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Original research
Magnitude of illicit cigarette trade in Malaysia: empirical evidence compared with industry studies
  1. Wency Kher Thinng Bui1,2,
  2. Hana Ross3,
  3. Norashidah Mohamed Nor1
  1. 1 School of Business and Economics, Universiti Putra Malaysia, Serdang, Malaysia
  2. 2 School of Government, Ateneo de Manila University, Quezon City, Philippines
  3. 3 Research Unit on the Economics of Excisable Products, University of Cape Town, Rondebosch, South Africa
  1. Correspondence to Dr Wency Kher Thinng Bui, School of Business and Economics, Universiti Putra Malaysia, Serdang, 43400, Malaysia; wency_thinng{at}hotmail.com

Abstract

Background The tobacco industry contends that the illicit market in Malaysia occupies 62.3% of the total cigarette market. If this is true, Malaysia has one of the largest shares of illicit cigarettes in the world.

Methods This study employs a rigorous gap analysis to measure the size of the illicit cigarette trade in Malaysia and compare it with the industry estimates.

Findings We found that in 2019, the illicit cigarette market share ranged from 38.2% to 52.5%, depending on assumptions with respect to consumption under-reporting, which is substantially less than the industry estimates. We found that the size of the illicit cigarette market was not driven by higher excise tax: doubling the excise tax rate from RM0.20 to RM0.40 per stick in November 2015 resulted in only a slight increase in the illicit cigarette market share and no increase in the number of illicit cigarettes in the market.

Conclusions Therefore, a reduction in cigarette excise taxes, as suggested by the industry, will not solve the problem of illicit cigarette trade in Malaysia. Instead, the government should ratify the Framework Convention on Tobacco Control’s Protocol to Eliminate Illicit Trade in Tobacco Products and implement the strategies outlined in the protocol.

  • Illegal tobacco products
  • Tobacco industry
  • Taxation

Data availability statement

All data relevant to the study are included in the article or uploaded as supplementary information.

https://doi.org/10.1136/tc-2021-057210

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    Data availability statement

    All data relevant to the study are included in the article or uploaded as supplementary information.

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    Footnotes

    • X @WencyBui

    • Contributors WKTB, HR and NMN conceptualised the study. WKTB and NMN collected the data. WKTB performed the data analysis and wrote the first draft of the manuscript under the supervision of HR. All authors contributed to the writing and revision of the manuscript and have approved the final article. WKTB is acting as gurantor for the research.

    • Funding This work was carried out with the financial support from Cancer Research UK and Canada’s International Development Research Centre.

    • Disclaimer The findings and conclusions in this report are those of the authors and do not necessarily represent those of International Development Research Centre or its Board of Governors.

    • Competing interests None declared.

    • Provenance and peer review Not commissioned; externally peer reviewed.

    • Author note This paper adds: A key contribution of this paper is the use of an evidence-based method to estimate the size of illicit cigarette market in Malaysia. The finding is nationally representative and proves that the tobacco industry had exaggerated the severity of illicit cigarette trade. We highlighted the urgent action needed to combat illicit trade in Malaysia.

    • Supplemental material This content has been supplied by the author(s). It has not been vetted by BMJ Publishing Group Limited (BMJ) and may not have been peer-reviewed. Any opinions or recommendations discussed are solely those of the author(s) and are not endorsed by BMJ. BMJ disclaims all liability and responsibility arising from any reliance placed on the content. Where the content includes any translated material, BMJ does not warrant the accuracy and reliability of the translations (including but not limited to local regulations, clinical guidelines, terminology, drug names and drug dosages), and is not responsible for any error and/or omissions arising from translation and adaptation or otherwise.