Mindanao armed groups funded by smuggled Indonesian cigarettes

From Malaya Business Insight (Jul 26, 2024): Mindanao armed groups funded by smuggled Indonesian cigarettes

ARMED groups in Mindanao are financing their activities through smuggled cigarettes, mostly originating from Indonesia, a security expert said in a recent forum.

Prof. Rohan Gunaratna, a security studies instructor at Singapore’s Nanyang Technological University, identified the Abu Sayyaf Group (ASG) and the Moro National Liberation Front (MNLF) as among the beneficiaries of the illicit cigarette trade in southern Philippines.

“Indonesia is a key source for the cigarettes coming in,” Gunaratna said during a recent forum titled “Terrorism-Illicit Trade Nexus: A National Security Threat” at the PROTECT 2024 Conference at the New World Hotel in Makati. “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 which also include current 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 M. Año and Armed Forces Chief of Staff Gen. Romeo Brawner Jr., along with several officials of the Indonesian Embassy in Manila.

Gunaratna, who founded Singapore’s International Centre for Political Violence and Terrorism Research, cited Indonesian trade data showing cigarette exports to the Philippines reaching $137 million or nearly P8 billion in 2021. However, these exports are not reflected in official Philippine import data.

The smuggled brands are typically unregistered with the Bureau of Internal Revenue (BIR) and lack graphic health warnings, tax stamps and other regulatory compliance. 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 seized by authorities in Mindanao provinces, are also openly sold in stores and markets despite lacking import records or evidence of excise tax payment.

Gunaratna identified Palawan, Zamboanga, Sulu and Tawi-Tawi as entry points for smuggled cigarettes from Indonesia and Malaysia, citing millions of pesos worth of seized products between 2021 and 2023.

He said that as members of these groups consolidated their power through years of continued smuggling, they attained political positions in the areas that protected their businesses and interests.

“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 leaders have invested heavily in cigarette smuggling to fund their activities. Gunaratna said that as their power grew, these groups secured political positions that shielded their operations.

“Law enforcement is focused on dismantling this criminal network,” Gunaratna said. “It’s imperative that the national government work closely with the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM). It’s important to develop cooperation between armed forces with both the AFP and Philippine National Police [PNP] working together, to make sure these corrupt elements are neutralized,” Gunaratna said.

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 decrease in tobacco excise tax collection in 2023, dropping from P160.55 billion in 2022 to P134.87 billion in 2023, representing a loss of about P25.5 billion.

https://malaya.com.ph/news_news/mindanao-armed-groups-funded-by-smuggled-indonesian-cigarettes/