Federal Minister for Commerce Jam Kamal Khan held a detailed meeting with a delegation of Philip Morris International led by President CIS & Central Asia Marco Mariotti to discuss major challenges facing Pakistan’s tobacco sector, including illicit trade, weak enforcement and export potential.
According to official details released on Thursday, the delegation informed the minister that Pakistan is suffering an estimated annual revenue loss of around Rs350 billion due to the growing illegal cigarette market.
Participants stated that nearly 45 to 47 billion cigarettes are reportedly being sold without tax payments, creating serious distortions in the formal market and placing compliant businesses under pressure.
The meeting reviewed structural weaknesses within the tobacco supply chain, including issues related to tobacco leaf procurement, under-reporting of production and inadequate traceability systems.
The delegation said that while registered companies operate under strict regulations, undocumented production and misuse of contractual arrangements continue to facilitate illegal manufacturing activities.
Officials noted that the issue extends beyond taxation and also involves concerns related to undocumented income, money laundering and wider economic distortions benefiting a limited number of informal operators.
A major focus of the discussion was the need for stronger implementation of existing laws and regulations.
The delegation maintained that although tax stamp systems and legal frameworks already exist, enforcement remains inconsistent and requires coordinated efforts from both federal and provincial authorities.
The role of the Pakistan Tobacco Board was also discussed, with participants stressing the need to strengthen the institution’s monitoring and enforcement capabilities.
The meeting further examined policy challenges linked to Pakistan’s commitments under the International Monetary Fund programme, particularly reforms involving import liberalisation and equal treatment of commercial and industrial importers.
Stakeholders observed that while such reforms aim to facilitate trade, they may also complicate efforts to control the supply of inputs used in cigarette manufacturing.
Jam Kamal Khan described the issue as a “multi-layered challenge” requiring action across the entire supply chain, from cultivation to retail markets.
He stressed that the primary issue lies in weak enforcement rather than the absence of policy and called for closer coordination between federal institutions and provincial governments.
The minister reaffirmed the government’s commitment to supporting the formal sector, improving exports and ensuring a transparent business environment.
He directed officials to convert stakeholder proposals into actionable recommendations focused on stronger enforcement, improved traceability and gradual reduction of the informal economy.
Both sides agreed to continue engagement and cooperation to tackle illicit trade and unlock the sector’s export potential while protecting government revenues and farmer incomes.