Labuan Chinese Chamber of Commerce president Wong Kii Yii said Zafrul’s statement was “incorrect and uncalled for”.
“The business community as well as the people of Labuan totally reject this claim made by the minister,” Wong said, in a statement today.
“This statement reflects badly on the finance ministry as well as the Perikatan Nasional federal government led by Prime Minister Muhyiddin Yassin.
“We would like to see for ourselves the minister’s so-called analysis that proves duty free areas act as hubs for the illegal cigarettes trade.”
He said based on their sales records, Labuan sold a total of 300 million sticks of duty free cigarettes annually.
“This is a far cry from the minister’s ‘high volumes that makes no sense’ comment.”
In an interview with The Edge, Zafrul had said the government decided on several measures to improve revenue collection, including from the shadow economy.
“So, no more selling duty-free cigarettes on duty-free islands where sometimes it becomes a hub.
“We did an analysis — how come so many can smoke on this island? It doesn’t make sense, the number of cigarettes per capita, including tourists, is just too high,” he said last week.
The minister said the government was also looking at reducing leakages and one of the ways was to curb illicit smuggling of high-duty goods.
Responding to Zafrul’s comments, Wong said the ministry had not only gotten its maths wrong but that it was also “clearly misinformed” about how illegal cigarette syndicates operated.
“We would like to invite the minister as well as ministry officials to visit Labuan and investigate. Go ahead, audit us. Our members will be more than happy to cooperate. Our island is not that big, it is hard to hide containers full of cigarettes,” he said.
Wong said the national economy would suffer if excise duties were imposed on duty free cigarettes based on the ministry’s erroneous analysis.
He said cigarettes were one of the most popular retail items in any duty free area.
“Take it out of the equation and there will be a severe shortfall in retail income.
“Already Labuan’s economy has been hammered by the decline in the oil and gas sector and the Covid-19 pandemic – and now, the new excise duties on duty free cigarettes may just be the straw that breaks the camel’s back.”