From 7-8 May, Southeast Asia’s leaders convened in the Philippines for the Association of Southeast Asian Nations (ASEAN) summit, where the Iran war and Strait of Hormuz loomed large amid the ongoing disruption to the region’s supply chains. Never one to waste an opportunity for government influence, Philip Morris International (PMI) warned on the summit’s closing day that this supply chain instability could fuel a spike in the region’s illicit tobacco trade, while calling on the Philippines to lead ASEAN’s response.
This missive notably followed PMI’s participation in the ASEAN-EU Sustainability Summit 2026, where its representatives flaunted the company’s CSR investments in the Philippines. A well-worn move, the tobacco industry’s use of CSR to ingratiate itself with governments in order to sway anti-tobacco policies was recently spotlit by the Southeast Asia Tobacco Control Alliance’s (SEATCA) Asia Pacific Tobacco Industry Interference Index 2025. Alongside the Philippines, the Index identifies Malaysia as another ASEAN country where Big Tobacco has retained significant influence through CSR and widespread policymaking participation.
In Malaysia, the tobacco industry is now launching a new attempt to influence tobacco traceability, building on its alleged bribery of a former Ministry of Health (MOH) official to dilute the country’s 2024 tobacco control legislation. Kuala Lumpur must now serve as an example to the wider region by resisting this interference and staying the course laid out by the WHO Framework Convention on Tobacco Control (WHO FCTC) and its Protocol to Eliminate Illicit Trade in Tobacco Products.
Malaysia’s illicit trade in Big Tobacco’s crosshairs
True to its familiar playbook, the tobacco industry is targeting Malaysia’s illicit tobacco trade, which the Royal Malaysian Customs Department (JDKM) estimates costs the government RM4 billion ($1.02 billion) in lost tax revenue annually, and which JDKM Director-General Datuk Anis Rizana Mohd Zainudin has cautioned “poses serious threats to national security and societal wellbeing.”With this interference, Big Tobacco’s aims to undermine the country’s existing regulations. In late April, Japan Tobacco International (JTI) presented findings from the latest NielsenIQ Illicit Cigarette Studies (ICS), commissioned and funded by the Confederation of Malaysian Tobacco Manufacturers, which includes JTI, PMI and British American Tobacco (BAT), claiming that Malaysia’s illicit share stood at 56.7% in January 2026 and that a doubling in fake tax stamps (FTS) was largely to blame.
However, SEATCA has long criticised the ICS due to its tobacco industry funding by the tobacco industry, warning that such data is used to inflate the illicit trade threat and pressure governments into freezing tobacco taxes. By exaggerating that illicit market’s size, the industry implies that further tax hikes would benefit smugglers, while its latest FTS warnings conveniently support its push for a digital-only track-and-trace system in Malaysia, similar to the ineffective, industry-friendly traceability systems for tobacco products implemented in the EU and UK.
Furthermore, SEATCA recently highlighted that if fake stamps are the problem, they point to weaknesses in the tobacco industry’s own supply chain, citing a 2024 study showing that 8.4% of audited JTI-branded cigarette packs and 8% of audited PMI-branded cigarette packs in Quezon City, Philippines, bore FTS. Reminding of the tobacco industry’s historic complicity in the region’s illicit trade, SEATCA underlined the study’s recommendation for a robust tobacco traceability system with physical and digital markers, fully independent of the tobacco industry – as is already in place in Malaysia – alongside a firm rejection of tax freezes.
Real story on Kuala Lumpur’s tobacco control agenda
Tobacco majors’ push for a new traceability system in Malaysia and across ASEAN is highly concerning, particularly considering Kuala Lumpur’s historic leadership. Building on its 2005 ratification of the WHO FCTC, Malaysia became ASEAN’s first and only state to implement a fully industry-independent, WHO-aligned traceability system in 2015, reinforced that same year by a doubling of cigarette excise taxes.
