{"id":2852,"date":"2020-02-19T12:58:30","date_gmt":"2020-02-19T04:58:30","guid":{"rendered":"https:\/\/newmalaysiatimes.com\/?p=2852"},"modified":"2020-02-19T12:58:30","modified_gmt":"2020-02-19T04:58:30","slug":"illegal-cigarette-trade-rampant-12-billion-sticks-sold-in-2019","status":"publish","type":"post","link":"https:\/\/newmalaysiatimes.com\/?p=2852","title":{"rendered":"Illegal cigarette trade rampant; 12 billion sticks sold in 2019"},"content":{"rendered":"

Kuala Lumpur, February 19, 2020 \u2013 <\/span><\/i>JT International Berhad (JTI Malaysia) today lauded the\u00a0<\/span>establishment of a multi-agency task force set up to tackle the illegal trading in cigarette and\u00a0<\/span>alcohol, calling it an opportunity to address a problem that has surpassed crisis levels and\u00a0<\/span>continues to deprive the country of tax revenues, while exposing glaring concerns over the\u00a0<\/span>porousness of entry points into Malaysia.\u00a0<\/span><\/p>\n

At a press conference today, JTI Malaysia, which is a member of the Japan Tobacco Group, said\u00a0<\/span>the illegal cigarette trade has reached a staggering <\/span>62.3% for the full year 2019 compared to\u00a0<\/span>58.9% in 2018, an increase of <\/span>3.4 percentage points year-on-year. Based on this, it is estimated\u00a0<\/span>that about <\/span>12.2 billion sticks of contraband cigarettes were sold and consumed in Malaysia in 2019.<\/span><\/p>\n

JTI Malaysia released the results from the Illicit Cigarette Study conducted by research house\u00a0<\/span>Nielsen and commissioned by the Confederation of Malaysian Tobacco Manufacturers (CMTM),\u00a0<\/span>which highlighted that the illegal cigarette incidence recorded during Wave 3, for the period of\u00a0<\/span>October to December 2019 declined 2.1 percentage points from 64.6% in Wave 2 (June \u2013 August\u00a0<\/span>2019) to 62.5%.\u00a0<\/span><\/p>\n

JTI Malaysia Managing Director Cormac O\u2019Rourke said, \u201cThe illegal cigarette trade in Malaysia\u00a0<\/span>continues to be rampant and has escalated substantially over the last 4 years with at least 6 in\u00a0<\/span>every 10 cigarettes consumed locally being illicit. The year-on-year increase recorded now\u00a0<\/span>necessitates strong and decisive action on policy and enforcement to address the situation. We\u00a0<\/span>have called for the establishment of a body to coordinate enforcement and policy matters involving\u00a0<\/span>various law enforcement and regulatory agencies throughout 2019, so we view positively the\u00a0<\/span>recent establishment of a <\/span>Multi-Agency Task Force (MATF) by the Ministry of Finance and led\u00a0<\/span>by the Royal Malaysian Customs to comprehensively combat illegal smuggling and illegal trading\u00a0<\/span>in Malaysia.\u201d\u00a0<\/span><\/p>\n

Multi-Agency Approach Strengthens Efforts\u00a0<\/b><\/h5>\n

O\u2019Rourke said the multi-agency approach taken by the Government, involving ministries and\u00a0<\/span>agencies such as Ministry of Health, Ministry of Domestic Trade and Consumer Affairs and Royal\u00a0<\/span>Malaysian Police Force, should strengthen the efforts to comprehensively combat illegal trading.\u00a0<\/span>Together with the legitimate tobacco industry in Malaysia, this task force will be responsible for\u00a0<\/span>creating a strategic, coordinated, and collaborative framework to tackle the illegal cigarette crisis.\u00a0<\/span><\/p>\n

O\u2019Rourke said the effective implementation of this task force is of the utmost importance. \u201cWe\u00a0<\/span>strongly believe that Key Performance Indicators (KPIs) must be employed by enforcement\u00a0<\/span>agencies for this task force to be held accountable and so that progress can be measured, in\u00a0<\/span>particular revenue collection where RM5 billion is lost annually from illegal cigarette trading alone.\u201d\u00a0<\/span><\/p>\n

