KUALA LUMPUR: Organised criminal syndicates are taking advantage of Malaysia's weak border security to smuggle illicit tobacco into the country as well as 're-exporting' these contraband products to other countries in the region, including Australia.
The Retail and Trade Brands Advocacy (RTBA), an international non-government organisation that aims to safeguard supply chains and brands from criminal conduct, said this is based on findings in the 2019 National Drug Strategy Household Survey conducted by the Australian Institute of Health and Welfare and released on 16 July 2020.
RTBA managing director Heath Michael said "while high tobacco excise duty is a key factor driving demand for illicit tobacco in Australia, the supply of these contraband goods mainly comes from source countries through Malaysia."
RTBA's report, Illicit Tobacco in the Asia Pacific Region: Causes and Solutions (April 2020), indicated that Malaysia's borders are vulnerable to criminal exploitation as key smuggling routes for illicit tobacco inflows and outflows.
This is largely due to an insufficient enforcement.
The report also cited that transshipment remains a serious concern for the movement of illicit tobacco through Malaysia, both domestically and regionally, especially given the large number of entry points used to transport illegal products to and from neighboring countries including Vietnam, Indonesia, and the Philippines.
Further, the 2019 National Drug Strategy Household Survey also found that the proportion of smokers using illicit tobacco has increased by 37 per cent since 2012.
A recent report by KPMG, Illicit Tobacco in Australia 2020, also found illicit tobacco now accounted for about 20.7 per cent of total tobacco consumption, a huge increase from 14.1 per cent in 2019.
"As a case in point, over RM60,000 (PHP700,000) worth of Malaysian cigarettes were found abandoned in a secluded area in Barangay Curahab in Malabang, Lanao del Sur, in the Philippines last week.
"News reports claimed that the couriers of the 30 boxes of smuggled cigarettes ran away when enforcement personnel tried to intercept the shipment," Michael said.
"Clearly, the proliferation of the tobacco black market regionally may put Malaysia's relationship with its neighbours in jeopardy," he said.
Michael also noted that RTBA is encouraged by the recent Malaysian Auditor General's Report that admitted smuggling of goods and undocumented immigrants along Malaysia's land border is still happening despite security and enforcement activities.
The AG's report also stated the need to rectify several weaknesses such as enhancing security fences and realigning security check points.
"In addition to these improvements, RTBA recommends the government look into setting up a multi-national multi-agency task force to gather and share intelligence as well as deploying better monitoring and surveillance technologies that can increase efficiencies while reducing operational cost.
"Putting in place laws that mete out stiffer punishment for perpetrators of the black market, an enforcing these laws diligently can also help.
"As importantly, countries with very high tobacco excise duties like Malaysia and Australia should also consider excise reforms to address the demand side of this tobacco black market," Michael said.