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Rise of smuggled cigarettes, a poser on Malaysia’s enforcement

KUALA LUMPUR — August 9, 2019: Contraband cigarettes have been causing a twofold harm on Malaysia; it debilitated not only people’s health but the country’s coffers to the tune of billions last year–RM6 billion to be exact.

While such a loss has been relatively the same since 2016; it was nonetheless a sharp surge ever since the government upped cigarette excise duty at 40 per cent in 2015, which caused contraband cigarette market to grow to almost 60 per cent.

Independent economist Professor Hoo Ke Ping noted that such a trend was a no-brainer given how it was normal for people to opt for cheaper alternatives when things get too expensive.

Although he was skeptical of the said figure, that was recently disclosed by Japan Tobacco International Bhd (JTI), Hoo deemed that such a finding had inadvertently highlighted the government’s inefficiency in combating cigarette smuggling.

“If this is the true loss caused by contraband cigarettes, then where’s the enforcement? Is the government protecting the contraband cigarettes market? We have so many enforcement agencies, so don’t tell me we can’t track these smugglers,” said Hoo.

In April, JTI had raised a similar poser over the alleged inability of Malaysia’s enforcement agencies in curbing the overwhelming availability of contraband cigarettes and proposed a moratorium of cigarette excise hike for the next three years.

A call for the government to lower the excise duty for cigarettes was also floated by certain quarters who believed that by doing so would encourage smokers to switch back to legal tobacco products, which were regulated and taxable.

Hoo and Professor Dr Shamsul Bahri Mohd Tamrin of University Putra Malaysia (UPM) however, were against that idea.

“For the government to successfully promote a lesser smoking lifestyle, it must increase the price while also strengthen our enforcement,” said Shamsul Bahri, who specialised in ergonomics as well as occupational safety and health.

Such a contention, said Shamsul Bahri was in line with the World Health Organisation’s framework convention on tobacco control and that by going down hard on contraband cigarettes, the government can recoup its losses.

While Hoo did not dismiss that lowering the price of cigarettes could improve the government’s revenue in the short term , he said doing so would incur greater loss for the government in future.

“You can collect more money now but what about 10 – 20 years from now? Smoking cigarettes is already a deadly habit and Malaysia’s healthcare is heavily subsidised. Why should non-smokers pay for smokers’ healthcare?” said Hoo.

As for the level of health hazard posed between legal and contraband cigarettes, Associate Professor Asrul Akmal Shafie from Universiti Sains Malaysia’s school of pharmaceutical sciences said both are almost equally unhealthy except that the latter may be more so as it has no form of regulation at all.

“Generally, no study has been done to compare the two. However, due to lesser manufacturing facility quality, some of the illicit cigarettes are contaminated with pesticides and arsenics that may pose even worse health hazards to smokers.

“Also, contraband cigarettes will undermine the current regulation to control cigarette such as not carrying the mandatory pictorial health warning. This in turn will increase the number of smokers that should have been controllable with existing regulations,” he said.

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Zaidi Azmi and Ahirul Ahirudin

Zaidi Azmi and Ahirul Ahirudin