The study reported that 64.5% of cigarettes sold in the country as of August were illegal. A 25% increase compared with 2015 figures.

JTI Malaysia managing director Cormac O’Rourke said an estimated RM5 billion in uncollected tax revenue was lost through the illegal cigarette trade, while another RM2 billion was lost through illegal vaping.

He said this was because the vaping sector was still largely unregulated and many vape liquids remained untaxed.

“To close further revenue leakages, the finance ministry should explore tax revenues lost from illegal vaping. This can be done by looking at all liquids, as opposed to just those which contain nicotine,” he said in an online press conference.

On the upcoming Budget 2021, O’Rourke urged Putrajaya to impose a tax increase moratorium for the next two years so that businesses would have enough time to recover from the impact of the Covid-19 pandemic.

“There are 60,000 cigarette retailers in Malaysia. For many of them, 30% of their revenue comes from the sale of legitimate tobacco products. They need to see their business fortunes restored.

“If there are further (lockdown) restrictions, it is important that legitimate tobacco products remain available for sale in retail channels. Otherwise, you open up a vacuum for illegal cigarettes to thrive.”

He suggested that the government impose a ban on tobacco product transhipment, as this has been exploited by smugglers to ship cigarettes into the country on the pretext of transporting them to a neighbouring country.

He also called for stricter checks by the re-established Multi-Agency Task Force and designating a single port of entry for all tobacco products coming into Malaysia for better enforcement.