Since legal cigarettes are still pricier than illegal ones, people would still buy em’ unless we do something.
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The global pandemic has definitely made it difficult for criminals to make a quick buck here in Malaysia, but all that might change as the country prepares to reopen our borders by the end of 2021.
The Retail and Trade Brand Advocacy Malaysia Chapter (RTBA Malaysia) warns of a resurgence of illegal cigarette smuggling activities as we gear up to loosen the country’s pandemic border restrictions.
According to research done by the chapter, criminal syndicates have gotten crafty because of the pandemic and our introduction of stricter anti-smuggling strategies in Budget 2021.
RTBA Malaysia Managing Director Datuk Fazli Nordin explained that given the limitations of global transhipment activities, these syndicates were forced to change their usual logistic plans.
Seeing as how their normal smuggling routes, like the nation’s seaports and airports, were largely made unavailable to them, smugglers quickly adapted by changing their tactics from unloading large quantities of contraband under the radar at Malaysia’s main entrepôts, to moving smaller shipments of products undetected through the country’s vast coastline.
Given the limitation of transhipment activities, criminal syndicates quickly moved from smuggling illicit cigarettes via container ships and docks at big ports. They then unload these products from large cargo vessels originated from source countries onto small speed boats or fishing vessels before dropping them off at private jetties and landing spots throughout the country’s vast coast.RTBA Malaysia Managing Director Datuk Fazli Nordin via NST
Not only that, but the logistical challenges have also prompted these syndicates to increase the price of their illegal products in order to make up for the increased cost of the smuggling business – since they now have to pay extra to acquire stores and warehouses to hold their merchandise.
Naturally, the extra cost was passed on down to, who else, but the consumers of illegal cigarettes here in Malaysia, who are said to be paying upwards of 50% more to get a hold of the product.
The increased costs have been passed on to consumers who now have to pay RM9.00 per pack of illegal cigarettes from RM6.00 per pack before the introduction of Budget 2021 measures.RTBA Malaysia Managing Director Datuk Fazli Nordin via NST
Though this might seem like a positive development, seeing how expensive cigarettes means fewer people would buy em’. But in reality, since the price of legally taxed cigarettes is still way pricier than the illegal ones, there is no stopping people from opting to go against the law for a cheaper nicotine hit.
Furthermore, because of the financial crisis brought upon by the pandemic, Fazli says that people would of course turn to the illicit low-cost option.
As an added disadvantage, not only is Malaysia losing out on the millions worth of tax revenue that we should have gotten if it weren’t for the sale of these illicit products but the country is also forced to spend tons more on security and enforcement to prevent its spread.
Every year, large scale enforcement operations like ‘Ops Benteng’ – which involves the participation of several security agencies like the Royal Malaysian Police (PDRM), the Malaysian Armed Forces (ATM), Immigration, the Coast Guard and others – takes up valuable resources and manpower that can, and should be better used elsewhere.
In order to put this smouldering problem to rest for good, RTBA Malaysia suggests that the country implement even stricter measures to hinder the illicit cigarette industry from ever blooming again.
They say that this can be done by extending the nation’s moratorium on excise duties as we move forward to Budget 2022 and the 12th Malaysia Plan, while more funding is channelled to ramp up our enforcement initiatives and make everyone accountable for the industry to pay the price.
To achieve the objective set in the 12th Malaysia Plan, which is to transform the nation into a prosperous, inclusive and sustainable ‘Keluarga Malaysia’ by 2025, a comprehensive strategy to combat the illegal cigarettes trade must be executed now.
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