South Korea's customs office said Monday that it will beef up monitoring and crackdown on tobacco smuggling amid growing demand for cheaper cigarettes ahead of a sharp price hike slated to be effective starting next year.

The moves come as the government is to raise tobacco prices by 2,000 won (US$1.78) per pack starting on Jan. 1, the first increase since December 2004. It represents an almost 80-percent increase in the average per-pack price in Korea.

According to the Korea Customs Service (KCS), the agency will strengthen its monitoring on shipments of duty-free cigarettes intended for exports as they could be routed back to the domestic market through fake documentation. 

The KCS will also keep close tabs on merchants involved in tobacco smuggling and tourists suspected of purchasing more cigarettes than the government-imposed 10-pack ceiling for duty free.

The agency added that it will cooperate with police and prosecution to prevent smuggling of duty-free cigarettes supplied to U.S. soldiers stationed in South Korea out into the domestic market.

Since taxes account for more than 60 percent of cigarette prices, demand for tobacco smuggling seems to be growing. The KCS worries that a price hike could repeat the surge in smuggling as seen about a decade ago. 

According to the agency, about 1.7 billion won worth of smuggled cigarettes were seized in 2004, but the amount surged to 11.2 billion won in 2005, one year after the latest price increase.

The amount of smuggled cigarettes has significantly spiked recently. It came to 43.7 billion won last year and surged to 66.8 billion won so far this year until November. (Yonhap)