Special hand-held device is used to verify security mark on cigarette pack
British American Tobacco Malaysia is committed to raise the understanding and awareness of illicit trade as part of our strategic imperative to reduce unfair competition.
Illegal cigarettes are by far the legal cigarette industry's biggest challenge. It is fast becoming the largest player in the total cigarette market in Malaysia at the expense of legal manufacturers. These illegal cigarettes comprise of largely contraband cigarettes that come in a variety of names which are not brands belonging to legitimate cigarette manufacturers in Malaysia. The latest preliminary figures indicates that more than one out of three cigarette packs sold are illegal.
The illegal cigarette market can be fuelled by large increases in tobacco taxation, which often results in legal cigarettes being made unaffordable to some consumers who then switch to cheap alternative illegal brands.
Trade in illegal cigarettes may cause various unintended consequences, for example, it:
- Undermines the legitimate tobacco industry.
- Reduces the demand for Malaysian grown tobacco.
- Reduces the potential amount of taxation that could be collected by the Government.
- Makes the tobacco market difficult to regulate.
British American Tobacco Malaysia believes in gradual and moderate increases in tobacco taxation as opposed to sudden large increases. This is to ensure both sustainability and predictability of the Government’s taxation revenue and also to help limit the further growth of the trade in illegal cigarettes.
Whilst the prime responsibility for combating illicit trade lies with the Government, the tobacco industry has a significant role to play in supporting enforcement efforts to combat such trade.
Following the initiative that was announced in the 2003 budget, the Government successfully implemented security marks for locally manufactured cigarettes and banderols for imported cigarettes. The security mark initiative came into effect from August 2004, as part of the Government’s overall strategy to contain the illegal cigarette issue.
There has been increased enforcement action to reduce the problem of illegal cigarettes in the market place. We are encouraged by these efforts and remain committed to working with the authorities to tackle this issue.