What is the main concern regarding the illicit cigarette trade in Malaysia?

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The primary concern surrounding the illicit cigarette trade in Malaysia is its substantial impact on national revenue and market share.

Japan Tobacco International Berhad (JTI Malaysia) has welcomed government initiatives announced in Budget 2021 aimed at curbing the illicit cigarette trade, emphasizing that robust enforcement is crucial to address the issue. The company also noted that this illicit trade has led to a significant loss of revenue for the nation. The illegal cigarette industry currently holds a dominant position, accounting for 64.5 per cent of the total market consumption in Malaysia.
Strengthening of Enforcement Agencies

JTI Malaysia expressed satisfaction with the planned enhancement of the Multi-Agency Task Force (MATF), particularly with the inclusion of the Malaysian Anti-Corruption Commission (MACC) and the National Financial Crime Centre (NFCC). This integrated approach is seen as a vital step in combating the black economy associated with illicit trade.
Limiting Trans-shipment Activities

The company particularly welcomed the decision to restrict cigarette trans-shipment activities to specific ports. JTI Malaysia has consistently advocated for a ban on such trans-shipments, identifying it as a long-standing loophole that has been exploited by illicit traders for years.
Decision on Excise Tax

JTI Malaysia’s managing director, Cormac O’Rourke, approved of the government’s decision not to increase excise taxes on cigarettes. He reasoned that any tax hike would likely push more consumers towards illegal cigarettes and vaping products, further exacerbating the negative impact on the legitimate industry, its supply chain, and retailers who are already facing economic challenges.
Import License and Quota Measures

The Finance Minister announced measures including a freeze on cigarette import licenses and the imposition of excise duties on electronic cigarette devices and vape liquids from January 2021. Furthermore, the government intends to tighten the renewal process for cigarette import licenses by revising terms and introducing an import quota system.

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What is the main concern regarding the illicit cigarette trade in Malaysia?

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