Page 23 - WAD BEYOND GLOBAL June 2020

FEATURE

Already losing RM5 billion per year in uncollected taxes because Malaysia’s Control of Tobacco Product Regulations 2004
of illegal tobacco traders, Reed says the country simply cannot prohibits the sale of tobacco products online.
afford this when it needs every ringgit for the battle against
Covid-19 and the subsequent recovery. “I am a firm believer that excessive restrictions on legal
trading of any product will increase the chances of illegal
JT International Bhd (JTI Malaysia) MD Cormac O’Rourke transactions. We believe that both the government and
concurs, saying the government should not lose sight of the people will understand the impact of illicit and unregulated
issue of the illicit cigarette trade as it focuses on tackling the sales of cigarettes post-MCO,” says Naeem Shahab Khan, who
Covid-19 outbreak. was appointed MD of Philip Morris (Malaysia) Sdn Bhd
on Jan 1.
“As the government now turns its focus to the economy, jobs
and the nation’s finances, I am sure that a RM5 billion cash “We are hopeful this will result in improved enforcement
injection (from uncollected taxes) would be very welcome and higher compliance to avoid tax revenue leakage for the
indeed. government, which is critical for the economy at this point.”

“Earlier this year, the Ministry of Finance had established a Naeem points to countries in Europe and New Zealand,
multi-agency task force to combat the illegal trade. We believe where tobacco products are allowed to be distributed by
the new government should quickly adopt this as the primary manufacturers and distributors and sold by retailers during
vehicle to eradicate illicit cigarette trading in Malaysia once and their lockdowns. “Here in Malaysia, it is not as clear. I hope
for all.” that, together with the government, we can find a solution to
prevent this from becoming a big problem.”
Malaysia is the largest consumer of illegal cigarettes in the
world, making up 62.3% of the overall tobacco market last year, Heath Michael, MD of Retail and Trade Brand Advocacy (RTBA),
from 58.9% in 2018. This mean at least six in every 10 cigarettes a non-governmental organisation, says internal research shows
consumed locally is illicit. that demand for illicit cigarettes has increased during the MCO
as legitimate manufacturers are not allowed to distribute
O’Rourke adds that the MCO has posed challenges for the cigarettes.
company from an operational standpoint. “It is clear that
supply chains will be tested during this period. From media “The syndicates have intensified their use of e-commerce
reports, what we are now seeing is that illicit cigarettes are and social media platforms along with e-hailing and courier
being sold online and even being delivered door to door by services to meet the heightened demand. This trend is
food delivery providers. This just goes to show the extent of the worrying as it defeats the national health agenda to encourage
illicit cigarette trade in Malaysia. Of course, this compounds the Malaysians to quit smoking during the MCO while extending
problem for legitimate manufacturers, enforcement bodies and the government’s loss of revenue,” he says in an April 8
the government, which continues to be deprived of legitimate statement.
tax revenue.” www.wad.net | June 2020 21