More study is needed prior to implementing prohibition laws
KUALA LUMPUR, 17 FEBRUARY 2022 – High excise duties coupled with strict regulations on cigarettes and vape products will accelerate the growth of illegal trade.
This has already seen illegal cigarette trade causing the Government to lose RM5 billion in uncollected tax revenue annually, said the President of E-Cure Sdn Bhd, a consultant company in Economic Crime Control, and also former State Police Chief of Sarawak, in a statement today.
Datuk Dr Yusoff Nook’s comments came following recent news reports that the Ministry of Health’s plan to ban cigarettes and vape products for those born after 2005, emulating New Zealand’s approach on banning the sale of tobacco to its next generation.
While it has the right intention, Datuk Dr Yusoff cautioned that the ban must be thoroughly thought through from various angles.
“In New Zealand, the illegal cigarettes rate is only at 11.5% as of 2019. While in Malaysia, the illegal cigarette rate is more than 50% and imposing the same initiative will backfire and will not achieve its objective. Eventually, criminal syndicates will be the ultimate beneficiary of the ban.”
According to Datuk Dr Yusoff, before the 2015 excise hike, the illegal cigarettes rate was just 36.9%. After the excise hike, it jumped to 52.3% in 2016.
What prohibition
“Today, Malaysia has become the world’s No. 1 country in illegal cigarettes where 6 out of 10 cigarettes sold in Malaysia are contraband products. In Sabah and Sarawak, the situation is even more acute, where 9 out of 10 cigarettes sold are untaxed.
“Do we want another drastic hike of illegal cigarettes with an outright ban to adults who have been born after 2005?” he asked.
Datuk Dr Yusoff further added that the ban of vaping together with cigarettes will cause another illicit trade pillar akin if not worse than cigarettes.
“More and more smokers are already switching to vape currently as a means to quit smoking and vape shops are mushrooming throughout the country. If extremely high excise are implemented and – strict regulations are to be put in place, vape consumers are pressured to go underground to secure the products that they want.”
“This would not only cause the criminal syndicate to take full advantage of the demand but more importantly selling unregulated products to the consumers. We do not want to see another segment fall into the black market economy. The Government will continue to lose its revenue and law enforcement agencies will be paralysed by enforcing the strict regulations. ”
“Before implementing a total ban, MOH should work alongside other Ministries and key stakeholders to seek ways to address the problem of the illegal cigarette trade and at the same time develop policy that will not cause the increase in the demand for illegal products amongst consumers,” he concluded.