often sold at much lower prices than legal products, allowing illegal traders to gain a competitive advantage. Some networks are also linked to influential figures or transnational criminal organisations that exploit legal loopholes, false declarations and smuggling routes through third countries before distributing products domestically.

The government has stepped up enforcement in response to the surge. Prime Minister Anutin Charnvirakul recently travelled to southern Thailand to announce a major operation targeting an illegal tobacco network, during which authorities seized more than 20 million items and imposed fines exceeding 1 billion baht.

The report suggests that enforcement alone will not solve the problem. It recommends a broader system-wide strategy that combines suppression measures with structural reforms aimed at disrupting the entire illicit supply chain.

Proposed measures include stronger cooperation between government agencies and the private sector, improved intelligence-sharing and the development of joint risk indicators. The report also highlights the potential of digital tools such as traceability systems, AI and data analytics to improve supply-chain transparency.

Another recommendation is for ASEAN members to harmonise legal and regulatory frameworks. This could involve licensing systems for manufacturers, importers and distributors, establishing databases of legitimate operators and increasing penalties for large-scale illicit trade.

The Nation reported that one example cited is the Philippines, where exported tobacco products must carry tax markings and legal labels that comply with the laws of the destination country under Republic Act No. 10643. The measure aims to prevent product diversion and improve transparency throughout the supply chain.

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Adapted by ASEAN Now Nation 17 Mar 2026

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The government is just looking out for people's health. Imported tobacco is not as safe as Thai Tobacco....lol

1 minute ago, redwood1 said:

The government is just looking out for people's health. Imported tobacco is not as safe as Thai Tobacco....lol

Protectionism of a monopoly!

I am wondering how it is possible to import these tobacco products... It is not a bit, so follow the money and look who is involved.. Probably it will lead to nowhere as people involved are high ranked or influential... Make vaping legal and tax it it will compensate the loss for the illegal tobaccos

Happens everywhere. Taxes are too high so the black market has a market to move into.

4 hours ago, ikke1959 said:

I am wondering how it is possible to import these tobacco products... It is not a bit, so follow the money and look who is involved.. Probably it will lead to nowhere as people involved are high ranked or influential... Make vaping legal and tax it it will compensate the loss for the illegal tobaccos

Why do you think the illegal tobacco is imported?

Tobacco is widely grown in Thailand.

If the govt has any spine, they'll get out of the coffin nail business and save big on health insurance.

I don't think we can ever outlaw tobacco but how about on prescription, like heroin in England?

I'm actually seeing more and more Thais smoking, and virtually every TV series and movies have actors smoking. I hope the actors get a huge bonus for being made to suck up those cancer sticks.

Hmpf, and vaping, don't get me started. Does govt really need money from KILLING people!

I wonder how much legal tobacco costs the state in terms of medical expenses at government hospitals.

13 hours ago, BritManToo said:

Why do you think the illegal tobacco is imported?

The originating country's tax labels on the packets are a giveaway.