KUALA LUMPUR, Dec 4 — The Langkawi Chinese Chamber of Commerce (LCCC) has urged the government to postpone the implementation of excise duties on duty-free cigarettes until a proper study is completed.
In a statement today, LCCC vice-president Ku Chin Loon said failure to do so may result in the island losing significant revenue with businesses going under, causing more job losses and an income crunch.
The LCCC also called into question the analysis used by the Ministry of Finance (MoF) to categorise duty-free islands as hubs for illegal cigarettes.
In refuting the claim, LCCC urged the MoF to reanalyse its data, justify its claims and clarify what methods were used to acquire the figures.
The LCCC was responding to the MoF’s decision to impose excise duties on duty-free cigarettes starting January 1.
“The numbers we have on record clearly show that the volume of cigarettes sold and purchased within our island are well within reason.
“There is no market for illegal cigarettes in Langkawi and re-exporting duty-free cigarettes back to the mainland does not make sense from a logistics, cost and risk perspective,” said Ku.
“We urge the Ministry of Finance to review its statistics carefully as well as clearly identify the modus operandi of the illegal cigarette trade in order to see that duty-free areas have been wrongly implicated as black market hubs.
“Already tourism in Langkawi has taken a hit. The MoF’s incorrect analysis only stands to harm us further,” Ku said
He added that businesses and retailers in Langkawi are more than willing to cooperate with the Ministry of Finance to review its analysis and set the record straight.
“Retailers in Langkawi are also agreeable to complying with any additional measures that can further prevent potential mismanagement of duty-free cigarettes.
“These can include the imposition of tax on the importation of cigarettes with drawback facilities once they have indeed arrived for the Langkawi market,” he added.
Finance Minister Datuk Seri Tengku Zafrul Aziz had last week said the government’s analysis has shown that the number of cigarettes consumed per capita, including tourists, in duty-free islands is just too high and does not make any sense.
He also said that these duty-free islands can also become a hub for illegal cigarette trade.