Malaysia’s illicit cigarette trade dropped for the fourth consecutive year, but there is an ongoing drop in legal cigarette sales, due to consumers increasingly shifting to smoke-free alternatives. Photo credit: Pixabay
Malaysia's illicit cigarette trade continued its downward trend for the fourth straight year, dropping to 55% in 2024 from 55.6% in 2023, reports The Edge.
Juliana Mohd Yahaya, managing director of JT International Bhd (JTI Malaysia), credited this decline to stricter enforcement against tobacco smuggling and the prohibition of trans-shipment for tobacco products.
This marks the lowest level since illicit cigarette circulation hit a peak of 63.8% in 2020.
“We expect the incidence of illicit cigarettes to continue to decline this year. What has also contributed to the reduction in illicit cigarette incidence is the ongoing tobacco tax moratorium by the Ministry of Finance,” Juliana said at a news conference to reveal findings of the annual Illicit Cigarettes Study (ICS) for 2024. “But we know that at some point, [the moratorium] will end, so if the government were to impose an excise increase on tobacco products, we hope that it would be a moderate and predictable one.”
The latest ICS, commissioned by the Confederation of Malaysian Tobacco Manufacturers (CMTM) and conducted by Nielsen Malaysia, highlighted a sharp rise in cigarettes bearing counterfeit tax-stamps. These accounted for 13.8% of the illicit cigarette market in 2024, up from 8.7% in 2023 and 7.9% in 2022.
According to Juliana, while illicit whites remain the dominant category in the illegal cigarette trade at 34.3%, their share has been gradually declining. However, she expressed concern over the rapid increase in counterfeit tax-stamped cigarettes, warning that they are increasingly being misrepresented as legal products. “As such, JTI Malaysia continues to advocate for the government to transition from paper-based tax stamps to digital tax codes, aligning with the government’s digitalization drive,” she added. Until stricter measures are implemented, Juliana expects that counterfeit tax-stamped cigarettes will continue to gain a larger share of the illicit market.
Despite the overall decline in illicit cigarette prevalence, she highlighted an ongoing drop in legal cigarette sales, attributing it to the growing consumer shift toward smoke-free alternatives like heated tobacco products (HTP) and vaping. In 2024, total legal cigarette sales fell to 6.8 billion sticks, down from 6.9 billion in 2023 and seven billion in 2022.
Juliana noted that a decade ago, legal cigarettes dominated 66.3% of the market, with illicit cigarettes making up the remaining 33.7%. Today, legal cigarettes account for just 23.8%, while illicit cigarettes hold 29.9%. Meanwhile, e-cigarettes and HTP now comprise 25.3% of the market, with an additional 20.4% consisting of dual users who consume both traditional cigarettes and vaping or HTP products.
She further predicted that legal cigarette sales will either stagnate or continue to decline as more consumers transition to vaping alternatives.