Wawasanex Seeks Long-Term Fix for Illicit Cigarette Trade

KUALA LUMPUR, 6 November 2026 – Customs seized RM476.3 million worth of smuggled cigarettes in the first eight months of the year, yet illicit cigarettes still make up more than half of the market, says public policy startup Wawasanex, which is advocating a coordinated whole-of-ecosystem response to tackle illicit trade from source to point of sale.

The seizures by the Royal Malaysian Customs Department cover 2,333 cigarette-smuggling cases between January and August 2026. Meanwhile, NielsenIQ’s latest Illicit Cigarettes Study puts illicit cigarettes at 56% of total consumption as of July, little changed from 56.2% in May and above the 54% recorded at the end of 2025.

Dini Nurhani, Co-Founder and Creative Analytics Director of Wawasanex, said, “The seizures are real, our enforcement officers are active, and they deserve credit for their efforts. But the market tells us that what is caught is being replaced just as quickly. When more than half of the cigarettes smoked in this country are still illicit, the next step has to be making them harder to buy, not just catching more of them.”

The concern is also reflected in Wawasanex’s nationwide poll in May 2026, which found that 99% of respondents said illicit cigarettes were easy or very easy to obtain, while 68.8% identified a foreign national as the seller.

Illicit Cigarette Trade Fix

The findings underscore the need for a comprehensive response that addresses the illicit cigarette trade across the entire ecosystem, from supply chains and distribution networks to retail outlets where products ultimately reach consumers. Customs has also reported cases involving migrant workers being used to sell untaxed cigarettes at retail premises, pointing to the shop counter as the place where the trade reaches consumers.

Recent enforcement operations by local councils show that authorities are stepping up action against business premises operating outside licensing requirements. In Penang, the Seberang Perai City Council (MBSP) inspected 263 premises this year, resulting in 148 being ordered to cease operations and 255 compounds being issued. Meanwhile, the Penang Island City Council (MBPP) has taken enforcement action against 101 premises under Ops Tegas.

In Kuala Selangor, a joint operation by Kuala Selangor Municipal Council (MPKS), Companies Commission of Malaysia (SSM), Customs and the Ministry of Domestic Trade and Cost of Living resulted in three foreign-run premises in Bandar PuncakAlam being ordered to close, with 18 compounds issued for licensing offences andCustoms seizing suspected smuggled cigarettes.

Wawasanex said these operations reflect the Government’s wider push to address illegal foreign run businesses. Prime Minister Datuk Seri Anwar Ibrahim had called for a nationwide crackdown in June 2026, while Federal Territories Minister Hannah Yeoh had directed authorities to revoke and blacklist the licences of Malaysians who sublet their business premises to foreigners.

“This is the kind of action people can see on their own street. When enforcement agencies carry out raids and local councils step in to shut down premises operating outside licensing rules, it sends a clear message that these businesses cannot simply carry on as usual. The important thing is to keep up the checks and make sure the action is sustained,” Dini said.

Wawasanex said the Government’s RM1.1 billion allocation under Budget 2027 to strengthen enforcement agencies should support more regular checks and stronger action against retail outlets selling illicit cigarettes, alongside efforts to disrupt the supply networks behind the trade.

While recent enforcement operations demonstrate the commitment of enforcement agencies and local authorities to address illicit cigarette sales, current approaches are unlikely to deliver a lasting solution. A more comprehensive approach is needed, combining supply chain disruption, stronger retail compliance measures, enhanced inter-agency action, consumer awareness initiatives, and efforts to address the underlying demand and supply for illicit products. Only through a whole-of-ecosystem response can Malaysia effectively reduce the prevalence of illicit cigarette trade.

“Budget 2027 has given enforcement the means. The test now is simple. A year from now, will a smoker still find illicit cigarettes at the shop down the road? That is the number that matters,” Dini concluded.

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