Study: Malaysia’s Illicit Cigarette Trade Highest Globally

By CodeBlue | 20 June 2019

JTI Malaysia says illegal cigarette sales are reaching “uncontrollable levels”.

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KUALA LUMPUR, June 20 – Malaysia has the highest illegal cigarette trading levels in the world at 58.9 per cent of the market, JTI Malaysia said today, citing a study commissioned by tobacco manufacturers.

The tobacco company said based on the 2018 Illicit Cigarette Study conducted by research house Nielsen, along with reports from the market and its observations on the ground, the government would likely miss its revenue collection targets from the industry this year.

“While the government has passed laws in recent months that increases the penalties against contraband trading, this must be accompanied by strong action and enforcement at ground level if the government is to have any success in stemming the tide of 12 billion sticks of illegal cigarettes flooding into the market,” JTI Malaysia managing director Cormac O’Rourke said in a statement.

JTI Malaysia said illegal cigarette sales were growing rapidly in recent months and were reaching “uncontrollable levels”.

The country’s second largest tobacco company called for an excise tax moratorium for the next three years to prevent “price shocks” from pushing smokers to switch to illegal cigarettes.

The last excise tax hike on tobacco took place in 2015 at close to 40 per cent, resulting in a 40 sen tax per stick. A 20-stick pack of legal cigarettes can cost up to RM17.40, compared to illicit packs that purportedly cost between RM3 and RM5.

JTI Malaysia also urged the government to ban transshipment for cigarettes, where products are brought to Malaysia, repackaged and sent to another country, saying there should only be a single point of entry for any import of cigarettes into Malaysia.

“Were this to be unpalatable, the government could consider collecting tax on transshipped products exiting the port and refund once products leave the country. This has been successfully implemented in Singapore.”

The tobacco company also called for an independent body to lead a taskforce, comprising relevant government agencies and industry representatives, to tackle the sale of illegal cigarettes.

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