Institute for Democracy and Economic Affairs
This Policy Ideas builds on our previous report, “Illicit Trade in Malaysia: Causes and Consequences” (IDEAS, 2017). In that report we outlined the scale of illicit trade in Malaysia, the driving factors behind it and recommendations to address it. In this report, we consider those recommendations in more detail by assessing case studies from other countries where action was taken to stem the flow of illicit trade. We have complemented the assessment of these case studies with review of the relevant literature and interviews with experts in the field, including from industry and government. Using this analysis, we propose more detailed recommendations for tackling the problem of illicit trade in Malaysia.
The new Pakatan Harapan government committed in its manifesto to taking concrete action to reduce illicit trade in Malaysia. Under Promise 58 of the Buku Harapan, the government said that: “Enforcement agencies will be directed to stop smuggling of alcohol and cigarettes across the border, including tighter controls along the borders and heavier punishments to those convicted“. This is a welcome commitment as illicit trade remains a persistent problem in Malaysia, costing the government billions in revenue each year and damaging legitimate business.
Illicit trade is not a problem unique to Malaysia. Many countries around the world have sought to tackle the smuggling of contraband and the spread of counterfeit goods by adopting better technology, stricter penalties and educating the public, among other initiatives. The policies need to be tailored to the problem, but what each of the successful efforts have in common is a clear and determined strategy with political ownership and robust management to see it through. That is the approach that Malaysia needs to adopt. Within this strategy the Malaysian government can then strengthen the capacity of its various enforcement agencies and adopt specific policies to tackle the most serious drivers of illicit trade.
The recommendations presented here are designed to serve as the basis for further discussion on how Malaysia can eliminate the challenge of illicit trade.