Malaysia is seeing a drop in illicit cigarettes to its lowest level since 2020, but the figure is still high at 55.6%. Photo credit: Oleg Dubyna CC 3.0
In 2023, the prevalence of illicit cigarettes in Malaysia decreased to 55.6%, reaching its lowest point since peaking at a record high of 63.8% in 2020.
The latest Illicit Cigarettes Study (ICS) in Malaysia by NielsenIQ revealed a consistent downward trend in the incidence of illicit cigarettes, with figures falling from 57.3% in 2021 to 56.6% in 2022 and then further to 55.6% in 2023.
Although there was a decrease in the occurrence of illicit white cigarettes to 39.5% in 2023 from 41.4% in 2022, the volume of the legal cigarette industry remained stagnant, partly attributed to consumers transitioning to vaping products.
Juliana Mohd Yahaya, JT International Bhd (JTI) Malaysia general manager, attributed the decrease in illicit cigarette incidence in Malaysia to the rigorous enforcement actions against illicit operators by the Royal Malaysia Police and Royal Malaysian Customs Department, emphasizing their strict compliance control measures.
She also urged the government to contemplate implementing a more predictable and moderate approach to cigarette taxation in the event of any future tax increases. This is aimed at eliminating price shocks that prompt consumers to switch to illicit cigarettes.
Additionally, she advocated for a review of the effectiveness of the current paper-based tax stamps and suggested exploring alternative solutions such as secure and cost-effective digital tax codes, aligning with the government's digitalization initiatives.
Malaysia is seeing a troubling threefold increase in counterfeit tax stamps since 2016. The most recent ICS revealed a significant surge in the prevalence of fake tax stamps, rising to 8.7% of the market in 2023 compared to 2.8% in 2016.