Latest study conducted between June and August 2019 by Illicit Cigarettes Study (ICS) shows Malaysia’s illegal cigarette trade has worsen to 64.6 percent as compared to 59.7 percent recorded previously.
The study which is conducted by Nielsen also showed that twelve states in the country recorded an increase with the exception of Kedah and Perlis. The highest recorded increase are Federal Territory Kuala Lumpur (+9.4 percent), Penang (+8.3 percent) and Melaka (+6 percent).
The latest results are very concerning for Malaysia.
Although there are certain parties that have refuted these statistics by claiming that the numbers are overly exaggerated by the tobacco industry, but they themselves have not published any proper study.
The ICS is the most indepth and most recognised study globally on illegal cigarette incidence which is conducted three times annually in Malaysia with 51,000 samples of discarded cigarette packs collected nationwide. The packs are coded and verified for their security features and absence of local tax stamps, signs of non-genuine packaging or fake stamps and other indications of potential tax evasion or contraband products.
“To think that any legitimate industry can be corroded to this extent to the benefit of criminal gangs casts Malaysia in a poor light on the international stage,” Cormac O’Rourke, Managing Director of JTI Malaysia said.
This is a national crisis that needs addressing urgently by all the relevant institutions of the state.
O’Rourke highlighted concerns regarding the Government’s plans to add more regulations such as increasing the minimum cigarette price of packs which would further worsen the situation of the uncontrolled illegal cigarette trade.
Malaysia cannot afford to have further regulations imposed on the legitimate tobacco industry by the Ministry of Health (MOH) at a time when the country is facing serious smuggling crisis where 65 percent of all cigarettes consumed are illegal and sold below the current Minimum Cigarette Price (MCP).
“We are dismayed to learn that there is a proposal to increase the MCP from RM10 to RM15. Policy proposals of this nature are reckless and serve no genuine purpose. To raise it by 50 percent is an attack on legitimate retailers and law-abiding consumers alike,” O’Rourke added.
JTI welcomed Finance Minister Lim Guan Eng’s recent announcement on more needs to be done in enforcement to curb smuggling – a call consistently made by the legal tobacco industry for years.
We also welcome the Government’s RM235 million allocation to purchase twenty additional cargo scanners to be placed at strategic ports of entry.
“We are hopeful that from now on, the Government will seriously look at holistic and innovative solutions to tackle the ‘out of control’ illegal cigarettes smuggling situation at the country’s porous borders,” O’Rourke said.
JTI will continue to highlight potential solutions such as:
- A further excise tax moratorium for the next two years to avoid further price shocks leading to more smokers switching to illegal cigarettes
- A ban on transhipment for cigarettes at entry points in Malaysia. There should only be a single point of entry for any importation of cigarettes into Malaysia.
- Establish an independent body to lead a special taskforce.