Smugglers said to be offloading Thailand-bound cigarettes at sea

 

Customs officers showing their seizure of contraband cigarettes last November. (Customs pic)

PETALING JAYA: Smugglers are offloading Thailand-bound cigarettes and bringing them into Malaysia through small boats, according to industry watchers.

A tobacco company official said the cargo is picked up and loaded on lorries at Malaysian ports and sold to local agents.

Shaiful Bahari Mahpar of Japan Tobacco International Malaysia Bhd said the new tactic was adopted in May after government measures imposed in January were starting to show results, causing a drop in smuggled cigarettes.

The measures, introduced in the 2021 Budget, allowed cigarette transshipments at only five ports, while new import licences were frozen and rules on import licences tightened.

Shaiful Bahari, who is JTI communications director, said while joint operations in the past helped reduce illicit trade at the ports, Putrajaya, however, must fine-tune and improve its measures to curb the menace, especially at international waters.

The shortage of smuggled cigarettes resulted in prices going up by two or three ringgit to RM7 to RM8 a packet. Prices of licensed cigarettes are from RM12 per packet, he said.

He said many smokers had then started switching away from smuggled cigarettes, with a surge in volumes and an increase in tax revenue.

Shaiful said transshipment of cigarettes to Thailand should be allowed only if the products carry Thai health warnings and bear Thai tax stamps with valid Thai import licences.

Investment Analyst Pankaj Kumar said contraband could slip in easily because of Malaysia’s vast coastlines and the number of entry points. A massive drive by all security agencies was needed to stop smuggling.

He urged the government not to increase tobacco taxes in the 2022 Budget.

“For every 10% increase in taxes, the government loses RM250 million in tax revenue to illegal trade,” he said. He estimated that the government was currently losing about RM5 billion in tax revenue foregone because of smuggling.

Pankaj said many developed countries, where cigarette prices were much higher, did not have a smuggling problem because of good enforcement.

Over the years, Pankaj said international cigarette companies ceased operations in Malaysia, causing the loss of thousands of factory jobs. Philip Morris closed their operations in 2012, British American Tobacco in 2016 and JTI the year after.

The three companies now only import cigarettes into the country. - FMT