WE refer to “Increase tax on cigarettes” (The Star, Sept 12). BAT Malaysia feels compelled to correct some statements outlined in the article on illicit trade in cigarettes in Malaysia.
The writer asks: “Does that mean that many of the contraband cigarettes are his (BAT’s) own company brands?”
We would like to state that according to the trimester cigarette-pack litter survey conducted by the Confederation of Malaysia Tobacco Manufacturers and endorsed by the Royal Malaysian Customs, 98% of illegal cigarettes found in Malaysia are contraband, that is, cigarettes of various brands which are smuggled into Malaysia.
These smuggled cigarettes are not the leading brands sold in Malaysia, and are not manufactured or distributed by BAT Malaysia or any other BAT company.
Counterfeit cigarettes are illegal copies of legitimate brands and are made of poor quality materials. Malaysia’s illegal cigarette trade is dominated by contraband cigarettes, not counterfeit. The illegal trade in both contraband and counterfeit is designed to avoid paying taxes.
BAT Malaysia is not linked to or have any connection with any cigarette-smuggling activities into Malaysia. Smuggling is a global and serious problem, and in Malaysia it is illustrated by the serious erosion of the legitimate cigarette market to the tune of a significant 11% decrease in legal volumes during the first half of 2009 as measured by CMTM members’ sales.
From less than a year ago, where one out of four cigarette packs in Malaysia are illegal, the situation has worsened into more than one out of every three packs today.
The smuggling problem arises because organised crime syndicates have chosen to exploit the large price differentials between legal cigarettes sold in Malaysia and neighbouring countries.
These large price differentials have come about because the legal cigarette industry has seen heavy excise increases every year since 2002, and in the last two years alone the excise rate has increased by 50%.
We recognise the fact that the Government will increase taxes on cigarettes. This being the case, BAT Malaysia is not, and has never been, opposed to increases of excise on cigarettes. Our hope is that the Government will consider a moderate and gradual excise approach so as not to further fuel the ever increasing levels of illicit cigarette trade which does not benefit anyone other than organised crime.
Illicit tobacco trade is not a fight that can be addressed by the authorities alone. As such, the legal industry continues to cooperate fully with law enforcement authorities such as the Royal Malaysian Customs to support initiatives to help eradicate the problem.