KUALA LUMPUR: The government’s coffers is losing RM6 billion in tax revenues, annually, no thanks to illegal tobacco and illegal vape-based smoking products.
Apart from losing tax revenue, Malaysia has also found itself in an unenviable position of being a global leader in illicit cigarette penetration.
JT International Bhd (JTI Malaysia) managing director Cormac O’Rourke said between 2018 and 2019, the illegal market for cigarettes and vape accounted 70 per cent of total consumption in Malaysia.
“There had been no improvement in the situation. Almost 60 per cent of all cigarettes sold and consumed in Malaysia are illegal products. This is a two per cent increase on the previous year. Out of this, 7.4 per cent of all tobacco products also had fake tax stamp.
“What is the relevance of the tax stamp? The tax stamp costs 6 cents, which is the most expensive among all Asean countries. This tax imposed on top of the specific duty levied on legitimate manufacturers and distributors. But now there’s zero value to it since we have over 60 per cent of illegal tobacco products here,” said O’Rourke said here today.
He said Malaysia possessed close to six times the average in terms of illegal cigarette sales compared to the rest of the globe.
“This is beyond crisis point. The question has to be, why is the government not acting on the cigarette business? They are losing RM6 billion annually, yet we had not seen any sort of action being taken by the government.”
O’Rourke also expressed concern over the growing rate of illegal vaping, which is following the illegal cigarette trade.
He said there was no need to further or add on any laws in order to enforce the illegal vaping problems in Malaysia.
“Technically, since nicotine is present in the product, it is illegal in Malaysia. It has been illegal since 1952 since the Poison Act. No licence has been issued by Health Ministry for vaping products in the country.
“We (JTI Malaysia) had gone through the process of applying license to sell vaping products, but it was unsuccessful. What does this tell? No licenses had ever been issued for the sale of nicotine. So, the vaping products that are available for Malaysian consumers are being sold illegally.
“Why is the government failing to act? In essence, you should not be able to buy liquids containing nicotine, but this is still available in stores,” he said.
O’Rourke said if the government was serious on offering consumers an alternative to smoking, amendments must be made to the Poison Act 1952 to allow Malaysians to access to products which adhere to control and standards.
To overcome these problems among the solution proposed by O’Rourke includes a three year (minimum) moratorium on tax for tobacco products, a ban on transshipment of cigarettes and a formation of an independent body to lead a special task force on the issue.