Sales in Ecuador fall 30% due to illicit trade

Ecuadornews:

The tobacco, textile and cosmetics industries have suffered great losses in the last four years. Study suggests regional alliances to combat contraband.

Ecuador ranks 60th in the Global Illicit Trade Environment Index, which assessed the protection capacity of 64 countries around the world against this activity. The study evaluated 25 indicators that are related to legal, commercial and cultural policies of each country. Ecuador obtained a score of 50.1 out of 100.

The investigation was conducted by the Intelligence Unit of The Economist commissioned by the Transnational Alliance to Combat Illicit Trade (Tracit) and presented this Tuesday, November 27 in Quito at an event organized by the Chamber of Industry and Production (CIP). Jeff Hardy, general director of Tracit, acknowledged the improvements in controls exercised by Ecuador, but said that “the challenges are still great.”

In the event, representatives of three sectors exposed the effects of smuggling on their economies. One of the most affected industries is tobacco. Mauricio Sáenz, Director of External Affairs of Itabsa, Tanasa, Proesa (affiliated with Philip Morris International) indicated that one out of every two cigarettes consumed in the country is contraband, that is, a 55.2% incidence in the marketin the first semester of 2018.

According to their data and a study of MS Intelligence, between 2015 and 2017 the State lost $ 295 million in tax collection only for the concept of the Special Consumption Tax for these products. “If this year the smuggling rate is maintained, the country would lose $ 141 million,” he said.

The sale of cosmetics and personal care products (deodorant, diapers, sanitary napkins) has also been affected, especially in the last four years. According to María Fernanda León, executive director of Pro Cosméticos and the Ecuadorian Association of Direct Selling Companies, the legal business fell by 30%. She indicated that social networks are a new channel through which un authorized brands are sold in the country. She warned that there catalogs are exposed even with prices in Colombian pesos that do not have permission to commercialize.

As recommendations to combat illegal trade, Leon said that the authorities should expedite the processing of complaints from private firms, increase controls at points of sale and not create regulations that hinder the formal business.

The third sector affected is textiles. Its production has fallen between 10% and12% in the same way in the last four years, said Javier Díaz, president of the Association of Textile Industrialists of Ecuador (AITE).

Official figures indicate that between January and October 300,000 garments have been seized, but Díaz considers that “that may be 8% of the total merchan disethat enters.” In 2008, 25,000 tons of clothing were imported and currently10,000 tons have been imported. “That gap of 15,000 was not replaced by domestic producers but by contraband, “said.

Illicit trade has also caused the closure of companies in the sector. Of the 430 companies that existed four years ago, there are now 315.

Cooperation

Public-private partner ships

Jeff Hardy believes that seeking cooperation between customs and security forces within Latin America, especially in Colombia and Peru, would improve controls”immediately “, As well as alliances with the private sector.

20 Public institutions are part of the fight against smuggling in the country.

Controlin the Zedes

The Tracit study also suggests raising security policies in the Economic Development Zones (ZEDE) so that they are not exploited by trafficker sil legally. (I)

Source: https://www.eltelegrafo.com.ec/noticias/economia/4/ventas-comercio-ilicito-ecuador