KUALA LUMPUR, Feb 19 — Malaysia has been losing RM5 billion in tax revenue annually from the sale of illegal cigarettes, according to Japan Tobacco International Bhd (JTI Malaysia).
An Illicit Cigarettes Study (ICS) conducted by research house Nielsen and commissioned by the Confederation of Malaysian Tobacco Manufacturers (CMTM) found that 62.5 per cent of all cigarettes consumed in Malaysia were illicit.
JTI managing director, Cormac O’Rourke said this illegal trade in Malaysia continued to be rampant and had escalated substantially over the last four years with at least six in every 10 cigarettes consumed locally being illicit.
“The illegal cigarette trade reached a staggering 62.3 per cent last year compared to 58.9 per cent in 2018, an increase of 3.4 per cent year-on-year.
“Based on this, it is estimated that about 12.2 billion sticks of contraband cigarettes were sold and consumed in Malaysia last year,” he said in a media briefing on the ‘Illegal Cigarette Trade in Malaysia – A Situational Update’, here, today.
That situation has made Malaysia the largest consumer of illegal cigarettes in the world, followed by Uganda and Brazil.
Meanwhile, O’Rourke welcomed the establishment of a multi-agency task force (MATF) by the Ministry of Finance and led by the Royal Malaysian Customs Department to comprehensively combat illegal cigarette smuggling and trading in Malaysia.
He said the task force involving ministries and agencies such as the Ministry of Health, Ministry of Domestic Trade and Consumer Affairs and Royal Malaysian Police should strengthen the efforts to comprehensively combat the illegal trade.
“Together with the legitimate tobacco industry in Malaysia, this task force should create a strategic, coordinated and collaborative framework to tackle the illegal cigarette crisis.
“The setting up of the MATF presents an opportunity for the government to finally get to grips with and eradicate illegal cigarette trading once and for all.
“Achieving this will make significant inroads into the government’s efforts in stamping out the black economy which is estimated at 21 per cent of Gross Domestic Product (GDP) or approximately RM300 billion per year,” he said.
However, he pointed out that any effort to address illegal cigarette trading must be accompanied by cohesive cabinet-level policymaking that supported efforts of the MATF, and not negate them.
Also, he views any regulatory measure that runs counter to addressing the real problems as ‘reckless’.