The Philippines lost an estimated PHP141 billion (USD2.5 billion) in government revenue from illicit tobacco trade over the past two years — the highest among six ASEAN countries studied in a report by the EU-ASEAN Business Council and Euromonitor International.
The report also found that 86 percent of e-vapes sold in the Philippines are illicit, the highest rate among ASEAN countries where vaping is legal. Illegal vape sales alone caused an estimated PHP23 billion (USD400 million) in lost revenue from 2024 to 2025.
Across the ASEAN-6, illicit tobacco trade caused USD13.1 billion in lost government revenue over the same period. The illicit market generated an estimated USD12.6 billion in revenue, with illegal cigarette sales rising 14% and illicit vape sales increasing 24 percent in the past year.
Indonesia recorded the largest revenue loss at USD5.6 billion, while Malaysia had the region’s highest illicit cigarette market share at 57 percent, meaning illegal cigarette sales exceeded legal ones.
The report warned that illicit tobacco trade is growing across Southeast Asia, fueled by cheap prices, easy access, weak supply chain controls, and the region’s interconnected trade routes. Illegal cigarettes are mainly produced in Indonesia and Cambodia, with additional supply from China, while Malaysia, Singapore, and Vietnam serve as major distribution hubs.
Online platforms and encrypted messaging apps have also become major channels for illicit tobacco sales.
“The scale of illicit trade across ASEAN is often sorely underestimated – and, more worryingly, growing at an alarming pace. Its impacts are wide-ranging, spanning economic, public health and security challenges. If left unchecked, illicit trade could jeopardise ASEAN’s economic future as a global growth engine,” said EU-ABC Executive Director Chris Humphrey.
The report said illicit trade drains funds that could otherwise support infrastructure, healthcare, education, and economic development, while also undermining supply chain integrity and investor confidence.
“Illicit trade is a regional problem that demands a regional solution,” Humphrey added.
The council is urging ASEAN to strengthen regional cooperation, improve customs enforcement, adopt stronger track-and-trace systems, and increase intelligence sharing to combat illicit trade.
