KUALA LUMPUR: The contraband cigarette trade continues to grow in the country, despite the Covid-19 pandemic, which has brought much of the economy to a halt.
Japan Tobacco International Berhad (JTI Malaysia) managing director Cormac O'Rourke said the latest findings of the Illicit Cigarettes Study (ICS) show that a staggering 65 per cent of illicit cigarettes were consumed in August this year, compared to July (62 per cent).
The ICS was commissioned by the Confederation of Malaysian Tobacco Manufacturers (CMTM).
"The study was previously conducted three times a year, where 51,000 empty packs collected were mostly from the illegal cigarette trade in the country.
"Due to the pandemic and enforcement of the Movement Control Order (MCO) in March, the study was carried out on a monthly basis with 20,400 empty packs collected each month, nationwide.
"August recorded the highest volume of illegal cigarettes sold and used, with Malaysia remaining the number one country in the world for illegal cigarette trade. This is not good news.
"The numbers look even more devastating for the Federal Territory and Selangor, where illicit cigarette use spiked dramatically to 66.5 per cent and 65.7 per cent respectively, compared to 61 per cent and 60 per cent in July," he said at a virtual press briefing on Friday.
O' Rourke said Indonesia contributes a large portion of illegal cigarettes to Malaysia, besides China, Vietnam and the Philippines.
"Approximately 12 billion illegal cigarettes are sold in Malaysia annually due to the abuse of transhipment routes via the country's ports.
"Any increase to tax excise on tobacco products will encourage smuggling activities during the pandemic," he said, adding that this would further damage legitimate retailers' businesses which are already under pressure.
O' Rourke also urged the government to look into the issue of transhipment of tobacco products through entry points at the country's borders.
"This transhipment loophole has been exploited to evade duty on tobacco products through false intent of moving the items to a neighbouring country.
"The government should clamp down on transhipment foul play by imposing a ban on transhipment of tobacco products and designating a single point of entry to support enforcement efforts better," he said.
He said the legal tobacco industry requires assertive government action to tackle the illicit trade problem through the operation of a Multi-Agency Task Force (MATF), led by the Finance Ministry as soon as possible.
"We need to curb the proliferation of illicit tobacco products in the country, which is already costing the nation approximately RM5 billion in lost revenue every year," he said.
O' Rourke said Malaysia should also explore lost revenues from illegal vaping businesses that are estimated to be worth RM2 billion annually.