Unity Government Must Unite To Stop Illegal Cigarette Bestsellers
Dato’ Fazli says the so-called success and proliferation of top-selling illegal cigarette brands not only causes the Government to lose money but also negatively impacts the performance of legal industry players
KUALA LUMPUR, 24 May 2023 – Malaysia can make a significant dent in curtailing its stubborn illegal cigarettes problem by focusing enforcement efforts against top-selling brands of contraband cigarettes while tightening security measures around the nation’s coastal areas, said a business advocacy group today.
The comments from Advokasi Perusahaan dan Industri Sdn Bhd, an advocate for sustainable business growth and commercial crime prevention, came on the back of recent news report indicating that the top three selling contraband cigarettes in Malaysia, namely John, Canyon and Era takes up more than 28% of all cigarettes sold in Malaysia.
Dato’ Fazli Nordin, Managing Director of Advokasi Perusahaan dan Industri, said, “It is perplexing that the No. 1 selling illegal cigarettes brand in Malaysia, John, has a market share of over 30% of all cigarettes sold;translating into a loss of RM1 billion in tax revenue for the Government each year.”
“How can a brand that does not pay taxes and does not comply with any rules and regulations be allowed to grow and corner the Malaysian cigarettes market, enabling criminals to pocket more than RM500 million in profit annually?” he asked.
According to Dato’ Fazli, the so-called success and proliferation of top-selling illegal cigarette brands not only causes the Government to lose money but also negatively impacts the performance of legal industry players, sends a wrong message to foreign investors, funds crime and facilitates corruption. “Clearly, the negative multiplier effect from allowing illegal cigarettebrands like John to flourish far exceeds the RM1 billion loss to the Malaysian economy,” he added.
Advokasi Perusahaan dan Industri urges the Unity Government to invest more time, effort and resources to effectively get rid of top-selling illegal cigarette brands once and for all. In doing so, Advokasi Perusahaan dan Industri is confident that the country would be able to bring down the prevalence of illegal cigarettes, which is currently close to 60%, in a tangible manner.
“Enforcement is a critical success factor towards eliminating the top illegal cigarette brands, especially in the coastal areas that have become a popular soft spot for criminal syndicates to bring their contraband products in,” Dato Fazli opined.
“Clearly, the Government’s ban on transhipment has worked and must remain. Naturally, the criminal syndicates have pivoted to another modus operandi, taking advantage of our lightly guarded coastal areas,” he explained.
He suggested that enforcement can be enhanced with more ‘boots-on-the-ground’, better technology like the use of drones and CCTVs as well as improved training. “In order to facilitate enforcement, our agencies must also be able to access up-to-date intelligence. This can be facilitated through engagements with at-risk communities within the coastal areas and perhaps a reward system be put in place for whistleblowing,” he added.
Dato Fazli also said that there is a need to have better engagement and information sharing between enforcement agencies and the legal industry. “There is a brand of John cigarettes in the market that are sold legally, meeting the required minimum price and other regulations. The authorities and the ‘legal John” should work closely together to investigate and take action against ‘illegal John’ to safeguard consumers and brand reputation,” Dato Fazli said.
Advokasi Perusahaan dan Industri believes that the Government cannot afford the annual RM5 billion leakage caused by the illegal cigarettes market, more so as the Malaysian economy is struggling to get back on its feet after the COVID-19 pandemic.
Advokasi Perusahaan dan Industri also considers that the proposed Generation End Game (GEG), which bans Malaysian who are born after a certain year from purchasing cigarettes to potentially benefit top-sellingillegal cigarette brands exponentially. “These top selling illegal brands, which have the financial strength and operate above-the-law, will certainly push their products to those banned from buying cigarettes.”
“The very notion that GEG will bring an end to illegal cigarettes is naïve at best, given the proliferation of illegal cigarettes and the poor track record in enforcing against this problem,” Dato’ Fazli concluded.