By DayakDaily Team
KUCHING, May 25: As of January 2026, illegal cigarettes have accounted for 56.7 per cent of Malaysia’s market, representing a leakage in public revenue, a challenge to legitimate businesses, and a test of enforcement credibility.
According to Philip Morris Malaysia (PMM), the latest figure represents an increase from 54.4 per cent recorded in the 2025 Illicit Cigarettes Study, which found that illegal cigarettes outnumbered legal ones by 8.2 billion sticks to 6.9 billion, making Malaysia one of the most affected markets in Asean.
Citing discussions from Sarawak’s experience from a recently held dialogue titled ‘Sarawak’s Illicit Trade: Drivers, Risks & the Cost of Prohibition’ organised by DayakDaily on April 25, PMM said that the underlying challenge is national: illegal products continue to move through sophisticated supply chains that exploit enforcement gaps, consumer demand, and regional routes.
“When illegal cigarettes are sold cheaply and widely, they displace taxed legal products, undermine compliant retailers, and create space for criminal supply chains to operate.
“The problem is also increasingly complex. Smuggled whites remain the biggest component of the illicit cigarette market, while fake-tax-stamp products are also rising,” it said.
In 2025, products with fake tax stamps accounted for 15.5 per cent of Malaysia’s cigarette market, and by January 2026, this had increased to 16 per cent, showing that syndicates are not only smuggling products but also imitating official control mechanisms.
PMM also stressed that Malaysia’s illicit cigarette problem is not just a domestic issue, as it has become a regional trade, revenue, and governance challenge that requires stronger Asean coordination.
“Malaysia’s regional role is relevant in this context. As the long-standing Chair of the Asean Customs Enforcement and Compliance Working Group, Malaysia has an established platform to raise illicit trade as a regional enforcement issue.
“Malaysia’s own experience with high illicit cigarette incidence also provides practical context for discussions on cross-border enforcement cooperation.
“Illicit cigarette networks do not operate solely within national borders. They can exploit differences in customs procedures, maritime surveillance, tax regimes, and product registration systems.”
Regional routes, private vessels, ship-to-ship transfers, and coastal landing points, it said, indicate that enforcement challenges can extend beyond the jurisdiction of any single country.
“Malaysia’s leadership can focus on turning domestic enforcement experience into an Asean-wide operating practice. This includes shared risk indicators, intelligence exchange, coordinated coastal surveillance, joint operations, and common standard operating procedures among customs authorities.
“These measures can help enforcement agencies detect suspicious consignments earlier, focus resources on high-risk routes, and reduce disruption to legitimate trade.”
It added that this approach is aligned with recommendations advanced by the EU-Asean Business Council, which has argued that Asean needs stronger intelligence sharing, risk management, operational alignment, and public-private cooperation to address illicit trade more effectively.
At the same time, PMM stressed that policy design is crucial, warning that while blanket bans may appear effective, they can inadvertently fuel illicit markets if consumer demand persists and enforcement capacity is insufficient.
“DayakDaily’s dialogue captured this tension, particularly in discussions on vape and e-cigarettes, where experts warned that poorly calibrated bans may push consumers toward cheaper and more harmful illicit products instead of eliminating demand.
“Malaysia must continue to support strong public health objectives, especially youth protection, action against non-compliant products and stronger enforcement against illegal supply chains.”
In this context, PMM said that regulatory systems that protect minors, target criminal operators, and differentiate between product categories are relevant to achieving enforcement and public health outcomes.
“The data shows that illicit trade persists where enforcement gaps, policy gaps and market demand overlap.
“Malaysia is well placed to help Asean close those gaps. What is needed now is coordinated action that matches the regional scale of the problem.”
During the dialogue, the deputy director of the Royal Malaysian Customs Department (Sarawak), Abg Zamari Abg Nazarin, shared on the illicit cigarettes and E-Cigarettes ecosystem in Sarawak from a legal and enforcement perspective.
Additionally, Universiti Sains Malaysia Criminologist at the Centre for Policy Research, Dato’ Dr P. Sundramoorthy; UKM Medical Centre Public Health Specialist Professor Dr Sharifa Ezat Wan Puteh; and PMM Scientific Engagement Manager Dr Vijayndhran Balakrishnan highlighted the need for scientific and sociological-based approaches in developing harm reduction policies that ensure vulnerable groups are protected. — DayakDaily
