BAT wants stricter penalties to smoke out illegal cigarettes

British American Tobacco (Malaysia) Bhd (BAT) (4162) wants the government to impose stricter penalties and slap moderate excise duties to curb illegal cigarette trade.

According to the Royal Malaysian Customs, illicit cigarette trade reached a record 36.7 per cent of the country’s total cigarette industry.

“We plead to the government for more concrete measures to address the explosive growth of illicit cigarettes,” BAT managing director Jack Bowles said in a statement.

Over 80 per cent of illegal cigarettes are found in Peninsular Malaysia.
Less than a year ago, one out of four cigarette packs in Malaysia were illegal contrabands but now the situation has worsened into more than one in every three packs.

BAT managing director Jack Bowles said legal manufacturers have lost a significant 11 per cent in legal volumes during the first half of this year to illegal operators.

Almost all illegal cigarettes in the country are contraband or smuggled cigarettes.

“Contraband cigarettes are where the profits are because organised crime syndicates have chosen to exploit the large price differentials between legal cigarettes in Malaysia and other neighbouring countries,” said Bowles.

The government too is impacted because it is estimated to lose about RM1.5 billion a year in unpaid taxes.

However this problem is not unique to Malaysia as organised crime cuts across borders.

Some estimate that more than US$40 billion (RM140 billion) in tax revenue is lost by governments worldwide each year, and these losses are higher than the gross domestic product of many countries.

Bowles also wants the government to seriously consider implementing a moderate and gradual excise regime.


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