By Dr Rashidi Mohamed Pakri Mohamed
AUGUST 21 — Tobacco products in Malaysia are regulated mainly under the Control for Tobacco Products Regulation (CPTR) 2004, a component of the Food Act 1983. CPTR 2004 replaced the old CPTR 1993, and was developed based on the WHO Framework Convention on Tobacco Control (FCTC). Malaysia became a signatory on September 23, 2003, ratified the WHO FCTC on September 16, 2005, and officially became a party to the convention 90 days later on December 15, 2005.
The illicit cigarette trade is defined as “the production, import, export, purchase, sale, or possession of tobacco goods which fail to comply with legislation.” This is according to the Financial Action Task Force 2012. It has been reported based on Nielsen Cigarette Study 2016, the share over the cigarette black market reached a staggering 60 per cent back in 2016.
The estimated volume of the illicit trade is 11 billion sticks. The current excise rate for the government of 40 sen per stick, the government revenue forgone is a huge RM4.4 billion. This will result in more revenue losses for the government.
Right now, illicit cigarettes are priced between 17 and 25 sen per stick at the retail level. This is much lower than 85 sen per stick for legitimate cigarettes which includes the excise rate of 40 sen per stick.
According to the Article 6 of the Framework Convention on Tobacco Control commits Parties to use tax and price policies to reduce tobacco use, whereas Article 15 commits Parties to implement measures to eliminate the illicit trade in tobacco products.
The International Tobacco Control Policy Evaluation Project (ITC) in Canada, France, the UK, and the US, show that the probability of smoking illicit cigarettes increases with age and smoking intensity. Younger and less intense smokers are not typical users of illicit cigarettes in those countries.
This suggests that smokers switch to illicit cigarettes when they get older and more addicted. Therefore, when a person starts with a lower number of cigarettes per pack, the number of cigarettes smoked will increase due to the reinforcements from cigarette smoking and becoming more addicted.
This in turn will make someone more likely to switch to illicit cigarettes. Higher tobacco taxes are often blamed for causing increased trade in illicit cigarettes. However, globally, regions with the lowest tobacco taxes also have the largest illicit cigarette market share.
The key point is to find the balance between the taxes and increasing cigarette that can alleviate the illicit cigarette crisis. Finding the balance between these two components is the key of success in combating illicit cigarette.
According to the 2013 Tobacco Control Scale in Europe the illicit cigarette consumption in the UK has dropped from the year 2002 to 2013 by more than 75 per cent. This can be attributed to the implementation of strong anti-illicit trade measures together with comprehensive tobacco control measures has proven to be an effective strategy for reducing illicit cigarettes consumption worldwide.
The demand for illicit cigarettes is a derivative of overall cigarette demand. Low smoking prevalence means that the market for illicit cigarettes is also small. Because of that, anti-illicit measures are most likely to work when combined effectively with comprehensive tobacco control measures to reduce overall demand for tobacco products.
Other measures that can help to eliminate the problem with illicit cigarettes such as educating the public about illicit cigarettes and tracing cigarette boxes may or may not be as effective as compared to the stronger anti-illicit trade measures.
Finally, the best and most simple answer is to implement comprehensive tobacco control measures to reduce demand for all cigarettes.
1. Cigarette affordability trends: An update and some methodological comments. Blecher EH, van Walbeek CP Tob Control. 2009 Jun; 18(3):167-75,)
2. WHO technical manual on tobacco tax administration. World Health Organisation; Geneva, Switzerland: [accessed 22 Mar2011]. 2010)
3. The Tobacco Atlas
4. FATF 2012
* Dr Rashidi Mohamed Pakri Mohamed is a doctor of Family Medicine at Universiti Kebangsaan Malaysia.
** This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail Online.