british american tobacco p.l.c. sustainability report 2009 - Tackling illicit trade in Malaysia


Illicit cigarette trade in Malaysia has increased significantly from 14 per cent of the market in 2004 to 25.7 per cent in 2008. In 2009, following the global recession, Malaysia’s export dependent economy was severely impacted, further increasing consumer demand for low priced products. Initial research indicates that illicit trade could have been as high as 38.7 per cent of the market for 2009.

It is estimated that the Malaysian Government may see a tax revenue loss of MYR 1.5 billion (£272.2 million) in 2009. The legitimate tobacco industry has experienced a drop in volumes sold of more than 11 per cent as consumers have switched to illicit products.

In view of the mounting impact of illicit trade on government revenues and our business, British American Tobacco Malaysia has developed a comprehensive programme to tackle the supply and demand for illegal cigarettes and to encourage increased and more effective enforcement of illicit trade laws.

Activities in 2009 included stakeholder dialogues with the Malaysian Maritime Enforcement Agency, the Marine Police and the Royal Malaysian Customs to create awareness of the illicit trade situation and to support these organisations in identifying key illicit brands. The company also continued its engagement with Government ministries through the Confederation of Malaysian Tobacco Manufacturers (CMTM) to promote inter-ministerial cooperation and increased enforcement of illicit trade laws.

‘Don’t Buy or Sell Illicit Cigarettes’, the nationwide campaign launched by Customs and CMTM in 2008, also continued through 2009. This raised awareness among approximately 90,000 retailers and the public of the risks they take when selling or buying illegal cigarettes. It included newsletters, roadshows and dialogue sessions to provide retailers with detailed guidance on how to identify legal, contraband and counterfeit cigarette products.

Retailer roadshows were organised by CMTM together with local enforcement agencies and a supplier of security ink and tax stamps. These targeted around 300 retailers in hotspots for illicit trade in the Malaysian states of Kelantan, Selangor and Kedah. The retailers were provided with information on the various security features on legal cigarette packs and reminded of the laws and penalties relating to the sale of illicit cigarettes.

British American Tobacco Malaysia will continue to work with the various enforcement agencies and industry partners to promote awareness of the problem. Surveys will continue to be carried out to ascertain the level of illicit cigarette trade in the country and shared with the Government to encourage appropriate anti-illicit trade measures.