Make them pay

Small retailers in Malaysia are said to have been frightened off selling illicit cigarettes by the prospect of a RM100,000 fine, according to a story by Mark Rao for The Malaysian Reserve.

Such stores had been havens for smokers who needed to find cheap cigarettes, but because they are not typically big-money businesses, they have had to think twice.

A Center for Public Policy Studies’ report last year found that well-known illicit brands such as John, Canyon and Luffman were typically hidden by small retailers in opaque boxes and shelves or underneath tables, from where they were sold to customers upon request.

Illicit cigarettes took 64 percent of the market during the fourth quarter of last year, according to a report cited by British American Tobacco (M).

With the Government needing higher revenues to plug a huge financial hole, it promised stricter enforcement against illicit cigarettes and liquor.

The Government is said to be aiming to ‘recover’ about RM1 billion in revenue lost to the black market with its threats of minimum fines of RM100,000 and six months’ in jail for individuals caught dealing with illicit cigarettes and liquor.

The Royal Malaysian Customs Department and other relevant agencies are said to have increased preventive measures since January.

But BAT MD Erik Stoel said the government’s intent was there and important regulatory steps had been taken, but enforcement intensity was still not at the level to make a significant impact.

“It is early days, but we believe it is critical that more focus is put on enforcement and more law enforcement agencies join the party,” he told The Malaysian Reserve.

He said changing the law dealing with illicit cigarette trade cannot be the sole option and urged a unified front between the relevant authorities to tackle the issue.

Meanwhile, the Galen Center for Health and Social Policy CEO Azrul Mohd Khalib said the environment for the black market for cigarettes and tobacco products had to be made hostile, intimidating and prohibitive by the authorities.

“One way to do this is to threaten and enforce severe penalties for small retailers and traders for carrying these products,” he said, citing the termination of business licenses as an effective deterrent.

Cigarette excise duties in Malaysia rose 110 percent from 2011 to November 2015, while the Sales and Services Tax last year resulted in an increase of up to four percent in retail cigarette prices.