By Ranjit Singh
IT has been reported that six out of every 10 packs of cigarettes sold in Malaysia are illegal and this situation has worsened during the movement control order (MCO) period imposed by the government.
Illegal cigarettes are cigarettes that are sold without the requisite excise duties being collected. The government loses some RM5 bil in tax revenue from the sale of illicit cigarettes each year.
Cigarettes have been categorised as non-essential items by the government and their distribution has been prohibited during the MCO period.
JT International Bhd told FocusM that based on recent media reports, the illicit trade continued to be rampant in Malaysia despite the MCO and tighter scrutiny by enforcement agencies.
Smugglers have resorted to selling cigarettes online while offering door-to-door delivery services in collaboration with food delivery providers.
Under Section 10 (a) of the Control of Tobacco Products Regulations 2004 (CTPR), it is strictly prohibited for tobacco to be sold online.
Retail and Trade Brand Advocacy (RTBA), a non-governmental organisation that safeguards businesses from criminal conduct, said in a statement recently that travel restrictions, MCO and tighter scrutiny by enforcement agencies at border checkpoints and expressways have done nothing to disrupt the illicit trade supply chain in Malaysia.
“Recent feedback from industries and enforcement agencies indicated that instances of illicit trade in Malaysia remain high as syndicates and perpetrators use innovative ways to circumvent the more intense spotlight cast by the authorities due to the Covid-19 pandemic,” said RTBA managing director Heath Michael.
He said in the case of illicit tobacco trade in Malaysia, RTBA had found that demand for illicit cigarettes has increased during the MCO period as legitimate manufacturers are not allowed to distribute cigarettes, which were not considered as essential items.
According to RTBA, syndicates had utilised e-commerce and social media platforms along with e-hailing and courier services to cater for the spike in demand.
According to media reports, some delivery riders had carried bags that were purportedly used to transport food but in essence were used to smuggle cigarettes.
It would be difficult for the enforcement agencies to stop the delivery riders to check their bags but failure to do so would mean that the authorities are giving their tacit approval for illegal cigarette smuggling.
If the government could plug the revenue leakage from illicit cigarette sales, it could save RM5 bil, and this could help to fund 50% of the Bantuan Prihatin Nasional (BPN) which amounts to RM10 bil.
During this crisis period, the enforcement’s resources have been stretched thin, but turning a blind eye to the illicit cigarette trade would only mean the problem gets bigger. — April 13, 2020