Cigarette black market in Romania shrinks to 15.2 pct in March

Romania's cigarette black market shrank this March by 1 percentage point from January 2017 to 15.2 pct of the total market, shows a Novel Research survey.

"This is the result of the Customs Authority's contribution to the transposition of the 14 measures required by the Premier. The operations Shield 1 and 2 initiated by the Customs Authority in February and concluded on April 1 had positive effects. The revival of mobile teams in January 2017, the rendering of canine squads operational again, as well as the establishment of the Electronic Trade Monitoring Bureau had an important role in the further crackdown on smuggling. The modernization of customs structures must continue with the reinforcement of the mobile teams' capacity and increasing the efficiency of the scanning equipment which, when we took office in July 2016, we found to be used below the required capacity; a comprehensive process to increase the administrative capacity of Romania's customs authority is also needed. Thus, if the sustainable measures above are implemented, the downward trend that has taken smuggling down 3 percent points since November 2016 will continue in the medium and long time," said Dorel Fronea, vice- president of the National Tax Administration Authority and coordinator of the customs structures' activity.

According to Marian Marcu, Novel Research director, the country's northeast remained in March 2017 the most affected by illegal cigarette trade, accounting for 42.9 pct of the total, up 5.3 percent from January 2017.

"The western and southwestern regions further saw high levels of illic it trade this March (18.5 pct and 20.9 pct, respectively), although the numbers have been down from January. The most substantial decrease in the illicit market was in the south-east of the country. Non-branded 'cheap whites' further account for the largest share (56.3 pct), followed by products from the Republic of Moldova (24.5 pct, up 5.4 percentage points from January 2017) and Ukraine (15.8 pct, down 1.4 percentage points). The share of products from Serbia is at 0.1 pct, down 1 percentage point from the beginning of 2017," said Marcu.

Ileana Dumitru, BAT Romania Legal & External Affairs Director, said that the Government can win the fight with the smugglers.

"The best proof is the decrease by about 17 pct of the black market in the last four months. Political will, the resolute action of the authorities and industry efforts have reduced illegal trade from 18 pct at the end of 2016 to currently 15 pct. What will happen next, whether we head for the European average of 10 pct or for the all-times high of 36 pct recorded in 2010, it depends only on the extent to which the Romanian Government shines a brisk light on the extremely well organized smuggler networks that push through Romania's borders every day," said Dumitru.

Gilda Lazar, head of Corporate Affairs & Communications, JTI Romania, Moldova and Bulgaria, voiced her opinion that this commendable decrease could be however only temporary and that a steep, unprecedented rise of the black market could follow. She added that an initiative that could quickly take the illegal market back to the to record-high of 2010 caused particular concern among the players.

"According to the opinion of the Chamber of Deputies, which is the decision-making body in this matter, the Government backs the rejection of OUG No. 54/2010, that is currently in force. Rejecting it would mean returning to the unregulated regime of duty-free stores, as previous to 2010, which would jeopardize national security and the safety of budget revenues. Just as the explanatory memorandum of the ordinance states, at the time this piece of legislation was adopted, about 40 pct of illegal cigarette trade was running through duty-free retailers," said the JTI Romania, Moldova and Bulgaria Corporate Affairs & Communications Director.

Alexandra Olaru, Philip Morris Romania Corporate Affairs Director, explained that despite the successive decrease in the illegal cigarette trade, one should be aware that Romania is still far from the European average of 10 pct and that the authorities must consistently enforce measures to curb this phenomenon.

According to the survey, the situation needs to be clarified at the checkpoints at the border with Hungary and Bulgaria, and specific responsibilities must be assigned to the local police and gendarmerie, as illegal cigarette trade runs in their area of competence, mainly in markets, fairs and subway stations.