Countering Big Tobacco’s claims about the system’s supposed ineffectiveness, the World Bank has cited data indicating that Malaysia’s illicit cigarette market may be closer to half the level claimed by tobacco companies. Furthermore, a University of Putra Malaysia study also lowered earlier estimates and found that the country’s 2015 excise tax hike produced only a limited increase in illicit market share, with no increase in illicit volumes.
Crucially, this independent evidence points to a more resilient system than the industry narrative allows. Moreover, the current traceability model makes it possible to grasp the scale of the problem – an unlikely situation if a tightly-controlled government system were replaced by an industry-controlled one, as multiple experiences abroad have illustrated.
Stark warning from Canada’s past
Amid the industry’s latest influence attempts, Malaysia must not allow its tobacco traceability and taxation regimes to falter. SEATCA’s Index confirms that the country remains overly exposed to industry lobbying in violation of WHO FCTC Article 5.3 – a vulnerability acknowledged by its own Deputy Prime Minister.
This influence has had significant consequences, notably helping secure the removal of the generational endgame (GEG) from the Control of Smoking Products for Public Health Act 2024, as Deputy Minister of Health, Datuk Lukanisman Awang Sauni, revealed in Parliament in March 2024. Nearly two years later, allegations emerged that the Big Tobacco lobby had offered former health minister, Dr Zaliha Mustafa, RM50 million ($10.6 million) to drop this tobacco phaseout policy. While the bribe was reportedly rejected, a Malaysian consumer watchdog has called for a Royal Commission to investigate the industry’s undue influence and identify those responsible for enabling it.
Crucially, Kuala Lumpur must remember that tobacco taxes are, above all, a public health tool, not merely a revenue instrument. History offers a useful warning in Canada, the only country forced to reverse an ambitious tobacco tax policy because of illicit trade. After tax increases were followed by a surge in contraband, authorities ultimately scaled back a public health measure designed to reduce smoking. Yet that black market did not expand by accident: it was fueled by some of the very industry players now presenting themselves as enforcement partners.
In 2010, R.J. Reynolds Tobacco Co. and JTI-Macdonald Corp., formerly RJR-Macdonald before its acquisition by JTI, agreed to pay over half a billion dollars over a vast 1990s smuggling operation designed to evade tobacco taxes, after pleading guilty to aiding the sale and possession of contraband tobacco. Given the documented role of JTI’s subsidiary in Canada’s illicit tobacco trade, its current effort to shape Malaysia’s anti-illicit trade system is hardly reassuring.
Holding the line
Looking ahead, the solution does not lie in lowering Malaysia’s guard by bowing to industry demands for a more “friendly” system, especially when such models have yet to prove their effectiveness in curbing soaring illicit trades and tax losses. The EU and UK tobacco products traceability systems, for instance, have long been criticised for retaining remnants of the PMI-developed Codentify and relying on operators such as Dentsu Tracking and Inexto, both historically and financially linked to the tobacco industry. It would therefore be paradoxical for Malaysia to follow the industry’s calls for such a system just as the UK has chosen a Protocol-aligned model for vaping products, implicitly recognising its existing system as ineffective and ultimately favourable to Big Tobacco.
However, by implementing a robust anti-illicit trade policy encompassing consumer deterrence, enforcement and judicial conviction, Malaysia can tackle illicit trade without compromising its tobacco control agenda. This effort requires a solid foundation that only a track-and-trace system incorporating material and digital markers can provide. The same logic is encouragingly gaining ground elsewhere, with the Policy Research Institute of Bangladesh recently recommending digital track-and-trace systems combined with physical monitoring to curb illicit trade and improve supply chain transparency – the only approach proven effective and approved by the WHO FCTC Protocol.
Looking ahead, Malaysia should protect its existing system from industry infiltration by completing the long-overdue ratification of the Protocol, which would legally enshrine independent tobacco traceability and anti-lobbying safeguards. At a moment of significant supply chain instability for ASEAN, Malaysia can build on its status as a pioneer in WHO-aligned traceability and point the way forward for the region
