RM8 billion from illicit trade last year, says IDEAS

salman-taxKUALA LUMPUR: The government lost RM8 billion in tax revenue last year due to illicit trade, said the Institute of Democracy and Economic Affairs (IDEAS).

Products prone to illicit trade included tobacco, food, beverages, machinery and cars, said Ali Salman, IDEAS director of research and co-author of the policy paper, “Illicit Trade in Malaysia: Causes and Consequences”.

The think tank found that the illicit trade had impacted the Malaysian economy as government earnings had decreased.

IDEAS conducted a round-table discussion on the policy paper today. Various stakeholders participated, including representatives from the government, private sector, regulators, lawyers and civil society.

The participants said it was essential to improve the level of education to encourage consumers to use legal brands and discourage counterfeits.

They also suggested the formation of an international business committee, that could pool available resources, to urge the government to increase pressure and boost enforcement on illicit trade.

The round-table discussion also recommended that there should be a multi-stakeholders working group, consisting of various ministries and the private sector, to tackle the illicit trade problem in the country.

The panel discussion also touched on other potential areas for illicit trade in Malaysia such as digital piracy, drug trafficking and illegal logging. These need closer study and action, they said.

IDEAS research coordinator and lead author of the policy paper, Adli Amirullah, said the social cost of illicit trade could result in an increased crime rate and unemployment rate.

“High domestic taxes, lax border enforcement and supply constraints can lead to an increase in illicit trade flows, thus reducing the benefits of trade openness.”