The illegal cigarette trade in Malaysia

The illegal cigarette trade has become rampant in Malaysia and continues to gain momentum through its lucrative appeal.

What is illegal trade?

Simply put, the illegal cigarettes trade in Malaysia is largely the supply, distribution and sale of smuggled cigarettes, also known as contraband cigarettes, which are smuggled into the country from neighbouring countries without the payment of required taxes and duties.

These cigarettes are not at all regulated and do not comply with any laws imposed by the Government which include no mandated labelling requirements such as graphic health warnings, as prescribed by the Ministry of Health.

Counterfeit cigarettes (imitations of cigarettes which resemble branded and legal cigarettes) are negligible in Malaysia.

Why does the illegal cigarette trade occur?

A key factor that contributes to the economic incentive to trade in illegal cigarettes is the high prices of legal cigarettes in Malaysia led by excise duties imposed over the years.

Illegal cigarettes on the other hand are sold extremely cheap (RM3.00 – RM5.00) and are easy to purchase. This drives a high demand among consumers as a pack of illegal cigarette of 20 sticks is less than half the price of a pack of the cheapest legal cigarettes.

The high demand for cheap illegal cigarettes serves as a major incentive for smugglers and retailers to engage in the illegal cigarette trade as the huge economic opportunity it offers far outweighs the risks involved.

Malaysia’s long coastal lines, isolated jetties and long, porous borders also make it easy for crime syndicates to smuggle in illegal cigarettes undetected.