Customs Dept wages all-out war against illicit trade

14 May 2017:

THE Customs Department has declared an all-out war against illicit cigarette trade in its bid to eliminate the smuggling racket that has cost the government RM4.4 billion in revenue.

Customs director-general Datuk T. Subromaniam said the department recorded 2,663 cases of illicit cigarettes last year, with Sabah topping the list with 936 cases followed by Johor (273), Selangor (218), Sarawak (176) and Kelantan (159).

“Some 828.23 million sticks of cigarettes valued at RM82.68 million were seized by the department last year, with the value of duties and taxes on the items seized amounting to RM648.92 million.

“This is a huge increase from the 584.25 million sticks seized in 2015 valued at RM48.3 million, with RM315.43 million in tax value.”

He said contraband cigarettes were the most-smuggled commodity in Malaysia and stressed that the tax increase on cigarettes was not a factor in the rise of illicit cigarettes in the country.

“It (tax increase on cigarettes) is merely a measure to reduce the number of smokers in Malaysia and increase tax revenue. We cannot solely blame taxation for the rise in illicit cigarettes,” he told the New Sunday Times.

Subromaniam, who was recently appointed the department’s head, acknowledged that there had been enforcement gaps in the past and assured that stringent measures would be taken to plug leakages in the system.

“It (smuggling and illicit cigarette trade) is always on the rise largely due to policy gaps.  

“When I took over, we decided to look at the processes and procedures and developed several new strategies for implementation.

“The other thing is the integrity aspect. We are determined to stop the scourge of cigarette smuggling. There will be no place for corruption.”

Subromaniam said one of the major sources of smuggling was through free-zone facilities, which is outside of the department’s jurisdiction.

“Permits for transit and transhipment of critical goods are now required. We have strengthened daily enforcement activities, such as land, sea patrol, routine checking of the containers and premises.”

He said the department had conducted operations with various agencies under the Health Ministry, Domestic Trade, Cooperatives and Consumerism Ministry and the Malaysia Maritime Enforcement Agency to combat the illicit cigarette trade.

“We have tightened the Customs Collaborated Border Management at all entry points into the country and implemented a new policy at duty-free islands, whereby only certain areas of the particular island are gazetted as duty free.”

He said illicit cigarettes were sold from RM3.50 to RM8 for a pack of 20 sticks. In contrast, the price of legal cigarettes is five times more, with the most popular brand sold at RM17.

Most store owners hide their illicit cigarette stocks in the drawer beneath the counter, while a few hide them in biscuit containers or storerooms at the back of the shop.

Subromaniam said the department was also pushing for harsher penalties to deter traders and restaurateurs from selling contraband cigarettes.

“We are proposing an amendment to Section 135(1)(d) of the Customs Act 1967 to raise the minimum fine to RM100,000 for offences related to cigarettes and liquor.

“Going forward, I’m certain we will be able to contain smuggling in our country.

“The department aims to reduce the number of contraband cigarettes in the domestic market by 50 per cent in two years, but we are confident we can do better.”

He said from January to March this year, the department recorded 571 cases though raids on 808 premises, where 156.55 million sticks of cigarettes worth RM66.35 million in tax were seized.

“The seizures were made at major entry points, such as in Port Klang, Selangor.

“We urge the public to join us in our war by providing us with the information and tip-offs. We guarantee that their identities will be kept under wraps,” he said, adding that could contact the department through its hotline, 1-800-88-8855.