RM15b revenue loss in three years due to cigarette smuggling, but policies reversing trend

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RM15b revenue loss in three years due to cigarette smuggling, but policies reversing trend
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'In 2021, the tobacco industry produced a volume of 6.6 billion sticks, while 8.9 billion was smuggled into the country, costing the government a RM3.6 billion loss in excise tax alone' theSun theSundaily news cigarette taxes tobacco Malaysia

While the government has lost more than RM15 billion in revenue from 2018 to 2020 from cigarette smuggling, policies introduced in Budget 2021 to control the scourge have helped reverse the trend.

The source attributed the success to anti-cigarette measures in Budget 2021, such as the freezing of new cigarette import licences, tightening conditions for licence renewal and imposing an import quota. “Making cigarettes and tobacco products taxable goods in all duty-free islands and free zones has played a significant role in the government’s loss of revenue. At the same time, the measures have had a positive impact on reducing cigarette smuggling.The source said with tighter measures at ports, cigarette smugglers have resorted to riskier methods to bring their goods into the country, such as ship-to-ship transfers outside Malaysian territorial waters.

It was also revealed that smugglers and their front organisations were actively pressuring the government to remove Budget 2021 restrictions to enable them to once again utilise the ports to smuggle cigarettes into Malaysia. “Barter trade boats had also been used to smuggle illicit cigarettes from neighbouring countries into Malaysia. Under the current ship-to-ship transfers, smuggling activities are facilitated when vessels that supply illicit cigarettes from source countries such as Vietnam and Indonesia wait outside Malaysian waters.

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