\u201cThe setting up of the MATF presents an opportunity for Government to finally get to grips with\u00a0<\/span>and eradicate illegal cigarette trading for once and for all. Achieving this will make significant\u00a0<\/span>inroads into Government efforts in stamping out the black economy which is estimated at 21% of\u00a0<\/span>GDP or approximately RM300 billion per year\u201d.\u00a0<\/span><\/p>\n

Among the strategies that JTI Malaysia have put forward in the past year includes a <\/span>ban or\u00a0restriction of cigarette transhipment through Malaysia and a continued <\/span>moratorium on excise\u00a0tax increases for the next 2 years.\u00a0<\/span><\/p>\n

Stepping Up Efforts on Seizures and Enforcement is Key\u00a0<\/b><\/h5>\n

O\u2019Rourke highlighted that the amount of contraband seizures in 2019 indicates that a greater\u00a0<\/span>effort is required to fortify the borders and entry points. Recent reports from Royal Malaysian\u00a0<\/span>Customs indicated the department seized 466.16 million sticks of illegal cigarettes in 2019; a\u00a0<\/span>decline from the 843.89 million sticks seized in 2018, while over the same period illegal trade\u00a0<\/span>continued to increase by approximately 6 per cent. \u201cThe number of illegal cigarettes seized in\u00a0<\/span>2019 was significantly lower when compared to the estimated 12.2 billion illegal cigarettes sold in\u00a0<\/span>the country. There is no doubt that the proliferation of illegal trading over the years has a\u00a0<\/span>significant cost on the legal industry and jobs, while also contributing to the black economy in the\u00a0<\/span>country\u201d.\u00a0<\/span><\/p>\n

Lack of Regulatory and Policy Coordination Threatens Anti-Smuggling Efforts\u00a0<\/b><\/h5>\n

O\u2019Rourke meanwhile cautioned that any effort to address illegal cigarette trading must be\u00a0<\/span>accompanied by cohesive Cabinet-level policy making that supports efforts of the MATF, not\u00a0<\/span>negates them. He stressed that the Ministry of Health\u2019s (MOH) plans to amend the existing Control\u00a0<\/span>of Tobacco Products Regulations 2004 (CTPR) and to increase the Minimum Cigarette Price\u00a0<\/span>(MCP) from RM10 to RM15 as an example of how inconsistent policy-making can derail the MATF\u00a0<\/span>efforts and worsen illegal cigarette sales.\u00a0<\/span><\/p>\n

Calling any regulatory measure that runs counter to addressing the real problems as \u201creckless\u201d,\u00a0<\/span>O\u2019Rourke also said: \u201cNew regulatory measures by the MOH will only nullify the efforts of the task\u00a0<\/span>force as untaxed and unregulated illegal cigarettes will be provided with significant competitive\u00a0<\/span>advantages over higher-priced legal products. No public health agenda will be served by this\u00a0<\/span>proposal as 62% of all cigarettes consumed are already priced well below the current MCP with\u00a0<\/span>absolutely no enforcement from the MOH. Policymakers should not lose sight of unintended\u00a0<\/span>consequences as they advance the regulatory regime for legal tobacco products\u201d.\u00a0<\/span><\/p>\n

Illegal Vaping Remains an Issue\u00a0<\/b><\/h5>\n

O\u2019Rourke also highlighted the continuing threat of illegal vaping which now accounts\u00a0<\/span>approximately 10 per cent of the total consumption in the market. He said the Ministry of Health\u00a0<\/span>has yet to decide the regulatory approach despite the proliferation of the illegal products in the\u00a0<\/span>market, continuing the uncertainty over how the segment develops and impacts illegal trading.\u00a0<\/span><\/p>\n

\"\"
JTI Malaysia Managing Director Cormac O\u2019Rourke<\/figcaption><\/figure>\n

\u201cBased on a recent consumption pattern study conducted by IPSOS, approximately 30% of illegal\u00a0<\/span>vaping users, above the age of 18, are previous non-smokers and are now consuming\u00a0<\/span>unregulated products, despite existing controls and restrictions over such products under the\u00a0<\/span>Poison Act. This is not to mention the reports of numerous underaged users of these illegal\u00a0<\/span>products which should be of serious concern to the Ministry of Health.\u00a0<\/span><\/p>\n

\u201cWe again call on MOH to enforce existing laws, hold consultation with the legitimate industry and\u00a0<\/span>not take any further regulatory measures against legitimate businesses until such a time as illegal\u00a0<\/span>trading is brought under control,\u201d O\u2019Rourke said.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

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