Malaysia has lost over RM2.3 billion in unpaid taxes to smuggling in the past 4½ years — an amount that could have funded the construction of 28 schools.
The bulk of the losses came from cigarette smuggling, which cost the country over RM1.6 billion.
Under Budget 2023, the government allocated RM430 million to build five new schools in Selangor, Sabah, Sarawak, Terengganu, and Cyberjaya.
This means that it takes about RM86 million to build a school.
Data from the Customs Department also revealed that Malaysia lost more than RM1.4 million in unpaid taxes to the smuggling of subsidised items such as rice, petrol, diesel, wheat flour and liquefied petroleum gas.
Customs Department deputy director-general (enforcement and compliance) Datuk Sazali Mohamad, in an exclusive interview with the New Straits Times, said Malaysia lost RM2.34 billion from 2019 until June 2023 to
the smuggling of cigarettes, alcoholic drinks, vehicles and firecrackers.
The four items, along with drugs, he said, were smuggled into Malaysia due to high demand from the public.
Sazali said to evade law enforcement, smugglers frequently changed their strategies, such as using land or air routes if monitoring is stricter along the nation's coastlines.
"When Customs issues a licence to import cigarettes, we have set the permitted brand and quantity for a certain period. However, a company may import more than what is allowed.
"They also conceal goods that are not declared together with declared items and then smuggle out these concealed goods using a truck.
"Our country has a long coastline and land borders, so there are many unauthorised landing points and smuggling routes that can be used by smugglers."
Committed to minimising leaks, said Sazali, the Customs Department was set to expand the use of artificial intelligence (AI) baggage-type scanners and air cargo screening machines at all the country's entry points.
"The department acquired 20 cargo scanners in 2020 at our main ports.
These machines have AI capabilities and they can trace items such as cigarettes and liquor.
"We are acquiring baggage-type scanners and air cargo scanners with AI technology to be placed at the country's entry points, be it air or sea.
"These machines are suitable for scanning merchandise carried by passengers and air parcels, especially when dealing with the smuggling of prohibited goods and narcotics," he said.
The department will additionally implement 11 body scanners at the nation's primary entry points, encompassing international airports, the Sultan Iskandar Building in Johor, the Bukit Kayu Hitam Complex and the Sultan Abu Bakar Complex.
"Sometimes passengers don't hide the items in their bags.
"So our plan is to increase the number of body scanners so whenever we identify any high-risk passengers or those in our profiling, we will get them to pass through the scanners to check
on the possibility of them strapping themselves with illegal items."
The department hoped to replace old scanning machines with new ones, but this would depend on the government's financial capacity, he added.
Sazali said officers manning these scanning machines would undergo more training, especially in image recognition.
"The combination of AI and human intelligence will bring better results," he added.
The department, said Sazali, would also place their "rovers" — highly trained officers — to "spy" on the movements of suspicious individuals in high-risk areas such as airports and ports, to prevent smuggling of illegal items.
"We also collaborate and share intelligence information with international agencies such as the International Criminal Police Organisation, the United Nations Office of Drugs and Crime
and World Customs Organisations."