Do billions go up in smoke each year?


The illegal tobacco trade in Malaysia has ballooned into a RM5bil industry, robbing the government of an estimated RM2bil unpaid duties every year.

HE began smoking cigarettes over a decade ago. For Steve Wong, now 34, it was a teenage habit that lingered into adulthood until four years ago, when he switched to alternative nicotine products.

“When legitimate brands came onto the market, it seemed like a safer way to get my nicotine fix without smelling like smoke,” he says.

But that sense of relief is now clouded by uncertainty with talks on a vape ban looming for Malaysia.

Wong feels it punishes those who have already made the switch.

“I’m not against regulation. But with a complete ban, people will just turn to the black market. And if that doesn’t work, they’ll go back to smoking.”

With cigarette smuggling still rampant, Wong admits he would not mind turning to cheaper, illicit alternatives if access to legitimate, affordable vape products now prove to be an issue.

“I don’t like the idea of smelling like smoke all the time again. But if I can get a pack of cigarettes for a cheaper price, I’ll probably do it.”

He adds that it would not be surprising if many Malaysians are already knowingly buying illicit cigarettes.

An unsettling fact

Wong’s words echo a troubling truth. A Nielsen January 2026 survey found that 56.7% of cigarettes sold in Malaysia, or six out of ten packs, are illicit.

These are smuggled mainly from Vietnam, China and Indonesia, often hidden in 40-foot containers packed with millions of sticks.

The illegal tobacco trade has ballooned into a RM5bil industry, robbing the government of an estimated RM2bil unpaid duties every year.

While Malaysia has made strides in tobacco control, enforcement alone hasn’t been enough to stem the tide.

Even with regulated cigarette products available, more than half the market is illicit. This is proof that prohibition and price hikes, without comprehensive regulation, doesn't stop the trade.

Meanwhile, illicit cigarette consumption in the European Union rose by 10.8% in 2024, reaching 38.9 billion cigarettes – nearly one in every ten smoked, according to KPMG’s latest Illicit Cigarette Consumption in Europe report.

The paradox of prohibition

PMI, which has conducted studies on illicit trade globally, points to this paradox. Parallels can be drawn to the American prohibition on alcohol in the early 20th century.

“When alcohol was outlawed – for 13 years, with no satisfactory alternative—the demand remained. Hence, black market–driven chaos and civil unrest ensued", PMI notes in an article on prohibition.

That is exactly what’s happening in Malaysia, and even across the Causeway. Despite Singapore’s strict enforcement and outright vape ban, illicit vaping persists there.

Besides Singapore, other countries with strict vaping bans, like Thailand, Brazil, and India, have seen illicit trade persist.

Smuggled vapes continue to flood markets, driven by high demand and porous borders. In Australia, even with tight regulations, the black market for nicotine vapes thrives, as users turn to unregulated alternatives.

These examples further highlight that prohibition fuels unregulated supply, making it harder for authorities to control product quality or prevent youth access.

Instead, many argue that a regulated, taxed framework with proper standards, clear labelling and age controls, is a more effective approach for economic and public-health outcomes.

A high stakes game

Tobacco, primarily led by cigarette use, remains one of the world’s biggest killers, claiming over seven million lives annually.

The World Health Organization (WHO) reports that global tobacco use has declined from 1.38 billion users in 2000 to 1.2 billion in 2024, reflecting a shift from smoking to smoke free alternatives in many countries.

In Malaysia, the smoking rate is forecast to fall from 23.1% in 2010 to 16.1% by 2030. But if more vapers like Wong are driven back to cigarettes, or turn to cheap, illegal options, those public-health gains could quickly unravel.

The question, then, is not whether to regulate, but how. A ban on vape products may appear decisive, but as global examples suggest, prohibition hands the market to smugglers.

Regulating alternative nicotine products, enforcing tax compliance, stamping out illicit trade can help Malaysia protect its people and its revenue.

To this, Wong says: “Just make it fair. Regulate, exercise control, but do not make it impossible. If it is clean and legal, I will buy it. But if it is too expensive or inaccessible, people like me will find another way.”

As policymakers weigh the next move, that “other way” could well determine whether billions of ringgit keep going up in smoke or finally flow back into Malaysia’s economy where it belongs.

 

 

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