HIGH excise duties coupled with strict regulations on cigarettes and vape products will accelerate the growth of illegal trade which already seen illegal cigarette trade causing the Government to lose RM5 bil in uncollected tax revenue annually, said former Sarawak police chief Datuk Dr Yusoff Nook.
His comment came following recent news reports that the Health Ministry (MOH) plans to ban cigarettes and vape products for those born after 2005, emulating New Zealand’s approach on banning the sale of tobacco to its next generation.
While the intention was right, he cautioned that the ban must be thoroughly thought through from various angles.
“In New Zealand, the illegal cigarette rate is only at 11.5% as of 2019 while in Malaysia the illegal cigarette rate is more than 50% and imposing the same initiative will backfire and will not achieve its objective.
“Eventually, criminal syndicates will be the ultimate beneficiary of the ban,” he remarked.
According to Yusoff, who is also the president of E-Cure Sdn Bhd, a consultant company in Economic Crime Control, the illegal cigarette rate was just 36.9% before the 2015 excise hike.
However, the number had jumped to 52.3% in 2016 after the excise hike.
“Today, Malaysia has become the number one country in the world when it comes to illegal cigarettes where six out of 10 cigarettes sold in Malaysia are contraband products.
“In Sabah and Sarawak, the situation is even more acute, where nine out of 10 cigarettes sold are untaxed. Do we want another drastic hike of illegal cigarettes with an outright ban to adults who have been born after 2005?” he asked.
Yusoff went on to remark that the ban on vaping together with cigarettes will cause another illicit trade pillar that is similar – if not worse than – cigarettes.
“More and more smokers are already switching to vape currently as a means to quit smoking and vape shops are mushrooming throughout the country.
“If extremely high excise is implemented and strict regulations are to be put in place, vape consumers are pressured to go underground to secure the products that they want.”
Yusoff said that this would not only cause the criminal syndicate to take full advantage of the demand, but more importantly to sell unregulated products to consumers.
“We do not want to see another segment fall into the black-market economy. The Government will continue to lose its revenue and law enforcement agencies will be paralysed by enforcing the strict regulations,” he justified.
“Before implementing a total ban, MOH should work alongside other ministries and key stakeholders to seek ways to address the problem of the illegal cigarette trade and at the same time develop policy that will not cause the increase in the demand for illegal products amongst consumers.” – Feb 17, 2022
Photo credit: Rakyat Post
