MALAYSIA is now number one in the world for illegal cigarette sales with 12 billion cigarettes sold nationwide last year, according to a recent study.

The study, conducted by research house Nielsen and commissioned by the Confederation of Malaysian Tobacco Manufacturers, said illegal cigarette sales have reached 58.9%, an increase of more than 3.3% in 2017.

“Malaysia is one of the few countries in the world where illegal cigarette sales continue to thrive unabated, with the situation now surpassing crisis levels,” said Cormac O’Rourke, managing director of tobacco company JTI Malaysia.

“Excessive increase in taxation has led to this dire situation,” he said, attributing the phenomenon also to failed government policy and lax enforcement.

Hypertaxation, or excessive high excise-led price increases, created a wide price gap between legal and illegal cigarettes, he said.

“Malaysia is the third most expensive for buying cigarettes in the region and the fourth least affordable country in the world.”

A legal pack of cigarettes retails at RM11.90 to RM17.40, while an illegal pack goes for RM3.50 to RM5.

O’Rourke said the illegal trade caused significant losses to the government in uncollected taxes and duties, and also held back the Health Ministry’s agenda to reduce smoking nationwide.

“Malaysia is the only country where the illegal segment is larger than the legal segment.”

He called on the government to honour its promises made in the election manifesto and Budget 2019, and ensure stronger enforcement on tobacco.

Pakatan Harapan’s election manifesto said enforcement agencies will be “directed to stop smuggling of alcohol and cigarettes across the border, including tighter controls along the borders and heavier punishments for those convicted”.

The Customs Department has also been directed to step up enforcement, and the government hopes to recoup RM1 billion from clamping down on the illegal trade.

O’Rourke proposed three key measures to address the situation, the first of which being an excise moratorium for a minimum of three years.

The second and third, he said, were a ban on shipments of cigarettes at entry points used to smuggle illegal cigarettes and the establishment of an independent body to lead a task force to coordinate enforcement and government agencies. – April 3, 2019.