KUALA LUMPUR (April 23): The number of Malaysians turning to illegal cigarettes is expected to rise further following the Covid-19 pandemic, said boutique market research agency Green Zebras.
In a statement today, Green Zebras managing director and co-founder Steve Murphy said under any circumstances, affordability will always remain the primary reason Malaysian consumers turn to cheaper alternatives when it comes to purchasing their daily essentials and services.
“The income of Malaysians will be significantly impacted as a result of the Covid-19 pandemic and Movement Control Order (MCO). As incomes shrink, demand for cheaper, black market products will likely grow.
“This will certainly be the case for cigarettes, as the products are considered expensive in Malaysia because of high excise duty, while illegal alternatives are easily available and at a much cheaper cost,” he said.
Murphy’s revelations came as a follow-up to The Green Zebras’ Malaysian Perception of Smoking and Vaping Survey.
The survey found that a majority (51%) of Malaysians say that the level of taxation in Malaysia is a little too high, while 23% say the income tax is much too high.
Additionally, 81% of those aged between 19 to 39 feel that the current level of taxation is a financial burden to them.
Most respondents to the survey (91%) agreed that the cost of living in Malaysia today is indeed higher compared with five years ago.
Nearly all, smokers (93%) and non-smokers (93%) alike, agreed that smokers are more likely to move to buying illegal cigarettes as a result of the high excise duties, resulting in higher cost of legitimate cigarettes.
Meanwhile, news columnist and former Kurnia Insurans (M) Berhad chief investment officer and OSK Research Sdn Bhd head of research Pankaj Kumar said illegal cigarettes have impacted not only consumers but also business owners.
“Many of the legal manufacturers and shop owners that sell licit cigarettes are currently bleeding as a result of the illegal cigarette trade in the region.
“If the illegal cigarette trade remains rampant, many legitimate businesses will have to cease their operations in Malaysia. There will be an adverse effect on this radical move, an increase in unemployment and loss in tax revenue for the government."
Pankaj said with MCO in place, it is easier to vet vehicles passing through major road networks and the authorities can also double up to check on illicit cigarette trades and cut off the supply chain.
Echoing these views was criminologist and certified fraud examiner Datuk Sri Akhbar Satar who said illegal trade encourages criminal activities, corruption, social ills and, possibly, terrorism activities.
“Billions lost in these illegal trades can be channelled towards the development of public welfare and economic growth.
“This is an unfortunate reality when you lose such scale to illegal cigarettes trading. The billions lost is important in the current climate, where Covid-19 has affected millions of people, be it directly or indirectly,” he said.