KUALA LUMPUR: The illicit tobacco trade in Malaysia is expected to expand further due to financial constraints and clever criminal tactics, said the Retail and Trade Brand Advocacy Malaysia Chapter (RTBA Malaysia).
This, according to the non-governmental organisation, will negate any positive strides achieved by anti-smuggling measures introduced in Budget 2021.
RTBA Malaysia's view was made in conjunction with the launch of its Country Report: Illegal Tobacco Trade 2021 Malaysia.
RTBA Malaysia managing director Datuk Fazli Nordin said the report, based on public information analysis and discussions with sources close to the issue, highlighted a high level of dexterity and ingenuity shown by criminal syndicates to circumvent the anti-smuggling initiatives announced by the government in Budget 2021 and put into place on 1 January this year.
"Given the limitation of transhipment activities, criminal syndicates quickly moved from smuggling illicit cigarettes via container ships and docks at big ports.
"They then unload these products from large cargo vessels originated from source countries onto small speed boats or fishing vessels before dropping them off at private jetties and landing spots throughout the country's vast coast," Fazli said in a statement today.
According to the Illegal Tobacco Trade 2021 Malaysia report, Malaysian authorities seized a total of 40 million sticks of illegal cigarettes in 2020, whereas a total of 84 million sticks were seized from anti-smuggling operations in coastal areas in the first quarter of 2021 alone.
Interestingly, the report found that these criminal syndicates are now forced to adjust price and cost to mitigate the loss of volume from smuggling in large quantities through transhipment abuses at big ports to smaller but more frequent batches of contraband via coastal smuggling routes.
Due to this switch in supply chain strategy, they are also incurring higher costs by turning swiftlets houses, commercial shop lots, and private homes into warehouses to store products.
"The increased costs have been passed on to consumers who now have to pay RM9.00 per pack of illegal cigarettes from RM6.00 per pack before the introduction of Budget 2021 measures," Fazli said.
The higher cost of illegal cigarettes may seem like good news for the war against this illicit trade, but Fazli said the price of legal cigarettes is still significantly more.
"More and more consumers are expected to turn to illegal cigarettes that are still cheaper compared to legal products due to financial constraints caused by the Covid-19 pandemic.
"Moving forward, it would be counterproductive to increase the excise tax further as it would undoubtedly benefit the criminal syndicates and reverse the positive impacts brought by the Budget 2021 measures.
"Therefore, the government must maintain the excise moratorium in Budget 2022 while more funding is required to ramp up enforcement initiatives in coastal areas," Fazli added, citing recommendations made in the RTBA Malaysia report.
He said landlords must also curtail the use of privately owned assets, from warehouses to rented homes to store illegal cigarettes.
This can be achieved by holding landlords and premise owners accountable for renting out their premises for criminal activities while increasing the number of raids on suspected premises, Fazli said.
Following the report, RTBA Malaysia will be spearheading a series of initiatives to educate Malaysians on the impact of the illicit tobacco trade on Malaysia's socio-economic fabric.
These initiatives include educative article series in newspapers, public service announcements on radio as well as informative materials.
The Country Report: Illegal Tobacco Trade 2021 Malaysia will be available on RTBA Malaysia Facebook page.