PETALING JAYA: A think tank has proposed several methods of combating illegal trade, including imposing a ban on the sale of duty-free cigarettes in Langkawi, Labuan and Tioman.
The Institute for Democracy and Economic Affairs (IDEAS) said the previous government had admitted that the tax-free islands were a source for illicit tobacco but previous proposals to ban the sale of duty-free tobacco had been passed over in favour of restrictions.
In a statement today, it said Putrajaya should now impose a ban on the sale of duty-free cigarettes.
“This can be done on a time-limited basis to be reinstated once enforcement capacities have been improved,” it added.
It also urged the government not to increase excise duties on tobacco, saying multiple tax hikes on cigarettes had led to a drastic increase in the legal price of cigarettes which, in turn, caused a rise in the illicit tobacco trade.
It suggested that the government instead review the existing tax regime in light of the experience of other countries such as Canada and Pakistan which had successfully reduced the illicit cigarette trade after reforming excise duties.
Other proposals in its report, “Combating Illicit Trade: Lessons From Abroad”, included the establishment of a task force to look into the issue and the setting of specific targets for seizures. It also urged the government to publish all data on seizures and penalties.
This would allow the public to gauge the overall trends in illicit trade and hold the government accountable for its efforts to combat it, it said.
IDEAS also proposed that the government consider restricting access for certain imports to a single point of entry.
“Enforcement resources can be focused on this point, and imports of these products arriving at other points can be seized as a matter of routine, simplifying the process at these points,” it said.
It added that this policy should only be used for specific products such as tobacco.
IDEAS CEO Ali Salman said it was crucial that Putrajaya step up its efforts to counter illicit trade as it was draining the government of much-needed revenue and harming legitimate businesses.
“The government should follow the example of other countries and establish a clear strategy, governed at the highest levels to tackle this problem,” he said.