Govt loses RM4b in revenue to illicit cigarettes


KUALA LUMPUR: The illegal cigarette trade has caused losses of about RM4 billion in government revenue collection, the Confederation of Malaysian Tobacco Manufacturers (CMTM) said.

In a statement today, CMTM said the illicit tobacco market in Malaysia soared to 45.6% in December 2015 following a 40% increase in cigarette excise duty on Nov 4, 2015 against the backdrop of a challenging economic environment and weak consumer sentiment.

“This essentially means that almost one out of every two packs (of cigarettes) sold in Malaysia is illegal,” it said.

The CMTM said high excise taxes were not discouraging smokers from quitting the habit due to the availability of cheap illegal cigarettes selling at RM3 per pack, which was significantly cheaper compared with legal cigarettes retailing at RM17 per pack.

“It is anticipated that the illegal segment will soon overtake the legal segment in Malaysia,” it added.

In view of the alarming level of illegal cigarettes in Malaysia, CMTM urged the government to consider a moratorium on cigarette excise to allow the market to stabilise and for all law enforcement agencies to support the Royal Customs Department in the fight against contraband cigarettes.

It said the commitment demonstrated by the Customs Department under the “Ops Outlet” campaign saw a breakthrough in 2014, where the illegal cigarettes incidence declined to 32.8% in November-December 2014 from 38.9% in November-December 2013.

“However, the unprecedented excise increase has disrupted the significant progress that the Customs Department had made in its fight against illegal cigarettes,” CMTM added.