KUALA LUMPUR, Feb 19 — Over six of 10 cigarettes sold last year in Malaysia were illegal, according to a research study by Nielsen that was commissioned by tobacco companies.
JTI Malaysia, a member of the Japan Tobacco Group, said the illegal cigarette trade in Malaysia hit 62.3 per cent in 2019, up 3.4 percentage points from 58.9 per cent in 2018.
“Based on this, it is estimated that about 12.2 billion sticks of contraband cigarettes were sold and consumed in Malaysia in 2019,” JTI Malaysia said in a statement.
Nielsen’s illicit cigarette study, which was commissioned by the Confederation of Malaysian Tobacco Manufacturers (CMTM), also found that illegal cigarette incidence declined by 2.1 percentage points to 62.5 per cent in the period of October to December 2019, from 64.6 per cent in the June-August 2019 period.
“The illegal cigarette trade in Malaysia continues to be rampant and has escalated substantially over the last four years, with at least six in every 10 cigarettes consumed locally being illicit,” JTI Malaysia managing director Cormac O’Rourke said.
“We have called for the establishment of a body to coordinate enforcement and policy matters involving various law enforcement and regulatory agencies throughout 2019, so we view positively the recent establishment of a Multi-Agency Task Force (MATF) by the Ministry of Finance and led by the Royal Malaysian Customs to comprehensively combat illegal smuggling and illegal trading in Malaysia.”
O’Rourke noted that Malaysia loses RM5 billion annually from the illegal cigarette trade and estimated the black economy at 21 per cent of the country’s gross domestic product (GDP), or about RM300 billion a year.
He cited Customs reports that found a decline in the number of illegal cigarettes seized, from 843.89 million sticks seized in 2018 down to 466.16 million in 2019, despite a purported increase in the black market trade.
JTI Malaysia called for a ban or restriction of cigarette transhipment through Malaysia and a continued moratorium on excise tax increases for the next two years.
O’Rourke slammed the Ministry of Health’s (MOH) plans to increase the minimum cigarette price (MCP) from RM10 to RM15.
“New regulatory measures by the MOH will only nullify the efforts of the task force as untaxed and unregulated illegal cigarettes will be provided with significant competitive advantages over higher-priced legal products,” he said.
“No public health agenda will be served by this proposal as 62 per cent of all cigarettes consumed are already priced well below the current MCP with absolutely no enforcement from the MOH. Policymakers should not lose sight of unintended consequences as they advance the regulatory regime for legal tobacco products.”
JTI Malaysia also highlighted vaping that it said accounted for about 10 per cent of total consumption in the market. MOH has yet to decide if it will ban or regulate e-cigarettes and vaping products.
“Based on a recent consumption pattern study conducted by IPSOS, approximately 30 per cent of illegal vaping users, above the age of 18, are previous non-smokers and are now consuming unregulated products, despite existing controls and restrictions over such products under the Poisons Act,” said O’Rourke.
“This is not to mention the reports of numerous underaged users of these illegal products which should be of serious concern to the Ministry of Health.
“We again call on MOH to enforce existing laws, hold consultation with the legitimate industry and not take any further regulatory measures against legitimate businesses until such a time as illegal trading is brought under control.”
Nielsen’s illicit cigarette study, which is conducted three times annually by collecting discarded cigarette packs nationwide, analysed 51,000 samples of such packs.