KUALA LUMPUR (Feb 19): JTI International Bhd today called on the Ministry of Health (MoH) to streamline its health agenda efforts to support ongoing measures to tackle illicit trading of cigarettes.

In a statement, JTI Malaysia said the MoH’s proposal to increase minimum cigarette price to RM15 and amend control of tobacco regulations will dampen efforts by the multi-agency task force that was recently set up to combat illegal cigarette trading.

It said the measures will only nullify efforts of the task force as the measures would give advantage to unregulated cigarettes over the higher-priced legal alternatives.

“No public health agenda will be served by this proposal as 62% of all cigarettes consumed are already priced well below the current minimum cigarette price with absolutely no enforcement from the Ministry of Health.

“Policymakers should not lose sight of unintended consequences as they advance the regulatory regime for legal tobacco products,” said JTI Malaysia managing director Cormac O’Rourke.

He also said the MoH’s indecision on its regulatory approach towards vaping has prolonged the uncertainty over how the alternative, which now accounts for 10% of the market, impact the industry.

“Based on a recent consumption pattern study conducted by IPSOS, approximately 30% of illegal vaping users, above the age of 18, are previous non-smokers and are now consuming unregulated products, despite existing controls and restrictions over such products under the Poison Act,” said O’Rourke.

“This is not to mention the reports of numerous under-aged users of these illegal products which should be of serious concern to the Ministry of Health,” he added.

Multi-agency task force welcomed
JTI Malaysia, meanwhile, lauded the multi-agency task force to tackle illegal trading in cigarettes and alcohol in Malaysia, which was established by the Ministry of Finance and led by the Royal Malaysian Customs.

O'Rourke further proposed that the agencies involved use key performance indicators (KPIs), “for this task force to be held accountable and so that progress can be measured”, particularly the RM5 billion in unpaid tax duties from illicit cigarette trade each year.

The task force involves parties like the MoH, Ministry of Domestic Trade and Consumer Affairs, and the Royal Malaysian Police Force.

It will work together with the legitimate tobacco industry here to create a strategic, coordinated and collaborative framework to tackle the issue.

JTI Malaysia called it an opportunity to address “a problem that has surpassed crisis levels” and continues to deprive the country of tax revenues.

O’Rourke also pointed to how the trade has escalated substantially in the last four years, with at least six in 10 cigarettes consumed locally now being illicit.

“The setting up of the task force presents an opportunity for government to finally get to grips with and eradicate illegal cigarette trading for once and for all.

“Achieving this will make significant inroads into government efforts in stamping out the black economy which is estimated at 21% of GDP or approximately RM300 billion per year,” O’Rourke said.

The Royal Malaysian Customs seized 466.16 million sticks of illegal cigarettes in 2019, down from the 843.89 million sticks seized in 2018. But over the same period, the illegal trade continued to expand by about 6% to an estimated 12.2 billion sticks.