The Illicit Cigarettes Study (ICS) in Malaysia May 2023 report, commissioned by the Confederation of Malaysian Tobacco Manufacturers (CMTM) shows that illicit cigarettes prevalence in Malaysia remains high at 55.3% with a slight decline of 1.3 percentage points from 56.6% in 2022.
CMTM finds encouragement in the decline and believes that the anti-illicit measures introduced which include the strict control on the transhipment of tobacco products and increased enforcement efforts against illicit cigarettes are yielding positive results.
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 must be maintained and sustained.
However, at 55.3%, the illegal cigarettes prevalence 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 to RM8 per packet, compared to the lowest category of legal cigarettes sold at RM12 due to almost RM9 in taxes per packet.
This is causing the government to lose about RM 5 billion each year in uncollected taxes. CMTM urges 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 highlighted notable increasing presence of cigarette packs with fake tax stamps in the market. Based on the study, incidence of cigarette packs with fake tax stamps has increased to 8.5% from 4.9% in 2018.
There are currently more than 20 brands of cigarette packs with fake tax stamps in Malaysia and it is expected to grow if the issue is left unaddressed. It is urgent for the Royal Malaysian Customs Department to take swift action against the rogue importers who are involved in fake tax stamps products.
CMTM also highly welcomes the 10% reward programme that was announced by the Deputy Finance Minister I and believes that this programme is timely and will further encourage intelligence sharing, leading to impactful enforcement actions.
In fact, CMTM recommends that this programme 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 Ministry of health etc. in the programme.
In view of the current high incidence of illicit cigarettes in Malaysia, CMTM also recommends that the Parliamentary Special Select Committee that is currently tasked to review 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 policies are made based on substantiated science-based evidence, preventing any unintentional proliferation of illicit cigarettes in the country further and reversing the positive strides made.
