RETAIL and Trade Brands Advocacy Malaysia Chapter (RTBA Malaysia) is strongly recommending regional governments to review and if required, reform their respective excise structures on tobacco products, to complement efforts by the region’s enforcement agencies.
This is because one of the key drivers of the illicit tobacco trade is the price factor, according to the non-governmental organisation (NGO) whose aim is to safeguard supply chains and brands from criminal conduct.
“Countries like Australia as well as some Asean nations like Malaysia impose high excise duties on tobacco products to discourage smoking and increase public revenue,” RTBA Malaysia managing director Datuk Fazli Nordin pointed out in a media statement.
“This has driven many consumers to seek illicit alternatives.”
The very fact that legal cigarettes today cost three to four times more than illicit alternatives as in Malaysia’s case, has fuelled the explosion of illicit cigarettes which currently takes up 65% of the total market, the highest in the world, according to Fazli.
Additionally, Fazli also urged regional governments to lend a hand to their respective enforcement agencies to combat the illicit tobacco trade.
“This can be done by closing the price gap between legal and illicit products through practical excise reforms, thus effectively disincentivising criminal syndicates to smuggle illicit tobacco,” he noted.
Earlier, RTBA Malaysia has praised customs departments across Asean and Australia for their commitment to tackling illicit tobacco issues in the region through strengthened collaboration.
Both parties came into an agreement at the Task Force on Illicit Tobacco Planning Virtual Workshop on Nov 3-5 which was hosted by the Australian Border Force (ABF) and supported by the Jakarta Centre for Law Enforcement Cooperation.
The joint task is aimed to strengthen cooperation between both countries to tackle this issue. Joint enforcement activities will commence in 2021, according to news reports.
During the November workshop, the Asean Customs Enforcement and Compliance Working Group (CECWG) has highlighted that illicit tobacco poses a major economic issue in the region.
More than 50% of the cigarettes in the market are illicit, causing billions of dollars in tax loss. The proceeds from this black market can be used to fund other illegal activities that will harm the communities in the region.
“This multi-lateral collaboration is the right strategy to curb the illicit tobacco trade which is a growing threat in the region,” stressed Fazli.
According to the RTBA’s Illicit Tobacco in the Asia-Pacific Region: Causes and Solutions report launched in April this year, illicit tobacco is a threat that is not contained within borders.
The lead vectors of this threat are mainly China, Vietnam, Indonesia, Singapore and Malaysia.
The report further stated that China, the largest manufacturer of illegal cigarettes in the world, will use Singapore as a key distribution node to ship products onto Malaysia and further destinations like Australia.
“We are confident that this regional collaboration can disrupt the flow of this transnational supply chain,” added Fazli. – Dec 12, 2020
