THE incidence of illicit cigarettes in Malaysia has declined to 54.8% in May 2024 from 56.6% in 2023, according to the latest Illicit Cigarettes Study.
In this regard, the Confederation of Malaysian Tobacco Manufacturers (CMTM) has commended the Royal Malaysian Customs Department (RMCD) under the leadership of director-general Datuk Anis Rizana Zainuddin as well as other enforcement agencies such as the Royal Malaysia Police (PDRM) and the National Kenaf and Tobacco Board for their effort in combating illicit cigarette trade in the country.
There are three types of illicit cigarettes in Malaysia, namely smuggled white cigarettes, smuggled kretek cigarettes and cigarettes with fake tax stamps.
Smuggled white cigarettes declined by 7.6% to 31.9% in May 2024 from 39.5% in 2023. However, the decline is mostly neutralised by a corresponding 6.9% increase in cigarettes with fake tax stamps to 15.6% in May 2024 from 8.7% in 2023. Meanwhile smuggled kretek cigarettes remain unchanged at 7.3%.
“From January to May 2024, the RMCD foiled more than 3,000 attempted smuggling of illicit and contraband goods,” revealed the CMTM which comprised British American Tobacco (M) Bhd, JT International Trading Sdn Bhd and Philip Morris (M) Sdn Bhd in a media statement.
“These actions have greatly contributed to the reduction of smuggled white cigarettes in line with Prime Minister Datuk Seri Anwar Ibrahim’s drive to address leakages in the Malaysian economy.”
Nevertheless, CMTM cautioned that smuggling syndicates are increasingly affixing fake tax stamps on smuggled cigarettes to mask their illicit status, thus misleading some retailers into displaying those products on their shelves while confusing consumers into buying them.
“CMTM urges the government to intervene by implementing modern solutions to address the growth of cigarettes with fake stamps while persisting in its efforts to curb smuggled cigarettes,” noted the confederation.
While the incidence of illicit cigarette still represents a significant loss of excise revenue for the government, the promise shown in the declining incidence of illicit cigarettes is proof that the measures implemented by the government is on the right track, according to CMTM.
The decline in illicit cigarettes presents an opportunity for the government to consider implementing a multi-year tax calendar for cigarettes, kretek cigarettes, cigarillos and heated tobacco sticks with moderate and predictable tax increases to discourage consumers from turning to illicit cigarettes due to the unaffordability of legal cigarettes.
“This approach can generate additional excise revenue for the government to achieve its fiscal objectives,” added CMTM. – Aug 7, 2024
