MALAYSIA loses RM5 billion in revenue to illicit cigarette trade, if a June report prepared by Oxford Economics for British American Tobacco is right. What else can we expect if 59 per cent of Malaysia’s cigarette market goes underground. The Southeast Asia Tobacco Control Alliance — pointing to a Bath University study and a World Bank report — is questioning the numbers. This notwithstanding, we do think Malaysia is taking a big tax hit from illicit cigarettes.
Two, make legal products competitive. Ali says price gaps occur because legal products get priced out of the market. Cigarette fits the bill. Successive increases in tobacco excise duties have significantly increased the market price. According to Ideas, the trade in illicit cigarettes has grown significantly over the same period, to the extent that now more than half of the cigarettes smoked in Malaysia is illicit.