EuroCham has teamed up with the Consumer Protection, Competition and Fraud Repression (CCF) Directorate-General of Cambodia’s Ministry of Commerce, to deliver a forum aimed at combating counterfeit goods in the Kingdom.
On February 21, in partnership with regional partners, including the EU-ASEAN Business Council and regional head offices of relevant companies and brands, EuroCham hosted its inaugural Counter-Counterfeit and Illicit Trade Forum at Hyatt Regency Phnom Penh. It was attended by public and private sector experts to explore the impact of counterfeit products on the Kingdom’s economy and consumers.
EuroCham said in a press release that counterfeit products and illicit trade pose serious public health risks. This is mostly through the sale of counterfeit and substandard medicines, foods, alcohol, and cigarettes sold in the Cambodian market.
In addition, counterfeit and fake products impact the national economy through significant tax revenue losses and prevent businesses and brands from operating on a level playing field, with those reproducing their products at cheaper prices.
In his opening remarks, Phan Oun, Delegate of the Royal Government of Cambodia in Charge as Director General of CCF Directorate-General, said, “Counterfeits prey on consumer desire for lower prices. Purchasing counterfeit products may seem like a cheap option compared to the real thing but that low price comes at a high cost to yourself.”
Virakoudom Penn, Deputy Director of the Department of Competition, said in 2022, CCF investigated 334 cases in pharmaceuticals, electronic, automotive, beverage, and garment sectors. As a result, dozens of tons of counterfeit products were seized.
Since the Law on Consumer Protection was passed in 2019, CCF and the Counter-Counterfeit Committee of Cambodia have been tasked with the responsibility of ensuring the authenticity of goods. CCF has also embarked on national outreach campaigns to raise consumer awareness.
Phan Oun told the session that the government is keen to address the issue, as well as deliver awareness campaigns. He added that CCF is developing further laws and regulations to level the playing field for businesses and protect consumers.
These include the implementation of a recent sub-decree to regulate commercial advertising to prevent misleading customers and collaborations with international counterparts to exchange ideas and best practices.
“The concept of consumer protection is relatively new [to Cambodia]. However, the topic has the government’s attention, and we are working to promote broad awareness as well as develop new laws and regulations,” he said.
“As a consumer, we have fundamental rights and these rights will be protected and we will work to prevent businesses from obtaining unfair advantages,” he continued.
The private sector also raised concerns at the forum, while commending the government for its initiatives to stamp out counterfeit and fake products.
Rodney van Dooren, head of Illicit Trade Prevention in Asia Pacific for Philip Morris International (PMI), said 400 to 460 billion counterfeit cigarettes have hit the global market. He added that between 10 and 12 percent of all cigarettes are estimated to be counterfeit.
According to PMI estimates, this represents a staggering $40 to 50 billion in lost tax revenue per year worldwide.
“Trafficking in tobacco is high profit and low risk. It goes under the radar, and it’s operated in a very sophisticated way. In some cases, there is not enough enforcement,” he said.
In illicit alcohol trade, Chris Francis, Managing Director of the Alliance Against Counterfeit Spirits (AACS), said sales of counterfeit spirits in Southeast Asia increased from 1,525 in 2019 to 2,492 in 2021.
The pandemic provided the perfect conditions for the problem to worsen with increased at-home drinking. Online marketplaces exacerbated the issue further. Growing sophisticated counterfeit practices means counterfeit bottles can also be created, with most counterfeit labels, caps, and bottles originating in China and sold to markets worldwide.
He added AACS carries out 250 to 300 raids per year globally and supports another 300 to 400 a year across the globe. “Cambodia has been more difficult, and we need to form stronger relationships with law enforcement here,” he said.
According to the Asia Pacific International Spirits and Wines Alliance (APISWA), the illicit alcohol industry costs the global economy $8.9 billion per year.
Tan Ser Chhay, President of the Wine, Spirits, Beer Importer Distributor Association, raised blockchain tracking as an increasingly popular but expensive way to ensure the authenticity of products. Pernod Ricard attended the event to showcase its special seals that guarantee authenticity.
Regarding the healthcare sector, Elaine Khoo, Head of Digital Acceleration at Zuellig Pharma, said more than one million deaths are caused annually by counterfeit drugs. Additionally, up to $431 billion worth of counterfeit products hit the market each year.
She added that breakdowns in the supply chain open up opportunities for counterfeiters.
In the automotive sector, Voltra Founder, Yann Vaudin, said e-bikes imported across land borders from China have negatively impacted the electric vehicle market. Often, these bikes cannot be maintained, or have faulty parts with batteries that pose dangers, he added.
Experts in each sector agreed that with more regulation and enforcement on illicit trade, which could be achieved via private-public collaboration, investors would feel even more confident choosing Cambodia as an investment destination.
EuroCham Executive Director Tom Hesketh said the MOU will pave the road for the two sides to work on protecting consumers, levelling the playing field for businesses and helping establish regulations to prevent illicit trade.
“With the MOU, we are particularly honoured to be invited to be a consultation partner to assist the CCF in drafting the policies, strategies, and new regulations related to consumer protection and competition in Cambodia,” he said.