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. Get today's headlines by email 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. Join the discussion? Already a member? Adapted by ASEAN Now Nation 17 Mar 2026
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