Form task force to fight black market: MICCI

> Smuggling of tobacco, alcohol and other goods costs govt RM8b in tax revenue, says chamber

PETALING JAYA: The Malaysian International Chamber of Commerce and Industry (MICCI) has proposed the formation of a multi-agency task force to combat the thriving black market, which takes away about RM8 billion in tax revenue from the economy.

The oldest chamber of commerce in the country said their call is due to the proliferation of contraband, some RM5 billion of which comes from the tobacco industry, RM1.5 billion from the alcohol industry while the remainder from other sectors.

“It is undeniable that Malaysia is facing serious smuggling situation that threatens the economic sovereignty of the country. The black market is booming and there is an urgent need to plug such leakage in government revenue,” said the chambers President Datuk Tan Cheng Kiat, in its first concerted effort to bring the issue of the illicit market to government.

MICCI has 800 corporate members representing 30 countries.

It is believed the move will help put back between RM3 billion and RM4 billion a year into the government’s coffers by 2020.

The task force would comprise of representatives from the Royal Malaysian Customs Department, Finance Ministry, Domestic Trade, Co-operatives and Consumerism Ministry, Health Ministry, Royal Malaysia Police, Maritime Enforcement Agency and other relevant authorities.

Besides that, the chamber has been engaging with several cabinet ministers on policy and regulation matters to make Malaysia more business-friendly.

Among the issues raised were unfair taxation practices, revenue leakages, and unclear business policies.

MICCI hopes there will be active consultation with industry players prior to the implementation of taxes, given instances in the past of overnight 40% excise duty hikes, such as seen for cigarettes in 2015 – were done without proper consultation.

The chamber’s vice-president and Japan Tobacco International corporate affairs and communications director Azrani Rustam said 60% of the Malaysian tobacco market is flooded with illicit products, hence making it the largest in the world with contraband outweighing legal excise paid products.

He said this had led to the collapse of the legal industry to the shadow economy.

In addition to the SMAT task force, MICCI also proposed the setting up of a One Stop Centre for obtaining and applying for approvals.

Based on MICCI’s estimation, the multiplier effect of leakages, such as “missing” GST and income tax refunds and the 1MDBhd and the Sabah Pipeline scandals among others, that has bled the economy, could have amount to RM200 billion in total. This, said Tan, is the amount of money that should have been with the market.

He lauded the revival of Malaysia Incorporated which will see the private sector and the government working together to solve problem and challenges to stimulate the economy to create jobs.

Tan said it is vital for the private sector to do well, so that money can be rechannelled into the economy in the form of taxes and duties to the government.