KUALA LUMPUR (June 1): The Confederation of Malaysian Tobacco Manufacturers (CMTM) today refuted suggestions that security marking supplier Sicpa had contributed to the largest drop in the history of illegal cigarettes in Malaysia.

Sicpa is a Swiss-based security ink, authentication traceability solutions provider, which operates in Malaysia through Sicpa Product Security Sdn Bhd.
 
The company recently took the credit and claimed that the illegal cigarettes in the country had declined 6.6 percentage point from 38.9% in 2013 to 32.3%, as recorded in the Illicit Cigarette Study (ICS) 2014 by research firm Nielsen, due to the deployment of its products on cigarette packs.
 
However, CMTM has today issued a statement to counter the claims made by Sicpa on the effectiveness of their security markings against the decline of illicit cigarette trade.
 
Instead, the confederation highlighted that the recent large decline was attributed to the concerted and enhanced efforts by enforcement agencies, primarily the Royal Malaysian Customs (RMC).
 
“The nature of illegal cigarettes in Malaysia is such that they are wholly smuggled into Malaysia from other countries without any required security marking. To suggest directly or indirectly that the sharp decline recorded in the ICS 2014 statistics was due to the deployment of Sicpa products, in our view, is a misleading statement on the effectiveness of the system in addressing illegal cigarette trade in Malaysia.

"It does not provide the complete picture of the situation since 2004 when it was introduced,” CMTM said in the statement.
 
CMTM is a cigarette manufacturers’ association that was established by the three major players in the country, namely British American Tobacco Malaysia Bhd, JT International Bhd and Philip Morris (Malaysia) Sdn Bhd.
 
To recap, it was reported last month that Sicpa has been working through its long-term Malaysian technology partner Lembah Sari Sdn Bhd to enable RMC to combat the illegal trade of tobacco and imported alcohol in the country.
 
The company belonged to Datuk Haris Onn Hussein, the brother of Defence Minister Datuk Seri Hishammuddin Hussein.
 
Referring to the recent media reports in April, quoting Sicpa, the CMTM said they viewed with serious concern the impression created by Sicpa that its products, namely the use of security ink marking on locally manufactured cigarettes packaging and tax stamps on imported cigarettes, led to the said largest drop.
 
The CMTM went on to say that the decline highlighted by Sicpa in 2014 was specifically attributed to the strong enforcement efforts of the RMC through operations like Ops Pacak and Ops Outlet and had very little or nothing to do with the security ink marking or tax stamps on cigarettes.
 
Through anti-illegal cigarettes trade operations, said CMTM, the RMC has made significant progress in addressing demand for illegal cigarettes by arresting and remanding illegal cigarette retailers, including penalising them with deterrent sentences that led to the increasing pressures on illegal cigarette trading activities.
 
“What is clear is that since 2004 when security markings were first introduced in the Malaysian cigarette market, the Illegal Cigarettes Market rose sharply from 14.4% in 2004 to 33.7% in 2014. All through this period, the security markings requirement was enforced and implemented by the cigarette manufacturers,” CMTM added.