Out of Control

Illicit cigarettes now account for nearly two-thirds of the Malaysian tobacco market, according to research commissioned by the Confederation of Malaysian Tobacco Manufacturers (CMTM).

The study showed that the share of illegal cigarettes sales went from 59.7 percent from March to May to 64.6 percent from June to August.

The government lost an estimated MYR6 billion ($1.45 billion) in tax revenue this year due to the illegal import of cigarettes.

Japan Tobacco International Malaysia’s managing director, Cormac O’Rourke, said rise was deeply worrisome for Malaysia.

“To think that any legitimate industry can be corroded to this extent to the benefit of criminal gangs casts Malaysia in a poor light on the international stage,” he said.

Malaysia requires tobacco companies to sell cigarettes at a minimum price of MYR10, but contraband varieties are available at MYR3 to MYR7 a pack.

The government plans to increase the minimum price of cigarettes to MYR15, a policy O’Rourke described as “reckless.”