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The government may reverse its ban on the re-export of e-cigarettes and other heated tobacco products. Photo: Nora Tam

Hong Kong may reverse ban on some types of re-export of e-cigarettes and other heated tobacco products

  • Just this past April, legal amendment banning import, sale and manufacture of alternative smoking products took effect
  • But authorities now considering amending law, with eye on billions of dollars that trade generates annually, source says

Hong Kong may reverse its ban on the re-export of e-cigarettes and other heated tobacco products by land and sea transport by the end of this year as part of efforts to ignite growth, the Post has learned.

But an economist on Monday warned the move would undermine the credibility of city authorities if they backtracked on their promise to curb tobacco use and also weaken the promotion of public health.

“Senior officials are mulling over the relaxation of the transshipment ban on re-exporting the alternative smoking products from Hong Kong, given the significant values of the re-export,” a government insider said.

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“The original intention of the amendment was to prevent the re-exported products from slipping back to Hong Kong through other means. The new move would roll back the tobacco control regime.”

Under the city’s present laws, which were amended last year and took effect at the end of April, no one can import, sell or manufacture alternative smoking products such as electronic cigarettes, heated tobacco products and herbal cigarettes.

Offenders face a fine of up to HK$50,000 (US$6,370) and up to six months in jail. But consumers are still allowed to use vaping gadgets.

The legislation also prohibits smoking products from being transshipped through Hong Kong when brought in by truck or ship for transport onwards overseas, although air transshipment cargo and transit cargo that stays on a plane or ship are exempt.

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Hong Kong was a major transshipment point for vaping products from mainland China before the ban was imposed.

A report last December from the China Electronics Chamber of Commerce found that 95 per cent of the world’s vaping products were produced on the mainland, with more than 90 per cent exported at a value of about 138.3 billion yuan (US$19.23 billion).

But the Post has learned that authorities are looking at amending the rules by the end of this year, which is expected to generate billions of dollars a year for government coffers.

The Hong Kong Association of Freight Forwarding and Logistics in September said the curbs on the transshipment of e-cigarettes through the city had also led to a reduction in the volume of outbound air cargo.

Based on a survey of the association’s members, the affected e-cigarette cargo was estimated at 330,000 tons a year, a loss of about 10 per cent of Hong Kong’s annual export volume by air, it said.

The association said the value of the re-export cargo affected by the ban was estimated to exceed 120 billion yuan.

Some e-cigarettes on show. Photo: K.Y. Cheng

Gary Lau Ho-yin, the group’s chairman, also warned the ban had shaken Hong Kong’s status as a regional transshipment hub and dealt a huge blow to people’s livelihoods.

Lawmaker Frankie Yick Chi-ming, who represents the city’s transport sector and who lobbied for an easing of the ban, said the amendments to the law could include allowing the re-export of vaping products by sea-to-air transport as now there was a logistics system in place to prevent the products from slipping into the city.

“The Airport Authority has run a logistics park in Dongguan which serves as a joint checkpoint for shipment of goods. It will cast a giant security net to seal off the goods,” he said. “When the shipment arrives in the Hong Kong airport, the transit cargo will be put on board aircraft for re-export.”

“The government was concerned about the risk of vaping products slipping into the community. Now, this new security system could plug the loophole about transshipment of the products, so it feels safe to amend the law.”

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But Simon Lee Siu-po, an economist and honorary fellow at the Asia-Pacific Institute of Business at Chinese University, said the government could risk undermining its credibility by making a U-turn on the re-export ban of vaping products by land and sea.

“The government is facing mounting fiscal pressure with poor revenue from stamp duty and land sales. It is understandable that it needs to generate some income from various means,” he said.

“But the U-turn might defeat the government’s purpose of safeguarding public health while the public may think the government hasn’t kept its promise on the crackdown on tobacco products.”

Financial Secretary Paul Chan Mo-po has projected a budget deficit of more than HK$100 billion (US$12.7 billion) for this year, almost twice the amount forecast, as revenue from stamp duty and land sales are predicted to fall far short of expectations amid the Covid-19 pandemic and a weak external economic environment.

But Lee said the government should look for long-term solutions to generate revenue such as diversifying sources of income instead of relying on those collected from land sales. He added that lifting the ban on re-exporting e-cigarettes would only provide some short-term financial relief for authorities.

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“The core issue is the city’s narrow tax base. The government has to find some long-term solutions to expand its source of income otherwise it may need to make a U-turn on many policies,” he said.

The city first proposed a total ban on e-cigarettes in 2015, but that was watered down in 2018 when the authorities decided to regulate the sector in the same way as traditional tobacco products.

But, after heavy criticism from the city’s medical and education sectors, Carrie Lam Cheng Yuet-ngor, then the chief executive, proposed a total ban on e-cigarettes, heated tobacco products and herbal cigarettes in her 2018 policy address.