LANGKAWI – The allure of Langkawi as a duty-free haven for certain products has taken a significant hit when several traders revealed the duty exemption for tobacco products has been revoked despite the two appeals filed by traders.
While the island’s Customs Department declined to comment, several traders told The Vibes that they have started to change the price tags on certain products to match the retail prices of those being sold in the peninsular as of last Sunday.
Langkawi Business Association deputy president Datuk Alexander Isaac confirmed this, saying the duty-free exemptions were revoked in April, but that Customs allowed the traders here to sell their existing stock before the duty reimposition.
Last November, Finance Minister Tengku Zafrul Tengku Abdul Aziz had announced that there would no longer be duty-free cigarettes on islands such as Labuan, Pangkor, Tioman, and Langkawi.
He had said it was part of measures to stem huge losses that the government was suffering from the underground economy that was driven by widespread smuggling of untaxed items.
“We did an analysis – why so many people smoke on these islands. It doesn’t make sense, the number of cigarettes per capita, including tourists, is just too high,” Zafrul was quoted as saying.
The government is also looking at reducing revenue leakage via smuggling activities.
“Cigarettes are one of them. The shadow economy in Malaysia averaged 21% to the GDP (gross domestic product) between 2010 and 2019. That is a huge number.”
It might make sense from a health perspective, but Langkawi has lost its appeal among tourists, said Isaac.
Asked if this will eventually apply to alcohol items, he said it is unlikely for now.
In February, traders had rallied with the tourism associations to appeal to the Treasury to not impose the duty-free ruling seeing that the tourism industry is badly affected by the pandemic’s travel restrictions.
Restaurateur Oli Khalid said that if the consumers are looking for well-known brands of previous duty-free items, they will have to pay full retail prices, but the cheaper versions are available on the island.
I think priorities are misplaced. We should be more concerned about the economy, public healthcare and restoring tourism growth rather than smuggling. Why revoke something in the middle of a pandemic?
Meanwhile, Tourism Langkawi pro-tem president Ahmad Pishol Isahak said the time has come for the tourism authorities to rally to rescue the industry instead of just complaining.
“I think priorities are misplaced. We should be more concerned about the economy, public healthcare and restoring tourism growth rather than smuggling. Why revoke something in the middle of a pandemic?
“The enforcement must be strict. If they are irresponsible, the tourists and traders should not be penalised for the enforcement agencies’ shortcomings.” – The Vibes, April 25, 2021
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