Illicit cigarettes prevalence remains high at 55.3%

THE Illicit Cigarettes Study (ICS) in Malaysia (May 2023) research commissioned by the Confederation of Malaysian Tobacco Manufacturers (CMTM) has revealed that the prevalence of illicit cigarettes in Malaysia remains high at 55.3%, a 1.3 percentage point decrease from 56.6% in 2022.

“The anti-illicit measures introduced which include strict control on the transhipment of tobacco products and increased enforcement efforts against illicit cigarettes are yielding positive results,” opined CMTM.

In Kelantan, the illicit incidence had declined to 50.2% compared to 70.6% in 2020 as a result of heightened enforcement actions in the state. It is critical that these initiatives be maintained and sustained.

However, at 55.3%, the prevalence of illegal cigarettes is still considered extremely high by international standards.

Malaysia is still one of the highest illicit cigarette markets in the world as consumers are driven towards illicit cigarettes that are sold between RM4 and RM8 per packet, compared to the lowest category of legal cigarettes sold at RM12 due to almost RM9 in taxes per packet.

According to CMTM, this is causing the government to lose about RM5 bil each year in uncollected taxes.

Moreover, CMTM urged the government to further enforce against coastal smuggling that is prevalent, particularly in the east coast region of Peninsular Malaysia given that criminal syndicates are now taking advantage of the porous borders to smuggle their products illegally into the country.

The ICS 2023 May report also noted an increase in the sale of cigarette cartons with fake tax stamps. Based on the survey, the prevalence of cigarette cartons with fake tax stamps has risen to 8.5% from 4.9% in 2018.

In Malaysia, there are presently more than 20 brands of cigarette packets with fake tax stamps and the number is projected to expand if the problem is not handled. It is critical that the Royal Malaysian Customs Department take prompt action against rogue importers who are involved in the production of fake tax stamps.

Furthermore, CMTM expressed its strong support and appreciation for the recently announced 10% reward programme by the Deputy Finance Minister Datuk Seri Ahmad Maslan.

“This programme is timely and will further encourage intelligence sharing, leading to impactful enforcement actions and it should not be limited to the Royal Malaysian Customs Department as it is equally important to include other enforcement agencies such as the Royal Malaysia Police, Malaysian Maritime Enforcement Agency and Health Ministry, etc,” added CMTM.

In view of the current high incidence of illicit cigarettes in Malaysia, CMTM also suggested that the Parliamentary Special Select Committee that is currently tasked with reviewing the Control of Smoking Products for Public Health Bill 2023 which includes the Generational End Game proposal, undertake a comprehensive assessment and consultation for the bill.

This is to ensure that regulations are founded on scientific data, preventing any inadvertent proliferation of contraband cigarettes in the country and reversing the government’s beneficial strides. – Aug 2, 2023

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