Japan Tobacco International said the illicit cigarette trade remains a major challenge in Malaysia, with counterfeit tax stamps and increasingly sophisticated cross-border smuggling operations complicating enforcement efforts. According to JTI Malaysia, the share of illicit cigarettes carrying counterfeit Malaysian tax stamps rose from 8.7% in 2023 to 16% in January 2026, the highest level recorded. The company cited a recent enforcement operation in the Philippines that uncovered counterfeit Malaysian tax stamps allegedly intended for the Malaysian market.
JTIM estimated the country’s illicit cigarette incidence rate at 56.7%, representing roughly RM4 billion ($1 billion) in lost government revenue. Company executives said affordability remains a key driver of illicit trade, warning that rising logistics costs, raw material inflation, and potential excise tax increases could widen the price gap between legal and illicit products. The company also pointed to growing consumer migration toward alternative nicotine products such as vapes, which currently face lower taxation levels than cigarettes.
JTIM said policymakers are evaluating stronger deterrence measures, including digital tax stamps designed to improve supply-chain tracking and real-time product authentication. The company also called for a more balanced tax framework across nicotine categories, advocating for vape taxation to align more closely with heated tobacco products rather than combustible cigarettes.
