This sounds really serious! Contraband cigarettes in Malaysia are nothing new and a recent study shows that we are finally topping the charts but it’s not good. Apparently, the study which is commissioned by the Confederation of Malaysian Tobacco Manufacturers has confirmed that we are the country that has the highest penetration of illicit cigarettes in the world with 58.9% of cigarette sales in Malaysia consisting of contraband smokes.
According to The Star, the study which was done by research agency Nielsen said that this means about 12 billion sticks of contraband cigarettes were sold in 2018, which is an increase of 3.3% from 2017. Wow, so many! JT International Bhd (JTI) managing director Cormac O’Rourke said that this situation was going from bad to worse as illegal cigarette sales were thriving and surpassing critical levels.
Dubbed as the 2018 Illicit Cigarette Study, the Nielsen team picked up a total of 153,000 discarded cigarette packs from the streets across Malaysia over the year. FMT reported that the researchers then checked the packets for local tax stamps and packaging to determine whether it was authentic.
Based on their findings, the team said that 91% of the contraband cigarette packs did not have any tax stamps and others had fake tax stamps. The states that had the highest number of illegal cigarette sales include Sabah, Sarawak, Pahang, Kelantan and Terengganu as 70% to 80% of cigarette packs from these areas were contraband.
O’Rourke said that this is worrying and more needs to be done to improve the situation. “One of the key reasons why enforcement efforts have not been able to contain and stop illegal cigarette sales is the lack of effective and coordinated enforcement. This has enabled cigarette smugglers to manipulate existing policy loopholes and take advantage of porous borders as main smuggling routes into the country,” he explained.
Meanwhile, another reason that has driven the growth of illegal cigarettes could be due to the staggering increase in tobacco excise duties and cigarette prices over the years. Under Malaysian law, tobacco companies have to increase cigarette prices by the same amount as they cannot absorb any of the excise duty hikes.
He suggested that the government should have an excise moratorium over the next three years to stop these price hikes as the high prices were driving smokers to illegal cigarettes.
“We should look at banning tran-shipment of cigarettes at entry points in Malaysia and introducing a single point of entry for any importation of cigarettes into Malaysia. Tran-shipment has been manipulated by smugglers where, the shipment of cigarettes arrive here supposedly bound for another country, but it never leaves and in the end finds its way into the local market,” he added. Finally, he said that an independent body should be set up to monitor and address the issue of contraband cigarettes.
Looks like something will have to be done to stop these illegal cigarette sales!
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